What ‘Cultural Fit’ Means And How To Find It

Julius Buchanan, Editor in Chief, Wealth Solutions Report

Papike, Diamond And Nash Share Views On The Meaning And Discernment Of Cultural Fit, Signs Of A Bad Fit, And Cultural Change Over Time

Many aspects of advisor recruitment are quantifiable through various measurements – assets can be tallied, future earnings projected, and technology inventoried and evaluated – but cultural fit remains a quality rather than quantity that is best identified by the eye of the beholder.

To develop a clearer view of what cultural fit entails, how to factor it into transaction decisions and how much it changes over the long-term, we sought the views of expert recruiters, all of whom are executives from our Top 5 FA Recruiting Firms of 2023.

The Elements Of ‘Cultural Fit’

Louis Diamond, President, Diamond Consultants

Louis Diamond, President of Diamond Consultants, notes the difficulty of deriving a definition of culture and instead describes characteristics that support cultural alignment, including “an advisor’s personality, collaboration preferences (lone wolf versus team-oriented), economic requirements (i.e., salary and bonus or paid on a grid and how important the economics are to the decision), demeanor and style of business.”

Jodie Papike, President of Cross-Search, also provides factors that help an advisor determine cultural fit, such as individual advisor preferences, experiences and their view of where they will feel comfortable.

Jodie Papike, President, Cross-Search

She adds, “One advisor may be leaving a large firm where they feel they are treated like a number and are therefore looking to join a smaller firm, while another may be used to the name recognition and services that only a larger firm can offer and are therefore only willing to consider bigger companies.”

Jeff Nash, CEO and Co-Founder, Bridgemark Strategies

“Too often, I see advisors base decisions on the likability of the recruiter/branch manager – who are paid to be likable,” cautions Jeff Nash, CEO and Co-Founder of Bridgemark Strategies. Nash emphasizes the three factors his firm trademarked – feel, fit and financials – pointing out that conversations about an advisor’s short- and long-term goals help lead to a cultural fit with a firm that meets those goals.

“One thing is certain,” adds Nash. “If an advisor lands at a firm and their goals are not aligned, it’s just a matter of time before that advisor will need to switch again.”

Determining A Good Fit

Nash says that it’s difficult for advisors to determine cultural fit on their own. According to Nash, recruiters will oversell a proficiency that relates to an advisor’s needs, such as product mix, fee model or target audience. “Our expertise helps the advisor understand a firm’s proficiency versus just being able to accommodate. This gets to the heart of a cultural fit.”

According to Papike, the most important step in finding the right fit is prioritizing needs. “For example, if access to decision makers is important to you, consider privately held firms and get to know the owners well.” In addition, Papike recommends a home office visit and talking with existing advisors.

“Our job is to understand hundreds of firms and get a deep understanding of an advisor’s preferences and personality,” says Diamond. “This is the part of the job that is more art than science. We can usually vet out poor cultural fits from the jump. Still, it’s incumbent upon the firm and advisor to do the hard work in establishing the quality of the connection.”

Red Flags

“If something doesn’t feel right during the recruiting phase, don’t move forward!” warns Papike, who says advisors must trust their gut instincts and focus on fit rather than upfront money or a payout. “If you aren’t getting answers to questions, if conversations with department heads aren’t going well or if you just don’t get a good feeling about a firm, go another direction.”

Similarly, Nash cautions that the largest red flag can be a checkbook. “Often recruiters or salespeople may try and mask a cultural disconnect with a bigger transition offer.

Accepting these offers is a recipe for short-term money and longer-term unhappiness.”

Nash provides nuance, stating that “there is nothing wrong with negotiating and taking advantage of some of the record transition packages out there. Problems arise when a decision is based on the money being too good to pass up, even in the face of a bad cultural fit.”

Diamond says advisors should pay attention to whether their potential partner has a team-based culture, where the firm has the clients, versus an individual culture, where individual advisors have the clients, because self-determined, individualistic advisors will fit poorly in a team-based culture.

Diamond also warns on compensation structure, in which some firms provide a salary and bonus while others compensate on an eat-what-you-kill basis. “It would be challenging to land the plane on the cultural fit here.”

Cultural Change And Stability

Papike notes that culture emanates from the top and can change as ownership and organizational structure change, which may happen quickly in wealth management consolidation. She says that an advisor must ask the tough questions about the potential partner’s future ownership plans.

Diamond agrees that a firm’s culture starts at the top, so a change in leadership or a sale can change the culture. He also notes that a firm’s culture will change over time regardless, and that “equity can be a helpful tool to ensure a stable culture since this aligns interests and keeps folks rowing in the same direction.”

“When goals are aligned, often culture is aligned,” says Nash. “This is why having aligned goals is the foundation of cultural fit.”

Nash makes an analogy to geometry. “Consider two sets of lines. One set is parallel, and stays that way for the foreseeable future. That set of lines is culturally aligned. The other set is positioned somewhat in the shape of a ‘V.’ Over time those lines will continue to move further and further apart. This is why it’s so important to make sure there is strong alignment from the onset.”

Julius Buchanan, Editor in Chief at Wealth Solutions Report, can be reached at jbuchanan@wealthsolutionsreport.com.

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