5 Top Practice Management Tips
April 4, 2012 12:06 PM
5 Top Practice Management Tips<br><br>
Managing a practice is no simple task. Thats why Financial Planning regularly talks to heavyweights in the planning industry to get their top practice management ideas.
In this interactive slide show, five planning industry executives discuss everything from the best ways to explain the value of your advice to clients to how to attract and keep good employees.
In this interactive slide show, five planning industry executives discuss everything from the best ways to explain the value of your advice to clients to how to attract and keep good employees.
1. <b>David Grant</b>, financial planning analyst, Vantage Financial Partners
Three Ways To Keep Young Employees At Your Firm
Set realistic expectations
Success for young planners will not come overnight. Learning how to talk to clients and understand your own biases takes years. Companies that have made this clear from the onset have had better success retaining employees.
Give opportunities
Give your talented young people projects (or encourage them to design their own) that go beyond the scope of their as-is job description. They can find ways to improve the company, build a personal marketing plan, prospect a target demographic or become an expert in an area of interest, for example.
Reward them well
Dont risk letting another company poach your talent. Talk to your employees to discuss your expectations and theirs in terms of salary. If an employee you feel is really valuable expects 5% more than what you anticipated, pay more.
Not sure how many sick days or vacation days to give? Make it unlimited. Anyone who will abuse this system doesnt belong at your company.
Set realistic expectations
Success for young planners will not come overnight. Learning how to talk to clients and understand your own biases takes years. Companies that have made this clear from the onset have had better success retaining employees.
Give opportunities
Give your talented young people projects (or encourage them to design their own) that go beyond the scope of their as-is job description. They can find ways to improve the company, build a personal marketing plan, prospect a target demographic or become an expert in an area of interest, for example.
Reward them well
Dont risk letting another company poach your talent. Talk to your employees to discuss your expectations and theirs in terms of salary. If an employee you feel is really valuable expects 5% more than what you anticipated, pay more.
Not sure how many sick days or vacation days to give? Make it unlimited. Anyone who will abuse this system doesnt belong at your company.
2. <b>Alex Murguia</b>, managing principal of McLean Asset Management, CEO of inStream Solutions
Explain Clearly The Value Clients Are Getting From You
As an industry, we dont demonstrate our value proposition. Although advisors provide great value, if you were to ask almost any advisory firm, How many of your clients have achieved their objectives? I doubt that many would answer with any precision. If you were then to ask, How are your current clients doing relative to their objectives right now? I also doubt any advisors would really know that answer.
I find this very troubling and unbelievable that we as an industry have not done a better job. Lets juxtapose that with UPS. They would be able to tell you instantly and to the foot where all their packages are.
If we cant demonstrate our value proposition, then we have not met our value proposition.
As an industry, we dont demonstrate our value proposition. Although advisors provide great value, if you were to ask almost any advisory firm, How many of your clients have achieved their objectives? I doubt that many would answer with any precision. If you were then to ask, How are your current clients doing relative to their objectives right now? I also doubt any advisors would really know that answer.
I find this very troubling and unbelievable that we as an industry have not done a better job. Lets juxtapose that with UPS. They would be able to tell you instantly and to the foot where all their packages are.
If we cant demonstrate our value proposition, then we have not met our value proposition.
3. <b>Deena Katz</b>, chairman of Evensky & Katz, associate professor of personal financial planning at Texas Tech
Employees, Not Just Owners, Need to Prepare For Succession
How do you prepare to be a successor? Seven steps:
Figure out what your career path is where youre working now
Are you working at a firm that has a defined career path with a possibility for you to become involved in management? Are there potential partnership opportunities? If the path is not clear, make an appointment with your employer to talk about advancement opportunities.
Assuming youre in the right place, set goals with your employer
List the responsibilities you will need to accept and perform well before you can move on to the next step. Be sure these are time-specific.
Be a leader
Listen to others around you. Act fairly and ethically at all times. Ask for help when you need it and offer to help others when they do, even if they dont ask.
Bring new clients to the firm
Do this even if its not part of your job responsibilities. Show that you know that growth is important to the survival of the firm.
Be active in your community
You can start by taking an active role in your professional organizations.
