Ask a business coach about sanity

Financial planners may have a far higher success rate than most other small businesses, but there’s still plenty of room for improvement. Zilla Efrat asks some of the industry’s “coaches” just what advisers are doing wrong — and how they can do better.

Question: What is the definition of sanity? Answer: To keep doing what you have always done and expect things to change.

This is a question that Malcolm Payne, managing director of Malcolm Payne & Associates, asks his clients.

Indeed, Payne is one of a growing number of "business coaches" who are helping financial planners to turn their practices into highly profitable businesses.

They are in demand, it seems, because, while financial planners are good at telling their customers how to run their affairs, they are often not that good at running their own affairs.

Many also need some hand holding as they try to keep pace with the rapid changes sweeping across their industry, touching everything from products and technology to commissions and the way advisers are regulated.

"The most typical mistake that financial planners make is that they do not play to their strengths," says Jim Stackpool, another coach and managing director of Strategic Consulting and Training.

"Their strengths are usually in advising clients and devising strategies, but they end up managing their businesses and that isn't their business.

"We get them to delegate their weaknesses. That's because those who don't shine will become cogs in some else's bigger machine."

Tony Stephens, newly appointed national business coach for Zurich Financial Services Australia, adds: "All too often, the key revenue generator of a small business gets bogged down in operational issues, like renewing leases and looking after IT issues, at the expense of more profitable activities, like seeing key clients.

"By appointing a practice manager to look after routine business matters, advisers can free up their time to see more 'A' class clients, improve their profile in the marketplace and hone their skills through educational courses."

"You'll never find an orthopaedic surgeon operationally managing his own practice and neither should you," Stephens says.

Payne believes that the delegation should also extend to the services financial planners offer their clients.

"My attitude is that not many people, if any, can look after all the needs of high net worth individuals," he says.

He notes that this would entail helping clients keep their money, enlarge it, protect it and dispose of it and requires skills as diverse as accounting and tax advice, planning, risk management and estate planning.

"We have to accept what we are good at and then, associate with people who are good at what we are not."

He adds: "My philosophy is that the money is to be made in the planning. It's the old story. People tend to rush in from all areas. They don't think."

"Planning is often paid lip service to and not aimed at practical business improvements," concurs Productivity Profits director Barbara Hawes, noting that the way to deal with this is to put in action type criteria which must be delivered on.

Both she and Payne believe that one of the biggest mistakes advisers make is not seeing the big picture - that is, being task driven and approaching things in a myopic way.

"They have a tendency to take an example put out by the industry as the right thing to do and not to put this through the business to see whether it is right for them," Hawes says.

Another error typically made by financial planners, say the experts, is that they do not define or segment their target market.

Payne says: "Their market isn't just everyone who needs planning. They must categorise it into segments and then they must try and reverse the old 80:20 rule (where they spend 80 per cent of their time on clients who only bring in 20 per cent of their income)."

"Financial planners operate in "yes" mode. They think that all business is good business, but they cannot be everything to everyone," Stackpool adds.

He says planners are usually "one man" shows and the trick is to get them to focus on building a team.

They also make the mistake of trying to minimise all costs instead of maximising value. For example, instead of trying to squeeze the salary down of a potential employee they should pay more to hire a good person who can generate much more income, Stackpool says.

Jim Stackpool, managing director of Strategic Consulting and Training.

"We go into a business with turnover of about $500,000 to $1 million and then try and double that while reducing the time the principal puts in," says Stackpool.

He started his company in 1992 after seeing an opportunity to "get more addicted to the follow up." It now prides itself on implementation: holding clients' hands and keeping them accountable to what they should be doing

Malcolm Payne, managing director of Malcolm Payne & Associates

"I help advisers progressively become better and better at what they do," says Payne, who has 30 years experience in this business and boasts clients like Zurich and AMP.

"I get a group of advisers together and we lock ourselves up for a few days four times a year. We examine where the financial planners are different and what their value adds are."

Tony Stephens, national manager coaching at Zurich Financial Services Australia

"Advisers don't spend enough time on strategic business planning to ensure their personal objectives are in alignment with the direction in which their business is going," says Stephens, who has worked in strategic marketing roles for the past 10 years. He is now responsible for training a state-based team to provide a one-on-one coaching service to independent advisers.