5-minute Finance: Leading A Practice With Confidence And Care

By CLAY GILLESPIE
For AdvisorNews 

Ask yourself why you became a financial advisor. Most likely it wasn’t to deal with the logistics of running a practice, but that’s a responsibility and opportunity many financial professionals have. Although managing a practice efficiently can be tricky, at the end of the day, it’s a business and you want it to be operating at peak capacity. After managing my own firm for several years, I’ve discovered a few best practices that can help you succeed in business ownership and even propel it forward.

Let’s Talk Money

As advisors, it’s never in our clients’ best interests to think of clients solely as a means of earning a commission. If you shift your business model to a fees-based approach instead of commission, you can match the cost to the value of advice. This shift means you’re being compensated for your advice, not just selling products, and allows you to align fees for services you used to offer for free.

In establishing a new fee-based structure, ensure prices are fair and fit the services your firm provides. This goes for both raising and lowering prices: pricing too high can lead clients to believe you’re trying to swindle them, whereas setting costs too low can hurt your business and create skepticism. To illustrate this idea, I like to tell a story of when my wife and I were newlyweds, and she owned a small compact car. When it came time to sell the car, I decided to list it significantly below the market price to get it off our hands as soon as possible. After a week we didn’t receive any offers, so I re-adjusted the price to market value, and I received 45 calls within two days. As with this example, placing prices too low can lead potential clients to think there’s something wrong with your services.

Publish your fee schedule on the firm’s website to attract and educate new clients. Some advisors are hesitant to do this, but in an era where clients are most interested in doing their own research, this gives them the information they want and lets prospective clients know you’re professional and trustworthy. Be transparent and remember that clients who see this and recognize your prices are fair for the services you provide are the ones you should be working with.

Managing Growing Pains

As your business grows, it will become more difficult to maintain existing client relationships. If you’re the face of a firm, your work will begin to extend beyond the day-to-day client interactions, and managing those relationships while governing a practice can be overwhelming. At this phase, owners should add new advisors and para-planners, and begin to transition clients to them. It can be challenging to give up these client relationships, but it’s imperative to evolve the relationship from just you and your client to being between the client and your firm. This will allow you to scale your business, and often clients are actually more comfortable when they know there are additional resources and capabilities at the firm they can rely on.

There are a few different options to adding new advisors – whether you hire advisors with existing practices, advisors with experience but no client book or advisors with no experience who you’ll train. Each of these approaches comes with its positives and negatives, but I’ve found that a combination of hiring advisors with existing clients and training newly certified ones is the optimal route. Training advisors with no experience can take a few years, so bring them on when you plan to grow your business in the near future. This way you can show them the ropes and ensure the time spent training them is a rewarding investment.

Don’t Forget The Details

As you add new advisors, you’ll need to establish proper compensation. You could offer a salary, or you could choose to share the revenue from the client file. Our practice chooses to use a combination of both approaches, since offering our advisors an annual salary, along with added bonuses from the client files, keeps advisors feeling secure and appreciated.

It’s also important to sort out who has ownership of each client relationship to ensure consistency, divide of workload and benefits across the team. Having one established point of contact means that clients feel more secure as well, and it provides a reward to those advisors working hard to maintain the relationship.

At the end of the day, managing your own practice can seem daunting, but pricing your services fairly, plus knowing how to properly staff a practice and compensate employees can benefit any firm. With a few simple tweaks, your business can be set up for long-term success. You’ll help clients feel secure and confident in their financial future, keep your employees happy and bolster both your client and employee retention rate.

Clay Gillespie is the Managing Director with RGF Integrated Wealth Management and specializes in retirement income planning. Clay is a Qualifying and Life Member of MDRT and a Top of the Table Qualifier. He lives in Vancouver, Canada.

The views expressed are those of the author and not necessarily those of RGF Integrated Wealth Management, which makes no representations as to their completeness or accuracy.

This article is based off a member presentation at MDRT’s 2019 Annual Meeting. MDRT members can find the full script within the MDRT Resource Zone. To see more presentations like the one that inspired this article, MDRT members can register for the MDRT Global Conference in Sydney, Australia, taking place September 1-4.