Expect to start early and stay late
Set aside a period of time each week to devote to your professional and personal growth. Read management books, articles and other materials on a regular basis and consider how you might use some of these tools in your work.
Ask for more responsibilities
If youre already starting to meet your short-term goals you set, add some more. Perhaps you can participate in the firms investment committee or take responsibility for researching and installing that new software the firm needs.
If you do all of these things, even if you find this is not the place for you later on, you will be well positioned and valuable to someone else who is looking for a next generation partner.
How do you prepare to be a successor? Seven steps:
Figure out what your career path is where youre working now
Are you working at a firm that has a defined career path with a possibility for you to become involved in management? Are there potential partnership opportunities? If the path is not clear, make an appointment with your employer to talk about advancement opportunities.
Assuming youre in the right place, set goals with your employer
List the responsibilities you will need to accept and perform well before you can move on to the next step. Be sure these are time-specific.
Be a leader
Listen to others around you. Act fairly and ethically at all times. Ask for help when you need it and offer to help others when they do, even if they dont ask.
Bring new clients to the firm
Do this even if its not part of your job responsibilities. Show that you know that growth is important to the survival of the firm.
Be active in your community
You can start by taking an active role in your professional organizations.
Expect to start early and stay late
Set aside a period of time each week to devote to your professional and personal growth. Read management books, articles and other materials on a regular basis and consider how you might use some of these tools in your work.
Ask for more responsibilities
If youre already starting to meet your short-term goals you set, add some more. Perhaps you can participate in the firms investment committee or take responsibility for researching and installing that new software the firm needs.
If you do all of these things, even if you find this is not the place for you later on, you will be well positioned and valuable to someone else who is looking for a next generation partner.
4. <b>Pat McEvoy</b>, president of Woodbury Financial Services
Before Changing Broker-Dealers, RIAs Should Ask Themselves These Questions
Why are you leaving?
Why youre leaving is as important to know as where youre going. The same things that are making you want to leave are the things you need to look into, so you dont end up in a similar situation and feel the need to leave again.
So the first question you might want to ask yourself is: What are the major issues within your practice causing you to find that the current broker-dealer is not a good fit? There usually are just a couple of reasons advisors decide to leave a firm the first might be that the firm no longer lines up with your business, and the second would be the culture.
Once youve answered that question, then decide if you want to make a move to an independent firm, or to a wirehouse or a bank.
Whats the ownership structure of the new firm?
Is it owned by private equity, publicly traded or owned by a parent company, for example? How does that ownership structure fit in with your vision of where youd like to be?
What do you feel you need to be better at?
Whats missing, or whats the flat spot in your practice? Maybe you want to expand into estate or tax planning, or have better technology? See if the new firm is a good fit, given what youre trying to build into your own practice.
What charges and and expenses will you be facing at the new firm?
Many firms have considerable fees that are applied across the board. Look at the non-revenue income of a firm to determine if those expenses are fair and reasonable. Determine if the firm is making a profit on your practice in ways that dont support your business model.
What is the long-term sustainability of the firm? What if there are lawsuits? The answers to those types of questions will give an advisor a perspective about the type of firm theyre joining.
What kind of communication strategy has the firm developed?
Its important to make sure the firm does have a communication strategy in place. At Woodbury, were very persistent in helping our reps and advisors be good at communication, setting up automated ways for them to notify clients if something unexpected comes up like a natural disaster. If they become injured, we have systems for notifying clients as well. Its hugely important to find a firm that will support you in keeping in touch with all your clients.
What compliance tools are offered by the broker-dealers investment advisory platform?
Independent RIA firms are feeling the pressure to comply more and more, and see advantages in affiliating with broker-dealers who can offer the same support at less cost thanks to scale than it would be for the RIAs alone.
Why are you leaving?
Why youre leaving is as important to know as where youre going. The same things that are making you want to leave are the things you need to look into, so you dont end up in a similar situation and feel the need to leave again.
So the first question you might want to ask yourself is: What are the major issues within your practice causing you to find that the current broker-dealer is not a good fit? There usually are just a couple of reasons advisors decide to leave a firm the first might be that the firm no longer lines up with your business, and the second would be the culture.
