Four Ways Custodians Believe RIAs Can Improve Their Business
September 10, 2012 5:14 PM
Four Ways Custodians Believe RIAs Can Improve Their Business
To become more successful, most small business owners must begin by acknowledging all of the areas in which their business falls short. For independent advisors, and many entrepreneurs, this can be a tough thing to assess.
Never fear. A great place for RIAs to get assistance improving their business is from custodians.
David Canter, an executive vice president at Fidelity Institutional Wealth Services, Richard Whitworth, a senior manager of practice management at TD Ameritrade Institutional, Nick Georgis, a vice president of advisor services at Charles Schwab, and Karen Novak, chief operating officer of Pershing Advisor Solutions, shared some advice on ways advisors can improve their business.
Mike Byrnes is the founder of Byrnes Consulting. Read more at ByrnesConsulting.com and follow @ByrnesConsultin.
Never fear. A great place for RIAs to get assistance improving their business is from custodians.
David Canter, an executive vice president at Fidelity Institutional Wealth Services, Richard Whitworth, a senior manager of practice management at TD Ameritrade Institutional, Nick Georgis, a vice president of advisor services at Charles Schwab, and Karen Novak, chief operating officer of Pershing Advisor Solutions, shared some advice on ways advisors can improve their business.
Mike Byrnes is the founder of Byrnes Consulting. Read more at ByrnesConsulting.com and follow @ByrnesConsultin.
The Hip Bone is Connected to the Leg Bone
Too many advisors make decisions without considering how one choice can impact many parts of their business.
"Whenever you are making a decision about your practice you have to look at things holistically," said David Canter of Fidelity. "How to do I grow faster? It goes back to all the elements of running a good business. Do you have the right strategic plan? Do you have the right target market?"
Canter said that he believes that strategy is easy, but sometimes execution is more important. He said that Fidelity works with advisors to find out what is working and what is not. One example is their "time in motion" study, in which they find out how a company's principals are spending their time. By tracking how (and where) resources are allocated, firms can better segment clients and think long-term about their hiring strategy.
From this analysis, Fidelity helps RIAs with strategic planning, goal setting and resource allocation on the technology and operations side.
"It goes back to people," Canter said. "They are the most important resource. It is important the staff focus on the strategic mission and their roles and responsibilities."
"Whenever you are making a decision about your practice you have to look at things holistically," said David Canter of Fidelity. "How to do I grow faster? It goes back to all the elements of running a good business. Do you have the right strategic plan? Do you have the right target market?"
Canter said that he believes that strategy is easy, but sometimes execution is more important. He said that Fidelity works with advisors to find out what is working and what is not. One example is their "time in motion" study, in which they find out how a company's principals are spending their time. By tracking how (and where) resources are allocated, firms can better segment clients and think long-term about their hiring strategy.
From this analysis, Fidelity helps RIAs with strategic planning, goal setting and resource allocation on the technology and operations side.
"It goes back to people," Canter said. "They are the most important resource. It is important the staff focus on the strategic mission and their roles and responsibilities."
Human Capital is Unfocused
In almost every firm, employee compensation is by far the biggest expense, it is also the biggest investment.
When it comes to human capital, TD Ameritrade's Whitworth says advisors are somewhat reactionary and are not spending enough time focusing on hiring and training.
For example, if an RIA has employee turnover, most will rush to fill the position, without thinking strategically about positioning the firm for increased success.
According to TD Ameritrade's latest RIA Sentiment Survey, 87% of RIAs surveyed view themselves as "excellent," "very good" or "good" people managers, yet 82% of RIAs spend less than five hours a week on staff management and HR-related tasks.
"A disconnect exists," Whitworth said. Advisors view themselves as good managers, but are not spending any time managing people. "It is an area where advisors need to spend more time," he said.
Whitworth said, "If products and advice become commoditized, people are a manner where you can truly differentiate yourself. Hiring, firing, training and development are top challenges."
Advisors have a real opportunity to build high performing teams that are a firm's best asset.
TD Ameritrade sees that by having a high performing team it increases firm growth and the likelihood of finding an internal successor. Whitworth said TD Ameritrade gives advice all along the spectrum: assessing the needs of an organization, designing the organizational structure, building the team and leading it.
