(If you're wanting practical, easy-to-implement ideas - this isn't your blog post. Check out some of the articles below instead. If you want some interesting insights, and a perspective into who I am and why I do what I do, read on.
And for what it's worth - I drafted this article before Facebook's recent Cambridge Analytica scandal. In my view, the only thing that's special about the Cambridge Analytica saga is that it has created a narrative to draw attention to issues with Facebook that were already apparent.)
Om Malik recently wrote an interesting article, explaining "The #1 reason Facebook won't ever change".
Malik explains that "companies have a core genetic profile and it is tough for them to deviate from it. That DNA defines every action, reaction, and a strategic move made by a company. The DNA represents a company’s ethos — and to a large extent, its ethics."
In the tech world, Malik talks about Google's core DNA being "search and engineering", with the proviso that engineering is driven "by the economics of search". Microsoft is at its core a desktop software company, even as it tries to adapt to a cloud- and data-based world. In an earlier article, Malik gives some more general examples: "If a company makes luxury goods, all its 'genetic instructions' whether it is sales processes, manufacturing and production methodologies, its design and ultimately its messaging are tuned to provide a collective 'corporate DNA.' Similarly a company making paper napkins is built a certain way and another one selling routers and switches is built in a certain way."
In pointing out why Facebook won't change, Malik explains that "Facebook’s DNA is that of a social platform addicted to growth and engagement. At its very core, every policy, every decision, every strategy is based on growth (at any cost) and engagement (at any cost). More growth and more engagement means more data — which means the company can make more advertising dollars, which gives it a nosebleed valuation on the stock market, which in turn allows it to remain competitive and stay ahead of its rivals."
It's a reason to be skeptical about Mark Zuckerberg's recent aim to ensure time spent on Facebook is "time well spent". You could be cynical and think that Facebook's aim will be to make us perceive time on Facebook to be time well spent.
More personally, it has also got me thinking about businesses I've worked or dealt with, and how this has influenced, and will continue to influence, the business and professional decisions I make.
I'm a "recovering lawyer" after practicing law for many years. Before practicing, I was fortunate enough to come across an article titled "On being a happy, healthy, and ethical member of an unhappy, unhealthy, and unethical profession" by Patrick J Schiltz. It's long. But reading (and re-reading it) is time well spent.
One of Schiltz's key messages is that for larger law firms, money will inevitably become a major factor when determining the decisions that get made. The more stakeholders there are in a business, the more difficult it is to get consensus about what to value and prioritise.
However, there's always one thing that stakeholders can usually find consensus on: money.
I believe this extends to larger professional service firms of any type.
Even if some of these stakeholders have more important priorities - "sabbaticals, time for child-care, political involvement, greater work satisfaction, or whatever" - money will usually at least be a factor.
Money ends up being the lowest common denominator.
Schiltz's argument isn't limited to this insight. But for the purposes of this article, it demonstrates that there are incentive structures for certain types of professional service firms.
It has neutered my desire to work in larger firms. It helps that I'm allergic to bureaucracy. But that's another issue.
I want it easy to be... healthy, happy, and ethical.
Related to this is research by Noam Wasserman from the Harvard Business School, including "Rich versus king: The entrepreneur's dilemma", "The founder's dilemma", and articulated in an interview with Sarah Jane Gilbert: "Rich or royal: What do founders want?". The latter article points out that there's "a fundamental tension many entrepreneurs face, the conflict between wanting to become rich and wanting to keep control of their new company. Few can have both".
As a business owner, I'd rather be "royal" than "rich". It's one of the reasons I operate my own business. In part, it's less about having control of my business but having control of my life. Not only do I want control of my business: I want control over my life.
Reflecting on this has made me realise: I want to operate on my own. Even with a like-minded business partner, there will be things we don't agree on. I'd rather do what I want, when I want, how I want. (Within the constraints of the law, my conscience, and what's best for my clients, of course.)
It has also made me look at incentive structures, conflicts of interest, how I can add value to clients, and areas that I'm not as strong at or don't care to work on.
Which has influenced certain decisions relating to Fairhaven Wealth that may not be in my best interests from a financial perspective, but are in my best interests as a person, who cares "wealth" from a much broader perspective. (Think less about money and more about well-being.)
- Focusing on being "royal" rather than "rich". I want the buck to stop with me. I don't want to have to negotiate, and in some cases compromise, my values and priorities.
- Providing one-off engagements, rather than on-going services where I "lock" clients in. I'm in two minds about this: for one, insisting (like most advisers do) on an ongoing service is somewhat paternalistic and limits the options available to clients, which I don't like. However, I also understand that much of the value of financial advice isn't just about the advice, per se, but about making sure clients follow through with the advice; the behavioural coaching; and keeping people accountable to their plans over time. If clients want that, they can engage me regularly. Or they can go elsewhere. One thing I'm clear about is that this decision is not the best approach from a commercial perspective, but is the best from my own perspective - because I'd rather the onus be on having clients follow me up, rather than me following them up.
- Providing financial advice on an "advice-only" basis, and not implementing advice on behalf of clients. For one thing, I don't think there's a huge amount of value-add with implementing advice. Especially if I have to put clients onto a platform to do so, and this increases the product fees they have to pay. For most of the investment options I recommend, it's easy for clients to implement - and, quite frankly, I'd just be a middleman adding complexity to the mix. Again, I think most advisers conflate advice with implementation because implementation is where the money is. But the paperwork is a pain in the backside, especially if I'm just a middleman and not adding any value, so I'd rather leave that out of my life. (It also means I don't need to deal with anti-money laundering/counter-terrorist financing compliance - which, again saves me spending time on something I loathe, and reduces the costs I have to pass on to clients.)
- I charge fixed fees. This results in a better alignment of interests between me and my clients. It's also simple. Perhaps I could charge hourly rates. But the billable hour is bad for the soul - or mine, at least.
I've thought long and hard about what my company's DNA is. It's not all about money. At its core, I want Fairhaven Wealth to enable me to provide the highest quality service to clients, while providing me with the flexibility I want (and my young family demands), and being happy, healthy, and ethical.
What is your company's DNA, and how does it align with your ability to be healthy, happy, and ethical?