Once youve answered that question, then decide if you want to make a move to an independent firm, or to a wirehouse or a bank.
Whats the ownership structure of the new firm?
Is it owned by private equity, publicly traded or owned by a parent company, for example? How does that ownership structure fit in with your vision of where youd like to be?
What do you feel you need to be better at?
Whats missing, or whats the flat spot in your practice? Maybe you want to expand into estate or tax planning, or have better technology? See if the new firm is a good fit, given what youre trying to build into your own practice.
What charges and and expenses will you be facing at the new firm?
Many firms have considerable fees that are applied across the board. Look at the non-revenue income of a firm to determine if those expenses are fair and reasonable. Determine if the firm is making a profit on your practice in ways that dont support your business model.
What is the long-term sustainability of the firm? What if there are lawsuits? The answers to those types of questions will give an advisor a perspective about the type of firm theyre joining.
What kind of communication strategy has the firm developed?
Its important to make sure the firm does have a communication strategy in place. At Woodbury, were very persistent in helping our reps and advisors be good at communication, setting up automated ways for them to notify clients if something unexpected comes up like a natural disaster. If they become injured, we have systems for notifying clients as well. Its hugely important to find a firm that will support you in keeping in touch with all your clients.
What compliance tools are offered by the broker-dealers investment advisory platform?
Independent RIA firms are feeling the pressure to comply more and more, and see advantages in affiliating with broker-dealers who can offer the same support at less cost thanks to scale than it would be for the RIAs alone.
5.<b>Matt Matrisian</b>, director of practice management for Genworth Financial Wealth Management
How to Analyze the Profitability of Your Client Segments
Planners may know what different client groups they serve, but too often they arent using that information to change their practices accordingly. Very few advisors, once theyve gone through the exercise of client segmentation, then go and make changes within their practices as a result of this exercise. And just because advisors analyze their clients by segment doesnt mean they understand the profitability of their client segments or know what type of service model to use for each segment.
So how to figure out the profitability of each client segment? Advisors need to do a time analysis. Where are they spending their time? How is their staff spending their time? What clients are they spending time with? Set up a basic grid by individual client. Give the grid to all the staff.
Each advisor should write down the amount of time he or she spends with each client, including breaking down all the different ways of engaging with the client, such as meetings, meeting preparation, answering questions, and so forth. Advisors should do that for about a month. Then you can see if youre spending a lot of time with clients you think of as your most profitable clients lets call them A clients or with 'C' and 'D' clients.
From there advisors can start to break down, based on their overhead, what the profitability of that relationship actually is.
Once advisors start to analyze their businesses from a profitability perspective, they start to see that their larger client relationships are subsidizing their smaller ones, to a large extent. That becomes a bit of a challenge. The smaller relationships are using a significant amount of capacity and resources within that business. These resources could be better spent on targeting ideal clients or potentially increasing the revenue stream.
Planners may know what different client groups they serve, but too often they arent using that information to change their practices accordingly. Very few advisors, once theyve gone through the exercise of client segmentation, then go and make changes within their practices as a result of this exercise. And just because advisors analyze their clients by segment doesnt mean they understand the profitability of their client segments or know what type of service model to use for each segment.
So how to figure out the profitability of each client segment? Advisors need to do a time analysis. Where are they spending their time? How is their staff spending their time? What clients are they spending time with? Set up a basic grid by individual client. Give the grid to all the staff.
Each advisor should write down the amount of time he or she spends with each client, including breaking down all the different ways of engaging with the client, such as meetings, meeting preparation, answering questions, and so forth. Advisors should do that for about a month. Then you can see if youre spending a lot of time with clients you think of as your most profitable clients lets call them A clients or with 'C' and 'D' clients.
From there advisors can start to break down, based on their overhead, what the profitability of that relationship actually is.
Once advisors start to analyze their businesses from a profitability perspective, they start to see that their larger client relationships are subsidizing their smaller ones, to a large extent. That becomes a bit of a challenge. The smaller relationships are using a significant amount of capacity and resources within that business. These resources could be better spent on targeting ideal clients or potentially increasing the revenue stream.
