20 Rules for a Successful Study Group: Part 1 of 2

The following blog post was originally published in Advisor Perspectives:


Study groups are a great tool, allowing advisors to exchange helpful insights – but they can run your business into the ground. For your study group to succeed, you must know what you’re getting into, the parameters you want to live by, and how you’re going to be sure to get the best of, not the worst of, the experience.

Usually, when an advisor first forays into a study group, all is hunky-dory. Unfortunately, over time, things inevitably go awry. Colleagues who you once respected start providing very poor advice. It can feel like your peers have lost the wisdom that led you to trust their advice in the first place!

The reality is the quality of the people in the group has not dissipated; it’s just that the

available flow of new, quality information has diminished. In other words, what is new and exciting when you first begin is no longer exciting when you are digesting it a third and fourth time over. You will learn a lot in your initial meetings. But your meetings will eventually begin to do more damage than good as people “reach” to try and bring new and exciting discussions to the group.

The question is: How will you keep this from happening to your study group?

First, every study group has a specific lifetime of relevance. Once the competitive

relevance that prompted its organization has been realized, the study group goes into a

tailspin of diminishing returns. Eventually the group reaches a point of irrelevance. This should not be confused with the idea that the participants are irrelevant – it’s just that all the valuable information that can legitimately be shared has been shared. This is when the study group becomes most dangerous to your future financial health.

There are variations on this theme, of course, but its remarkable how all of the many study groups I’ve observed have followed this basic path.

Be warned, however, that there are usually a few members who are emotionally attached and desperate to continue with a study group, even after its usefulness has lapsed. They mean well, and try to find numerous ways to infuse relevancy where it does not and cannot exist. While their efforts may be valiant, they are futile, dangerous, expensive and a significant waste of time and energy. Once this begins to occur, many of the members will realize that the study group is unproductive. They are often hesitant to hurt one another’s feelings, however, and may not acknowledge the elephant in the room. Instead, one member after another will slowly come up with alibis for not being able to make study group sessions.

A clear indication that your study group is slipping into irrelevance is when members begin to suggest new rules such as:

  • Everyone has to arrive at the next meeting ready to present a new idea.
  • Everyone must arrive at the next meeting ready to present a case study.
  • Everyone is responsible for finding outside speakers to come address the study group.
  • Everyone is required to suggest a new investment idea that could be used by the group.

Whenever one of these strategies is suggested, you know it is the beginning of the end.

Often times, these outside “speakers” or investment ideas can lead you astray and be very dangerous to your practice. When fellow group members “reach” to introduce new things to the group, not only can it be a waste of time, it can also lead you down the wrong path from a regulatory perspective.

So the question is, “How do you prevent such erosion from taking place within your study group?” Or, better yet, how do you as a group anticipate this natural evolution in advance, so that when the study group disbands everyone is emotionally unscarred, continues as friends, and will remain a valuable resource for each other going forward?

The best thing you can do is set up rules in advance of your very first meeting, such as those I’m about to suggest. But if you are already in a study group that is on the slippery slope toward irrelevance, then initiate the following rules ASAP – the other members will love you for it!

  1. Recognize that every study group has a lifespan of relevance. Make sure that everyone understands this and realizes that the study group cannot go on indefinitely.
  2. Acknowledge that there are only two purposes of the study group:
    1. The primary purpose of the group is to share what works and what doesn’t within each individual practice, so that everyone can learn from the successes and pitfalls others have experienced.
    2. Secondarily, the study group exists to help its members “problem solve’, so that members are not repeating the same errors that others in the group have learned to avoid.
  3. Rotate the location for the study group meetings at each member’s office. The host of each session should profile their practice for the others. They should begin the day’s session with a guided tour of their systems and processing within the business.
  4. Realize that very few study groups will successfully meet more than twice per year. If this sounds too infrequent for your group, meet quarterly for the first year and then convert to one or two times per year after that.
  5. Once you have visited every office, take six months to a year off from the normal rotation. Do not meet just for the sake of meeting. And especially, do not suggest any of the red- flagged rules I described earlier.
  6. Once you have decided upon a time to reconvene, allow for members to withdraw without being chastised. For those who wish to continue, you may desire to add new members or continue as- is.
  7. Start with an end in mind. In other words, once every office has been visited a certain number of times (1-3), the study group should dissolve. Remember, this is not a marriage. It is more akin to a college course. You would not want to keep taking the same class from the same professors over and over again!
  8. Make sure that every member has 100% trust and comfort with the other members. Give each member unilateral veto rights over any new members.
  9. Create a geographical competitive radius around each member’s practice and do not allow another member from within that same radius.
  10. Ensure that everything shared in the study group is confidential. Create a good faith contract or non-disclosure that is signed by the entire group.

*Mark insert conclusion & reference to next 10 coming*

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