The Practice Management Trinity
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Washington, DC: “It seems as though I’ve been listening to all this practice management stuff for years,” Joseph groaned. “CRMs and service models aren’t rocket science, but management is speaking out of both sides of its mouth; on the one hand they want us to grow and improve our service model while at the same time they’ve cut support both at the home office and branch level.”
Without knowing the particulars of Joseph’s firm, I got the picture. Like many advisors, he’s being asked to do more with less. I know this might appear to be counterintuitive at first glance, but doing more with less is very doable, if…
If Joseph and advisors of his ilk are able to get their heads out of the sand and start focusing on what they can control. As Joseph indicated in his rant, none of this is rocket science.
I’ve been writing about practice management since authoring How to Build a 21st Century Financial Practice nearly a decade ago. There are some basic principles that at the time were considered best practices and now are viewed as standard practices. These are the practice management basics, all standard practices within the control of any advisor willing to take practice management seriously.
Our practice management mantra revolves around effectiveness and efficiency. I’ve never been a fan of having too many policies and procedures, which can intimidate advisors like Joseph and get others into the “policy-procedure overload” of practice management. Neither is advisable.
The following Practice Management Trinity can help advisors master the basics necessary to expect any success with today’s affluent investor.
Step 1: Inventory/Service Models. Over the past 10 years, advisors have done a terrific job of segmenting their client base, which of course, is their inventory. Many advisors have even learned how to give away smaller clients. However, more needs to be done. The idea is simple: Priority attention needs to be given to those clients generating the most revenue. Easier said than done, I know. So first, take a clinical view of your households and determine which are generating the majority of your annual revenue. So, let’s say you have 150 households (down from 400 households a few years ago); you want to find out which ones are responsible for the majority of your revenue. You’ll never get too far away from Pareto’s 80/20 principle; whether it’s 20 percent of your client base or 20 households, it’s important to have this inventory clarity for every member of your team. Service model clarity also is essential. The days of attempting to be all things to all clients are long gone. Our research tells us that elite teams and elite advisors have two service models; one for those top clients that are generating 80 percent or thereabouts of the revenue, and a scaled-back version for the remaining but still profitable clients. Part of your inventory/service model process involves determining who will serve as the primary relationship manager for each client, and then determining the tasks that other team members will be responsible for in servicing each client. As advisors are moving toward smaller client bases, they need to get away from the A, B, C, and D segmentation and embrace the principle of two service models for a limited inventory of clients.
Step 2: Task Mapping. This is a new phrase that’s evolved from our world of hyperspecialization (see the article in Harvard Business Review, June-July 2011). The idea is to have every member of your team or practice (part-time assistants included) map out the tasks they currently perform. Your role as team leader is to compile a master list of tasks. This can be done by creating an Excel spreadsheet with the first column listing individual tasks, the subsequent columns labeled with individual team member names, with an “x” marking the intersection of team member and task. This exercise is likely to highlight tasks that need to be performed at a higher quality, subtasks that could be delegated, and other tasks that are redundant or unnecessary.
Step 3: Role Clarity. Not only do today’s affluent clients want an advisor who can oversee the multidimensional aspects of their family’s financial affairs, they want greater depth and breadth of knowledge. Today’s practice management is demanding that every role within your team has clarity, involves specific tasks mapped out in Step 2, and includes a knowledge-based component.
Role clarity involves identifying those tasks that require little or no thinking, determining the time involved relative to the importance of the task, and then deciding whether or not any of these tasks could be off-loaded to an intern, part-time assistant, etc.
Poor Joseph was in desperate need of enacting the above Practice Management Trinity. He had well over 200 households, a vague service model at best, tasks that were executed in a reactive mode, very loose role clarity, and yet he was blaming his firm. Ouch! On top of that, he was the primary relationship manager for all of his clients. I was very clear to him that the blame game was contributing to his problem and that this Practice Management Trinity not only was the solution, but that it was completely within his control.
Advisors who are serious about attracting, servicing, and developing loyal affluent clients in this new world had better embrace this. These are practice management basics in our new world.
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