by eric
by eric
Advisors need to repackage their service offering and translate it into the language of Gen X and Gen Z.
by eric
Pay Yourself a Salary
Paying yourself a salary and treating yourself like an employee — even if it’s just on paper — is crucial to building a true enterprise. If you don’t separate your compensation as employee from your equity as owner, you will not have a true gauge on profits of the business.
by eric
Today’s Wednesday Wisdom Podcast is for an advisor or advisors within a broker-dealer, who have been thinking about partnering with other advisors for the purposes of forming an enterprise, but have shied away from doing it because it feels impossible or daunting. There are many folks who operate as close to an enterprise as one could possibly imagine, so my message is: there is a way to get more formal about how you explore and leverage your partnership without having to wholesale, change the way you do business, go to another firm, or be recognized as an enterprise. Here are some best practices, tips and recommendations that may help you to approach this challenge a little differently.
Mass scale and customization sounds like an oxymoron; the notion that you can efficiently wholesale produce and deliver a service while still providing each customer with a uniquely tailored experience. It is the success formula for companies like Netflix and Amazon and the driving force behind today’s roboadvice platforms.
As the financial services industry continues to consolidate and private equity money favors businesses that can attain the highest levels of operational efficiency, advisors should be focused on how they can achieve both scale and customization within their own businesses. Here are four practice management to-dos that accomplish both:
1) Utilize a highly customizable CRM.
The most complex CRM systems like Salesforce give businesses the ability to create customized workflows and automate, from the simplest to most complex, business processes. Advisory teams should create multiple workflows across each aspect of the client engagement spectrum, from lead generation to next-gen client nurturing.
For prospects and leads, consider the activity that should be completed prior to a lead becoming a warm lead and ultimately a client. i.e. How many days post-initial introduction should a phone call be made by the assigned relationship manager? How many times should he/she continue to reach out if the initial call goes unanswered? At what point does the lead get dropped into an automated newsletter mailing list?
For current clients, consider the various service tiers for clients of varying demographic profiles. i.e. A business owner client with comprehensive planning needs would trigger a separate workflow than a just-out-of-law-school attorney paying ongoing fees for advice.
2) Integrate technology end to end across the wealth management spectrum.
You can’t possibly scale your business if you have a CRM system that doesn’t speak to your planning software that doesn’t speak to your investment management platform, and so on and so forth.
If you are upgrading systems ensure that integration points exist with all other systems you use. Appoint someone as head of technology (assuming you don’t have a chief technology officer) and empower them to stay in-the-know on best in breed wealth management tools and technology. Invest heavily in client facing tools that enhance the client experience but don’t increase the implicit costs of service (i.e. your time), for example: meeting scheduling apps, client satisfaction questionnaires and virtual meeting tools.
3) Segment clients by common preferences and needs.
Grouping clients together by common needs and preferences allows you to scale the services you provide (i.e. create repeatable workflows and deliverables) while still ensuring clients feel like the deliverable is unique to them. Busy female executives, professionals who own their own businesses, families with special planning needs: build tools, processes and service teams around each of your client groups. In other words, develop a philosophy around how you serve clients in each of these segments. Hire relationship managers or service advisors who can align to and serve each of these segments.
You may be wondering how to handle clients who fall below a certain threshold of assets or revenue. Apply a multi-tier methodology after initially forming each group; each group may have a comprehensive planning option, an asset management or single-issue option, and a fee for advice option.
4) Poll and survey your clients.
Do you know what your clients consider an “exceptional client experience?” Make it a habit of asking them through easy to produce and mass deliver survey tools, like Survey Monkey. Ask a combination of free form questions like: “Describe your best and worst ever client experience,” and multiple-choice questions like, “What type of service experience most appeals to you?” Use the data that emerges from these surveys to make tweaks in workflow and updates to clients’ CRM profile notes.
Running an operationally efficient business today is exponentially harder today than it was thirty years ago. Technology and compliance costs have skyrocketed, wealth management services have become commoditized, and the current inheritors of wealth (women and millennial heirs) are leaving their benefactors’ advisors at alarming rates. Indeed, a bleak picture of what advisor-business owners are currently facing.
On the flip side, the advisors who are actively managing these challenges are positioned to thrive over the next 20 years — especially as wealth transfers and solopreneur advisors tire out. If you are one of these advisors, consider the following three powerful practice management initiatives for next year:
1) Evolve your service and fee structure.
The future holder of wealth looks, thinks and acts differently than the traditional wealth holder you are used to. I cannot stress this point enough. The one size fits all approach of “X% advisory fee covers all wealth management services” will no longer suffice. Advisors need to become more creative with how they hook younger-gen wealth holders who don’t have a lot to invest TODAY but have tremendous potential for tomorrow. Additionally, as fee transparency continues to be at the forefront of clients’ minds, providing simple-to-understand pricing structures that correspond to a clients’ point in the life cycle will be critical. Consider:
2) Be mindful of the implicit costs of service.
Time and time again I have seen businesses plateau because of capacity issues. Bringing on new clients each year will always contribute positively to top line revenue, but almost always has an adverse effect on operating expenses. Identify the hourly rate you and other advisors / client relationship managers in your firm are worth. Assign talent to the various tiers of service accordingly. No exceptions.
And for the clients who are simply no longer profitable to the business – even marginally – consider moving them to a digital service option and charging them only for advice on the go.
3) Create multiple sources of revenue generation.
Most advisory businesses generate the majority of firm revenue from a single source: the founder and primary rainmaker. Create a culture of revenue generation by teaching others to business develop and incentivizing ALL team members to generate revenue. Consider your revenue as the derivative of four sources: prospecting in your target markets’ circles (including digital and social), introductions from current clients, introductions from centers of influence, brand marketing (advertising, content generated by your firm, etc.). If you are the owner of the first source, allow others on the team to take full ownership of the other three.
Introduce these three initiatives into your annual business plan next year and track progress on next year’s P & L.
