The Reality Of Being Done: How Do You Know When You’re Done Growing Your Practice?

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May 1, 2008

866 words

The Reality of Being Done: How do you know when you're done growing your practice?

Terrance J. O'Hara

What happens when an advisor has completely optimized his or her business? This question was asked by an advisor in 2000 at a workshop led by Bill Bachrach, founder and chairman of Bachrach & Associates Inc. (BAI). Bachrach thought for a moment and said, "I guess you're done." So began the concept of Being Done, the most controversial and misunderstood principle of BAI's Values-Based Financial Planning. Advisors and managers are frightened by it. Yet we're sure to experience it if we optimize our practices.

Bachrach describes Being Done as the point at which your practice has evolved to a stage that you serve a finite number of clients and no longer have to spend time marketing yourself. This lets you redirect marketing time toward serving your clients. Many advisors and managers misinterpret this to mean they should stop growing their client base. Being Done is a reality check. It is driven by the relationship between quality and time.

QUALITY AND TIME

Quality is a controllable element of business. You determine the level of quality you want the market to associate with your performance (or you embrace the level of quality your firm establishes, if you're not independent). Delivering quality requires a certain amount of time.

Time, however, is not controllable. There are only 168 hours in a week. It takes time to deliver your firm's level of quality, and that means you can only serve a finite number of clients.

You will reach a saturation point, when you exhaust the number of hours you have to serve your clients. To serve more clients means you have to either degrade the quality of your service or create more time. Degrading the quality of your service could damage your reputation and cause client attrition. And you can't create time without creating a serious work/life imbalance.

The "old-world" approach is predicated on the idea that "all revenue is good revenue." In fact, growth is only good if it is profitable, and damaged reputations, as well as client and advisor attrition, carry costs.

The reality is that good business is not all about revenue. It's about establishing a high trust relationship with your clients and delivering a consistent quality of service. That drives practice optimization and profitable growth. The "new-world" model recognizes that consumer expectations are changing. Consumers demand more service because products are now commodities. A firm's point of departure is based on how well it serves its clients.

In the old-world model, clients only entrust 20% to 25% of their financial needs to any one advisor, relying on four to five advisors instead. The new-world model focuses on developing a high trust relationship with clients, consistently delivering high-quality services, and growing by qualified referrals. This way, you grow faster and more profitably, reduce client attrition, sustain profitability, and lower your compliance exposure because emphasizing quality over marketing reduces errors. By definition, when you run out of time and refuse to degrade the quality of your services, you are "done."

What if you manage multiple advisors? From a corporate perspective, you can create time by adding more advisors who follow the new-world model. As they optimize their contribution to your firm and it grows profitably, they preserve your firm's reputation. The key is to keep them focused on Being Done.

Being Done has another parameter: You're not done until you only serve clients who fit your ideal client profile.

This is another break from the old paradigm in which all clients are good clients. To optimize your practice, develop a short list of criteria that clearly identifies your ideal client. This way, you can clearly communicate the related characteristics to the clients you serve and help them refer appropriate individuals. This helps you lower the risk of attrition of both parties. Some clients don't merit being served by a direct channel. Large firms should provide different "channels of distribution" to serve those needs. For example, use 800 numbers to serve clients who consistently seek, but do not necessarily follow, advice; or create website applications to serve the needs of do-it- yourselfers.

In the new-world paradigm:

* Time is uncontrollable and you will run out of it.

* Only through expansion (or other channels) can you create business time without sacrificing personal time.

* You can identify the span and quality of services you provide.

* You can identify the types of clients you enjoy serving.

* You can communicate your ideal client profile to your existing clients.

* Your time is better spent serving clients than prospecting for them.

* You can identify other advisors (or channels) to serve those clients who don't fit your ideal client profile.

* You are a professional and deserve to enjoy what you do and take pride in how you do it.

If you can admit to the above, you have taken the first step on your way to Being Done.

Terrance J. O'Hara is president and CEO of Bachrach & Associates. Visit www.BAIVBFP.com or call (800) 347-3707 for more information. (c) 2007 Financial Planning and SourceMedia, Inc. All Rights Reserved. http://www.Financial-Planning.com http://www.sourcemedia.com

May 1, 2008