When it comes to human capital, TD Ameritrade's Whitworth says advisors are somewhat reactionary and are not spending enough time focusing on hiring and training.
For example, if an RIA has employee turnover, most will rush to fill the position, without thinking strategically about positioning the firm for increased success.
According to TD Ameritrade's latest RIA Sentiment Survey, 87% of RIAs surveyed view themselves as "excellent," "very good" or "good" people managers, yet 82% of RIAs spend less than five hours a week on staff management and HR-related tasks.
"A disconnect exists," Whitworth said. Advisors view themselves as good managers, but are not spending any time managing people. "It is an area where advisors need to spend more time," he said.
Whitworth said, "If products and advice become commoditized, people are a manner where you can truly differentiate yourself. Hiring, firing, training and development are top challenges."
Advisors have a real opportunity to build high performing teams that are a firm's best asset.
TD Ameritrade sees that by having a high performing team it increases firm growth and the likelihood of finding an internal successor. Whitworth said TD Ameritrade gives advice all along the spectrum: assessing the needs of an organization, designing the organizational structure, building the team and leading it.
A Comparison Can Make All the Difference
Advisors often struggle with knowing how they are performing relative to their peers. To help, Schwab spends a lot of time with RIAs examining the benchmarking study.
"Advisors need to understand their productivity," Georgis said.
Schwab works with RIAs to understand their fee structure and growth rates. By going through this process, Georgis said that RIAs get a better understanding and can answer the questions, 'Where am I strong and where am I weak? Where do I need to focus?'
Schwab also helps advisors develop a written strategic plan. Though creating a proper assessment can take a large amount of time, RIAs that go through the process come out miles ahead of those that have not gone through it.
"In the old days, it was about practitioners trying to maximize revenue," Georgis said. Schwab is helping them grow past thinking like an individual practitioner.
"Advisors need to understand their productivity," Georgis said.
Schwab works with RIAs to understand their fee structure and growth rates. By going through this process, Georgis said that RIAs get a better understanding and can answer the questions, 'Where am I strong and where am I weak? Where do I need to focus?'
Schwab also helps advisors develop a written strategic plan. Though creating a proper assessment can take a large amount of time, RIAs that go through the process come out miles ahead of those that have not gone through it.
"In the old days, it was about practitioners trying to maximize revenue," Georgis said. Schwab is helping them grow past thinking like an individual practitioner.
Operational Efficiency and Growth
Most advisors find out the hard way that it is difficult to grow if the right staff and systems are not in place.
Novak said Pershing has launched a customer productivity report that shows RIAs how they can improve their operational efficiencies by comparing their practice with others.
Pershing creates a best practice report card detailing how an RIA works best and where they can improve.
To better grow, Pershing uses a client development plan with its advisor, led by relationship managers, to increase long-term success. It can include marketing opportunities, a growth model and pricing plan. Mergers and acquisitions can be another focus area, as acquiring a practice or tucking in a breakaway broker can make good sense for accelerated growth.
"We work with them to focus on the structure of the organization to be well positioned for future growth," Novak said. In many instances she admitted that her team has the uncomfortable role of getting RIAs to take a step back and change their roles to spur future growth.
Mike Byrnes is the founder of Byrnes Consulting. Read more at ByrnesConsulting.com and follow @ByrnesConsultin.
Novak said Pershing has launched a customer productivity report that shows RIAs how they can improve their operational efficiencies by comparing their practice with others.
Pershing creates a best practice report card detailing how an RIA works best and where they can improve.
To better grow, Pershing uses a client development plan with its advisor, led by relationship managers, to increase long-term success. It can include marketing opportunities, a growth model and pricing plan. Mergers and acquisitions can be another focus area, as acquiring a practice or tucking in a breakaway broker can make good sense for accelerated growth.
"We work with them to focus on the structure of the organization to be well positioned for future growth," Novak said. In many instances she admitted that her team has the uncomfortable role of getting RIAs to take a step back and change their roles to spur future growth.
Mike Byrnes is the founder of Byrnes Consulting. Read more at ByrnesConsulting.com and follow @ByrnesConsultin.
