If there’s anything the pandemic has forced us to realize, it’s how well we can rise to any occasion. Businesses have quickly adapted and those who never considered remote work before have started to understand its benefits. As life begins to return to normal, many new and existing business owners are considering whether it's worth opening an office or going back to the office at all.
If you’ve been thinking about going independent and launching your own firm, you’ll need to choose the setup of your new working environment—one that’s ideal for you, your team, and your clients.
Before making any decisions, be sure to work with your firm partner’s compliance team or a securities attorney about your preferred arrangement. While regulations were initially designed with the expectation that employees would be in an office, the Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) have recently adapted to allow for more remote work setups.
Here, we look at the pros and cons of a traditional in-office setting, a remote-only work environment, and a hybrid model that allows for both.
In-Office: The Traditional Approach
The pros:
- Shared devices and supplies. A central location allows employees to share necessary equipment, such as printers, copiers, and office supplies.
- Secure document filing. While you may still want to keep copies of important data within cloud storage, having a secure, in-office area for hard copy files may come in handy during power outages or other emergencies.
- Easier collaboration. People are social by nature, and interactions can become richer in person. A shared space fosters informal conversations, which may lead to significant business discoveries or breakthroughs. When interacting with clients, body language and unspoken cues are part of deciphering mood and disposition. Interpersonal strengths that enable you to attract new business and maintain loyal clients are better exhibited when people are sitting in front of you.
- More accessibility to your team. It’s easy to notice how your employees are doing when you’re in the same building with them. You can see who is overloaded and catch tension that might arise between team members so you can address issues before they become conflicts.
Rallying the troops is also easier when you have impromptu moments to praise a job well done. Small actions that foster camaraderie, like sharing snacks or offering small tokens of appreciation, work better when people are physically together, too.
Most importantly, the model you set for how people are treated and the respect given to each client, prospect, and team member is powerful when others witness it firsthand.
The cons:
- More overhead costs. Opening an office comes with the major expenses of rent and utilities. The need for office furniture and cubicles will also create start-up costs you wouldn’t have if you began your new practice from a home office.
- Commutes that deplete employee time and energy. Starting the day with the frustration of contending traffic may not be a recipe for success for you or your employees. Commuting time can take away from hours that your team could otherwise spend on productive work or relaxing and recharging.
- Top talent may want more flexibility. Expecting staff to be in the office 100 percent of the time may limit the talent you attract. In fact, according to a recent McKinsey report, more than a quarter of survey participants reported they would consider switching employers if their organization returned to entirely on-site work.
- Business scaling challenges. A physical space restricts how far you can expand your practice. Unless you open branch offices or are willing to meet with clients virtually, your growth will be limited to the surrounding area.
Remote Work: A Virtual Experience
The pros:
- Work from anywhere. When all you need is internet and phone connection to be productive, you and your staff will not be tied to one location. You can travel, move to a lower-cost area, or ensure that you never miss another family event while still connecting with your team and your clients.
- Less start-up and overhead costs. A relatively inexpensive home office space can be set up without the need for costly configurations and furniture. While you may need to provide equipment for employees' remote spaces, you won’t have the added costs of rent, utilities, and other expenses that come with running an office.
- Potential for productivity. The minutes or hours you and your staff would otherwise devote to commuting can be used to get more work done. A recent study on remote worker productivity and work trends found that employees are more productive when working from home.
- Expanded talent pool. A truly virtual work environment allows you to look for the best employees, regardless of where they’re located.
The cons:
- Less personal connection with staff and clients. Digital connections can’t fully replace real-life interactions. Tuning in to the needs of your staff and clients can be challenging when you’re only communicating by phone, email, or video conference.
- Team building obstacles. To address the isolation some people feel when working from home, you’ll have to find ways to create team building moments by recognizing accomplishments, expressing gratitude for hard work, or allowing for moments of fun and frivolity. It may be beneficial to plan in-person get-togethers throughout the year to build a connection between team members.
- Regulatory requirements. Certain activities require you to register a location as a branch. For example, if the address is presented to the public (i.e., on business cards or your website), you or a member of your team regularly meet with clients at that location, or records are retained there, it needs to be registered. This will result in added branch fees and subject the location to regular audits.
- Training and professional development complexity. Training new employees on systems and procedures can be difficult over the phone or in a video meeting. It can also be tough for an instructor to spot and address issues when someone falls behind if they cannot watch their progress in person.
Hybrid Model: The Best of Both Worlds
The pros:
- Top employee preference. According to a McKinsey survey, more than half of respondents said they would prefer a more flexible hybrid working model in which employees are sometimes on-premises and sometimes remote. Hybrid work combines the advantages of both environments. Employees and clients will have the ability to meet and connect on-site while also having the flexibility that remote work offers.
- Lower costs. When fewer employees work in the office at once, equipment, desk space, and other necessities can be shared. While you’ll still have to pay rent and utilities for your office, a more modest space can save on costs.
- Flexible company culture. Having a central location for in-person employee get-togethers and important meetings will build a stronger bond while still providing the flexibility many employees want and need. A hybrid model can also make attracting and retaining top talent much easier.
- Client engagement on their terms. No matter how clients want to interact—in-person or virtually—you’ll have the space and resources to accommodate their needs.
- Regulatory flexibility. Under a hybrid framework, your brick-and-mortar office can serve as a registered branch while remote locations may be non-branch offices. You can retain branch office records and conduct mandatory activities (e.g., regular customer meetings) at registered branches. This format can alleviate some of the challenges associated with having multiple registered branches yet provide the flexibility for some remote activities.
The cons:
- Stifled productivity. If your office space is limited enough that people will share a workspace when in the office, they may be less productive. A hoteling workspace limits employees’ options for organization, storage, and working the way they prefer. Employees working too closely can also interfere with client phone calls and meetings if background noise cannot be minimized.
- Hiring pool limitations. If you expect all employees to keep some in-office hours, they will need to be somewhat local. You’ll want to consider whether you are open to letting certain employees work fully remotely while others split their time between in-office and at-home.
- Scattered Team calendar. Keeping track of the days when team members are in the office or at home can be confusing, especially at first. You’ll need a system that designates who is in the office and when—and whether you let your employees decide.
- Regulatory constraints. Having a remote office requires an assessment of the activities and records kept remotely to determine how to meet various regulatory requirements. With two or more locations, you may create some complexity and additional cost versus choosing one model type.
Your Work Environment Will Pave the Way for Success
Only you can decide the most productive way to set up your office. If you’re new to running your own business, you may find it helpful to seek guidance on how to start. A good firm partner has been through it many times, with many other advisors. The lessons they’ve learned can eliminate some of obstacles you might encounter along the way and make this exciting adventure smoother for you, your team, and your clients—whether it’s in person or remote.