Managing conflict: the founder who became an employee

A common figure exists inside acquired advice firms now.

He used to be the senior partner. He still has the office, but the headed paper is different, and his job description contains the word salaried.

The private equity executive he reports to is young enough to be his son or daughter and asks questions about adviser productivity in a tone of voice nobody has used with him for two decades.

He’s not sure he likes it. He’s not sure what other options he has.

In the months after the deal closes, his colleagues notice he is not quite himself.

Emails seem to take a bit longer to answer. He stops contributing at management meetings. His lunches have stretched out.

The new owners read this as performance and reach for the tools they know: objectives, reviews, the suggestion of a transition plan — gentle at first, until it isn’t.

None of those tools can address what is actually happening, which is a loss of identity.

A different kind of conflict

This story is not unique to financial advice. It exists across professional partnerships — law, accountancy, vet practices, dentistry — where roll-ups have replaced the traditional career track with salaried employment.

In advice firms it shows up in stark relief because the founder’s value was always personal. His clients were his clients. His relationships came with him.

With private equity now behind a significant number of IFA deals and three-quarters of advisers approaching retirement, this scene is playing out across the country every week.

The firm bought those relationships. They are leaving with him too, one at a time, through the same dynamic everyone in the building can see and nobody knows how (or dares) to name.

Although it might not look like it, this is a form of conflict.

Even though there is no shouting, there is an unresolved difference of opinion about how the adviser should be treated.

This results in slow walking, side conversations in the kitchen and, in the end, clients who used to be in the firm and are now in someone else’s.

But the standard vocabulary of conflict management — grievances, escalation, resolution — does not fit, in part because nothing is being said out loud.

This is also akin to grief. The founder has lost a version of himself that he spent 30 years building — around which his professional (perhaps personal) identity revolved — and there is no replacement on offer.

The new boss is doing nothing wrong; the changes in structure were not personal; the firm is paying him fairly. But the price of the transaction is being paid in something nobody priced into the model.

A question of leadership

When the FCA reviewed the IFA market last October, it named three groups at risk from badly handled deals: consumers, employees and the wider financial system. The middle group is the one that goes unspoken in most boardrooms.

Two things make this a tough ask.

The first is that those in the room rarely have the language for what’s going on.

Leaders are trained to fix problems and unblock teams, not to recognise an identity shift in someone else and to sit with them in their confusion without rushing to make it better.

The second is status. Being managed by someone younger doesn’t trouble everyone, but for a senior adviser whose professional identity was built around being the one others came to for judgment, it can be acute.

And this can feel difficult to talk about, because talking about it exposes the loss.

Before you hit the speed-dial to HR: this is leadership work.

Acquirers who get this right notice early. They make space for a conversation about what is changing and what might be lost, long before the performance management cycle starts and anyone leaves.

They are careful about the symbolism of who reports to whom, particularly in the difficult first 18 months.

They give the founder something to do that draws on his judgment rather than his execution — mentoring younger advisers, or a seat on a client oversight committee, or work on long-term client strategy.

They do not do this as a sop, but in recognition that the senior adviser’s value is grounded in wisdom and the firm needs to access that.

This work determines whether the deal that looked good on completion still looks good three years later.

Private equity often thinks it’s buying assets when it’s buying people — and people are not really an asset class, despite what a lot of management thinking might have us believe.

So how do you work with people when their world is changing?

It is as simple and as difficult as this: being willing to name what’s happening, and to follow through on its consequences.

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