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Beta Testing Change in Your Ensemble Practice

I’ve spent decades consulting on practice management issues and had countless conversations with advisers wanting to make some sort of change in their practices. One adviser might want to hire a new employee to increase efficiency. Another might want to move into a new, more upscale office space. Yet another might want to bring other types of advisers into the practice, such as rainmakers or service advisers.

As the trend of shifting from a solo to a group or ensemble practice continues to gain steam in our industry, it’s important to realize some of the challenges going into partnership with other advisers can present.

Barriers to change

A partnership is a bit like a marriage. Your adviser partners come to the table with their own established values, perceptions and opinions. And just because one partner thinks a particular business change is a profoundly good idea, it doesn’t mean another partner (or partners) will share that belief. For example, say you think your firm should incorporate a formal business management process to help you target client acquisition and revenue goals. Your two partners disagree, arguing the following:

  • Why do we need to have a business plan? We know what we’re doing.
  • What’s the point of defining a niche? We’d have to turn down business.
  • There’s no need to create and stick to an ideal client profile.
  • Why is it important to track overhead? We can pay our bills just fine.
  • Documenting processes seems like a waste of time.
  • Who needs production goals? We’re earning enough.
  • Why do we need to create continuity agreements? None of us is going anywhere.

What do you do when you feel strongly about how to run the business more effectively and your partners put up barriers like these? Do you ignore the issue and simply learn to live with the status quo? Do you have a serious life-or-death discussion with them about the future of the firm? Or is there another option?

Beta testing change

Instead of giving up, or beating your head against a wall trying to convince others to see things your way, offer to implement the change you’re seeking in your own corner of the firm as a beta test. Of course, this requires your full commitment to the change. You’ll also need to develop a formal method for measuring the impact of the change you make. After an appropriate period of time, you can then share the results of your beta test with your partners and see if they’re now ready to agree with you.

Here’s an example: Let’s say you want to grow revenue. To do so, all new clients you take on have to meet your ideal client profile. You’ll want to calculate the return on this investment for your partners. You might also want to track how you help prospects who aren’t a good fit, particularly if your partners were adamant about not turning away any clients. The bigger the change you want to make, the longer it will take to document results, so try starting with a small change first, to make your point.

What is the value in this sort of beta test? You get to implement a change you believe in. You eliminate some of the frustration you were feeling. And everyone in the firm moves toward data-driven decision making.

Will this approach work in every situation? Probably not. But it can be a particularly effective technique for positioning specific changes to your partners. After all, results speak for themselves.

Joni Youngwirth_2014 for webJoni Youngwirth
Managing Principal of Practice Management
Commonwealth Financial Network
Waltham, Mass.


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3 Critical Practice Management Areas That Demand Attention

The industry has changed and it is more important than ever to have a plan, not merely to survive, but indeed to thrive in today’s environment. Creating a simple road map can be the difference between growth and stagnation.

At a minimum, we believe that you should consider these three critical questions, commit your ideas to paper and create an implementation plan with time frames and accountability.

1.) How will you drive retention?
Client retention is the foundation for the long-term viability of your firm. You must consistently deliver the appropriate client experience for each of your client segments.

  • Communication: Do you have a systematized client communication plan? Are you communicating value with the right frequency and maximizing your delivery mediums? Are you offering educational opportunities to help clients better understand their plan and the financial terrain?
  • Appreciation: Do your clients know that you appreciate them? Do you need to go beyond birthdays and holidays and deliver more creative or personalized appreciation?
  • Expectations: Do you really know if you are meeting, falling short, or exceeding client expectations? Do you execute surveys or offer service commitment or expectation meetings to review the value of your deliverables? Do clients understand the totality of your offerings?

2.) How will you drive efficiency?
In an increasingly complex industry with expanding requirements, efficiency and scalability are critical to long-term success.

