Maintaining your most valuable asset

The key to success in financial planning is the ability to provide quality service. And service is dependent on the quality of your staff.

However, anyone who has been looking for staff over the last couple of years will know — it’s an employee’s market out there.

A low unemployment rate means it’s next to impossible to attract good people within a reasonable budget, not to mention training costs once they are on board.

In a financial services practice, you are in competition with the banks and insurance companies offering huge bucks for graduate level positions plus bonuses for what may seem very little performance return.

This isn’t only frightening for practices looking to employ new staff, it’s very scary for any practice wanting to retain current staff.

Organisational structure

Good employees like to know where they fit in and how their contribution aligns to the business goals. Often this is made clearer to advice staff than support staff.

Given that good administration people are always thin on the ground, try to overcome this by including every member of the team.

A good organisational structure that shows clear reporting lines and decision-making roles are a great start to educating all staff on how the business operates and what part they play in the whole.

If your organisational structure does not delineate between roles or reporting lines then you are only providing confusion to your employees.

You may be confident that everyone knows how the business operates, but this is a common mistake principals make.

Your employees often have a very different view of the business to you though they usually won’t tell you this.

If it is not clearly communicated and provided in a written document assume your employees do not understand the decision making process, reporting lines and roles in your business.

Endeavour to make it clear to all through an organisational structure diagram and accurate, up to date job descriptions for each role.

Front office roles (advisers, revenue generators) should be separated in the structure from back office roles (paraplanning, client services) so it is emphasised that the front office roles should spend as much time with clients as possible.

Minimising an adviser’s need to perform administrative tasks will improve revenue.

Of course this doesn’t mean they get out of completing comprehensive client notes or ensuring support staff have all the information required to implement any advice given.

Job descriptions

With an organisational structure diagram staff know where they fit into your business, but with clearly documented and updated job descriptions they will know exactly what they are expected to do to contribute to the bigger picture.

Job descriptions for each of your staff ensures there is a clear understanding of the role to be performed and how this performance will be monitored and reviewed. Job descriptions should clearly summarise the tasks and responsibilities required of that role.

The position description should be presented as an attachment to the employee contract, so the employee knows from the very start what is expected of them.

Include key performance indicators (KPI) that can be measured in job descriptions so there is one source for you and the employee to go to for performance management and reviews.

Career planning

The next step in retaining employees is ensuring your business can cater to their future plans. Is there room for administration staff to train to become practice managers, advisers or paraplanners? Is there a possibility for staff to take equity in the business in the future? Are there advisers currently working in the business that could become your successor when you want to retire?

If you have identified career development plans for staff let that person know through a formal performance review. If not, ensure you hold regular formal reviews in order to allow staff to tell you of their plans.

Most people want to be listened to, so just giving them a forum to speak and encouraging them to be open will give you a great head start in any resource planning for the next few years.

Training and development

If an employee is keen on training, such as the enrolling in a Diploma of Financial Planning, you can encourage them to stay within your business by offering to pay for the training.

Any business related training is going to be a plus for your business and may mean that recruiting you thought you would have to do outside can be done internally.

Growing people through the business by supporting their development will benefit the business just as much as it does the individual.

Rewarding performance

An incentive scheme shows a real commitment to the value of staff within the organisation and recognition of their contribution to its success. But it will only be an incentive to better performance if it is linked to measurable objectives for both the team and the individuals. No one will be motivated by bonus payments that are made as a matter of course.

Your incentive scheme should reward individuals for three levels of performance.

First, for performing their role, according to their job description, with excellence and above expectations. Don’t reward poor or adequate performance. This will not only undermine the entire scheme, but it will give others the impression that their outstanding efforts are pointless.

Second, help each individual set development objectives for reaching goals outside their regular roles, for example gaining qualifications or learning new tasks within the business.

Third, link individual rewards with the overall business goals. This not only gives you the option to reward staff more if the business performs better than expected or not go broke if it doesn’t reach objectives, but also shows each individual how their performance contributed to the business as a whole.

Succession planning

Planning to exit the business takes almost as much time, effort and consideration as setting up a business from scratch. The principal’s extraction from the practice will take a lot of communication with clients, staff and the new owner. Succession is made much easier if the new principal or principals are already in the business. This is also a fantastic way to keep valued (and most likely sought after) staff.

Even if your plans don’t include retirement in the next few years, getting a structure in place that eases others into ownership of the business is a good risk management strategy as it reduces the dependency on one principal. It also allows you to recoup some money from your investment in the business.

Remember, equity is not just an option to be offered to front office staff. A good practice manager, for example, will be the hub of your business. They would already know most of the machinations of the business so moving into ownership and even possibly directorship is not a big stretch.

People management is not an easy part of owning a business. Even with all the right structures in place things can go awry.

However, people really are the crucial element in your business. Your clients depend on them, your revenue depends on them, and you depend on them.

Putting an organisational structure that works and is clear to all in the business is worth the effort.

Giving everyone job descriptions as they commence work will ensure you have a head start in managing them.

Reward good performance and don’t let underperforming staff get away with it.

Invest in your people and motivate them to develop their skills and experience within your business so your business can benefit from their increasing abilities.

Allow your people to invest in your business and grow it with you and perhaps even beyond you.

People are your most valuable asset, but like all assets they need careful maintenance and management to reap the best rewards.

Graham Peatey is the managing director of The Encore Group. Encore is a practice management specialist that services the financial advice industry.