Taking a business to the next level

Leo Menkens & Associates, part of theCharter Financial Planninggroup, suffered from a common problem among many groups: the principals were tied up in administration rather than doing what they were good at — financial planning.

The practice was already operating with a large client base and generating gross revenues of about $750,000 a year.

AXAdealer groups have been running business coaching support through its dealership practice managers for a couple of years and these have focused on areas such as business analysis and improvement processes.

Charter national manager Bruce Birchall says the challenge for the practice manager was to ensure Leo Menkens’ earnings were maintained during the business improvement program.

“The business coaching program provides the practice managers with the skills and tools to implement business improvement activities, which are based on 10 key business drivers,” he says.

“In this case, the manager focused on the human resources business driver with the objective of the practice becoming a viable, long-term growth business.”

The Leo Menkens practice has been with AXA , and prior to that, National Mutual, for more than 12 years.

It started by advising on risk, superannuation and estate planning, but in the last three years has branched out into financial planning.

There were three directors of the company who were financial planners, but a new structure that separated administration from the core business was achieved by a new organisational structure.

“The first stage of the business improvement program was to conduct a review of the current organisational structure and assess if that met the needs of the business today and in the future,” Birchall says.

“Strategic questionnaires were used to identify the type of organisational structure needed for the continued growth and development of the business.”

The first stage of the review mapped out what had to be done and how it was going to be achieved to reach the aims of the practice in the future.

The review involved both the directors and the staff, looking at their areas of responsibility and working practices.

Birchall says the review identified that the administration side of the practice was not working as well as it should.

To deal with this problem there was a need for key staff to be hired to meet the needs of the new structure for the business. Also, some existing staff did not fit into the new structure, so there was a need to bring in new staff.

The new staff saw the appointment of a chief executive officer and an operations manager to look after the administration. Two administration staff were also hired.

This meant the three directors concentrated on financial planning and boosted the team of three salaried planners and three paraplanners.

“The new staff were specialists in their field of administration and the AXA practice managers helped with job descriptions and recruitment,” Birchall says.

Part of the recruitment process was ensuring the new key staff members fitted into the culture of the practice and were able to work with the principal.

“To ensure a cultural fit, short-listed candidates were required to complete a psychological test, which complemented the face-to-face interview process,” Birchall says.

“The practice principal was psychologically profiled as well.

“All short-listed candidates were tested and assessed against the practice principal’s profile to see if they could work together.”

Birchall says this process resulted in a complementary team that better-understood how they should work together, through minimising their team weaknesses and maximising team strengths.

To ensure the rest of the team at the practice stuck to the aims of the new practice, performance scorecards were introduced. These also provided the basis for developing a staff recognition and reward scheme, as well as dealing with expense management for salaries.

For the planners, the scorecards focused on the number of plans undertaken, along with the quality and accuracy of the advice. This is in addition to the normal compliance requirements of the practice.

The scorecards are run on an annual basis and are reviewed throughout the year to ensure they are still relevant at the time of the review.

“Business improvement meetings are on-going, with the principal and chief executive officer meeting monthly to discuss strategy,” Birchall says.

While this change was taking place, Leo Menkens had to continue dealing with clients and earning the same levels of revenue.

This required both the AXA practice manager and the practice’s internal resources to actively manage the change and continue the improvement process.

“To achieve this, an acting chief financial officer and a practice manager were recruited to further build the new team and maintain the business improvement momentum on a day-to-day basis,” Birchall says.

“There was also a strong focus on moving the practice to a fee-for-service [model] and charging an hourly rate.”

To achieve this, new financial planning software was introduced so that the fee-for-service regime could commence and generate further earnings.

This also resulted in some clients leaving, which helped identify those that were not profitable for the practice.

“The practice has established a strong foundation for future growth of the business. It now has the team to progress it through the different stages of the business life cycle,” Birchall says.

“The business improvement program is on-going for the practice and other key business drivers will be addressed to ensure it becomes a viable, long-term growth business.”