  • People: Are roles and responsibilities clearly defined and aligned? Are you leveraging your talent?
  • Systems: Are all repeated activities systematized? Do you have standard operating procedures documented in a shared folder for all to access? Is your business scalable?
  • Time and technology: Do you really know where and with whom you are spending your most precious resource—time? Technology can be a time-drain or a time-saver. Is every team member maximizing technological resources?

3.) How will you drive growth?
We could all fill our days by simply dealing with the reactive; however, high-performance financial planners stay committed to growth.

  • Organic growth: Do clients consider YOU their primary advice provider? Have you fully served them? Are you developing multiple generational relationships? Where can you leverage your existing relationships?
  • Introductions: Are you referable? Do your clients proactively provide qualified introductions? How robust are your centers of influence? Are you delivering value to partners who have the propensity to connect you with ideal prospects?
  • Marketing: How strong is your brand identity? Who is your niche audience and how can you attract more ideal prospects through off-line and online marketing avenues? Based on your demographics, what type of marketing (advertising, seminars, mail campaigns or event marketing) makes sense for your practice?
  • Expand the team: For firms that are fully systematized but at capacity, you may consider bringing on new advisers/planners as your most vital growth strategy. Be sure to consider your “ideal” candidate and conduct full due diligence so as not to upset the culture of the firm.

What decisions will you make and what actions will you take to drive retention, efficiency and growth in 2017?

Sarah E. Dale, President of Know No Bounds, LLC

 

Sarah E. Dale
Partner
Performance Insights
Atlanta, Ga.

krista_sm

 

Krista S. Sheets
President
Performance Insights
Atlanta, Ga.


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The Value of Time and Experience

I recently visited an adviser whose business had grown very quickly. In a five-year period, he went from one employee to five and his production tripled, easily putting him in the seven-figure range. In comparison with many other advisers with similar businesses, this adviser is 15 years younger, on average and has a commensurate 15 fewer years of industry experience. Listening to his business challenges—especially those having to do with human resources—gave me pause. Did this adviser have more people problems than most or was something else going on?

Getting Better Vs. Getting Used to Things
In considering this young adviser’s situation, I believed one of two things was going on:

  1. He had not yet developed the skills necessary to manage staff, which was actually contributing to his issues.
  2. He had not yet recognized that people issues are an ongoing component of managing a business.

For example, the adviser felt that he needed to revise job descriptions and re-create a compensation system that would more specifically motivate the behaviors he desired. He wanted his employees to take more responsibility for producing error-free work, instead of depending on him to review their work and catch errors. The issue extended beyond his support staff. He had recently brought on a staff CFP® and discovered that the process of guiding and mentoring the young woman required a significant investment of time to help her understand how to apply financial knowledge and theory to clients’ reality. That’s not to mention the time he was spending helping her evolve business development skills. When I asked how much time he was investing in managing the business, he said 50 percent.

But is that really too much? Comparing his story with that of other advisers with similar business scale and capacity, I found that they were far less verbal and seemed less frustrated with their human resource situation. What was particularly thought provoking was that the young adviser had assumed he must be doing something wrong or that there was something wrong with his organizational model.

We’re Never Done
There is no doubt that if we make the effort to improve, we get better over time. We learn how to manage resources—time, money and people—more effectively. What this young adviser had yet to learn was that he was doing just fine as a manager. The reality is that just when we have things lined up to achieve the perfect organization, a lot can change—someone gets sick, leaves for a different job or needs to implement new technology or procedures, which actually causes him or her to be less effective and may even lead to performance issues.

The longer we spend in a leadership position, the more we learn that when things are going well, all we have to do is wait a bit—they’ll change! The good news is that the reverse is also true. When things are not going right from an HR perspective, focusing your attention on the issue can help improve it. The fact of the matter is that we are never done managing our people. And that’s the real value of time and experience.

Joni Youngwirth_2014 for webJoni Youngwirth
Managing Principal of Practice Management
Commonwealth Financial Network
Waltham, Mass.