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Team Management
Learn to make your advisory practice bigger than yourself, with Pat Hinton
Pat Hinton
Founder and Senior Partner, Boston Wealth Strategies
September 24, 2024

Many financial advisory practices suffer from key person risk. They become too dependent on one person’s knowledge, reputation and client relationships, and the loss of that individual poses a major threat to the practice. Valuation experts have suggested a key person discount of up to 25% in the value of private companies.*


A practice that is entirely reliant on a key person isn’t just at higher risk; it’s also less scalable. Overdependence on one person makes it difficult for a lifestyle business to grow into a full-on enterprise. After all, even the most talented and experienced advisor has only 24 hours in a day.


To avoid this, advisors need to answer several questions. How do you get everyone on your team to feel a sense of ownership? How do you develop younger advisors? How do you set up your practice to succeed after you’re gone? Will you sell it, and to whom?


Pat Hinton has found some compelling answers to these questions. Hinton, who turns 60 this year, is a co-founder and senior partner at Boston Wealth Strategies, a fee-based financial planning firm that manages more than $1 billion in assets. For Hinton and his partners, the key has been to build something bigger than themselves. “We’ve created an entity,” he says, “that will outlive us and will help provide for our clients when they need us most.”


Here are three ways to make a practice bigger than yourself, mitigate key person risk and unlock your ability to grow from lifestyle business to full-on enterprise.


 

1. Turn individual wins into team wins 

When Hinton and Greg Pinto founded Boston Wealth Strategies in 2013, it was wholly owned by Pinto and advisor compensation was based on individual production.

Like many advisors, Hinton was used to the conventional model, in which each advisor is the star of the show and there are few incentives for anyone to work together as a team. “For 20-plus years,” he says, he had been in “eat what you kill” mode.

But as Boston Wealth grew, he, Pinto and Dan Wagner — a third senior partner who joined the firm in 2020 with a focus on corporate retirement plans — felt that things needed to change. 

In 2022, the three partners implemented a revenue-sharing model. They decided to make everyone W-2 employees, including themselves. They each own shares of the enterprise, and every employee gets a cut of the firm’s revenue each month.

Previously, Hinton says, “If a colleague brought in a $10 million relationship to the firm, it really didn’t have a lot of impact on me personally.” But now, “if the 401(k) team, for example, has a big win and brings in a new client, and it adds to the bottom line, that’s a win for everybody.”

2. Give everyone a seat at the table 

Boston Wealth’s democratic approach is reflected in more than its entity structure. It’s also reflected in the firm’s decision-making process.

Early on, Hinton and his partners engaged a coach to train them on the Entrepreneurial Operating System (EOS), a model for helping small businesses scale. One benefit, Hinton says, is that it moves teams from being territorial and saying, “This is my idea,” to having productive conversations and making collective decisions.

They have a two-day offsite for the whole firm every December, meet with their EOS coach every quarter and have regular strategy meetings in between.

At first, only the three senior partners were present at strategy meetings. But eventually, they started involving junior team members. “There are perspectives they’re bringing to the table that you never thought about,” Hinton says. Beyond that, “when they have a voice, they feel more tied to the organization, more connected to it and more focused on its success.”

3. Build succession planning into the way you work 

Interchangeable parts mitigate key person risk. Hinton and his partners made it a goal to have multiple people who can provide consistent, high-quality service to any given client.

When they first started having younger team members manage relationships, they were nervous about pushback from clients. What happened instead was “a bit humbling,” Hinton says. “Most of the clients have said, ‘No, this is great.’ They just want to make sure they’re being taken care of.”

But Hinton’s goal isn’t just to have other people on his team who can step in to manage any client relationship as well as he can. In some cases, having younger colleagues step in is better.

“A lot of our clients have children in their 20s and 30s, just starting out, so they need help,” Hinton says, and they don’t want their “parents’ old advisor” to help them. “We have a team of 20- and 30-somethings that they can talk to. Whatever their situation is, we can match them up.” This helps the team develop relationships across generations and hold onto aging clients’ assets.

Ultimately, this creates a built-in succession and exit plan. As Hinton points out, a question that many advisors wrestle with is, “How do you take all the blood, sweat and tears that you’ve shed to build this business and transfer it to somebody?”

And when it comes to the question, “Who am I eventually going to sell my shares to?” Hinton’s answer is easy. “I can walk out my door and see them.”

 


Pat Hinton is a founder and senior partner of Boston Wealth Strategies, which manages over $1B in client assets. He has more than 26 years of experience and focus on financial planning, retirement distribution, college funding and overall investment management. He holds the CFP, ChFC, CLU and AIF certifications. Pat graduated with a degree in political science from North Central College in Illinois, where he played football and was a team captain. He and his wife Kate have been married since 1994 and have five children they raised in Walpole, Massachusetts.

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*Aswath Damodaran, NYU Stern, “Difference Makers: Key Person(s) Valuation,” as of August 2024.

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