The value of external input

Ian Thorpe is the fastest 200 metre and 400 metre freestyle swimmer on earth, yet he relies on a coach to help him make world records.

Like Thorpie, we may be a specialist in a particular field, backed by years of quality technical experience, but without that additional support pushing us to reach our full potential making the difference, we may not reach the potential we deserve.

Financial advisers these days are time-poor.

Due to Australia’s diligent regulatory environment and the usual small business constraints, advisers are forced to spend little time managing their own businesses.

More often than not basic office requirements such as time or key performance indicator (KPI) management are overlooked in place of more technical industry training.

Equally, management areas like business, marketing, risk and succession planning are not treated as a priority.

Most practices are being forced to be reactive rather than proactive. This is not optimal for clients or the adviser.

This creates a chicken-and-egg scenario — advisers have little time to spend on their businesses, but they need to spend the time to create the right structure and implement change.

The successful businesses addressing these issues have done so by forcing themselves to make the time to introduce a practice management culture.

Defining practice management

What is practice management anyway?

Practice management is talked about so much among the trade press and industry it is easy to lose sight of what it means. It is actually a very broad concept and, as often happens with these terms, overused reference dilutes its meaning.

When practice management is mentioned, the initial reaction is commonly one of misunderstanding or concern about cost to the business.

In fact, simply identifying a cultural direction for your business and implementing it can have major benefits to the bottom line while costing very little apart from time commitment.

Financial services industry specialist Business Health states that, according to their online diagnostic profiling, Australian financial planning practices that have a documented plan for their business on average earn nearly twice as much profit per principal.

However, most financial planning practice principals have either never completed a plan or had one reviewed by an outside source.

Documented business goals

According to a recent Business Health diagnostic, 86 per cent of boutique planners do not have an external coach/business adviser and only 14 per cent have written a long-term strategic plan.

Other alarming statistics surround risk management and succession planning — with none of the sample practices having a clearly documented succession plan and only 61 per cent a clearly documented risk management system in place, which becomes a PS 146 issue.

These figures suggest that these practices are either too busy looking after their own clients, do not have access to a quality outside business coach or believe this would be an onerous cost.

With 86 per cent of planners facing ‘health issues’ in the areas of business planning, succession and risk management, it becomes clear that organisations need to do more in the area of business development manager (BDM) development and training and market education.

Planners with a keen sense of how to market, how to convert prospects into clients, and how to manage a growing business could be far more successful as a financial adviser than a good technician who possesses only rudimentary versions of these skills.

This, in fact, is the essence of the argument for honing your practice management skills.

Third party facilitators

Business Health’s results suggest it is time for financial planners to look at their own businesses with the help of an external facilitator, particularly in areas such as business planning, marketing and sales, human resources, succession planning, risk and time management.

Just like Olympians, working closely with a quality external coach will inevitably achieve their best potential and, in the context of a financial planning business, may ultimately help double profits.

Whether a principal of a financial planning firm is looking to create efficiency or grow their practice, by using an external source they create an additional level of accountability to make changes, add a non-emotive angle to decision-making and provide valuable insights into what successful practices are doing around Australia.

Successful businesses have more than just technical or specialist skills.

A recent study commissioned by Skandia, and compiled by Brand Management, has identified that the conversion of a new client is more to do with a client’s attitude and life experience than the technical advice given.

Quality practice management can assist in changing techniques and updating messages to increase a planning firm’s conversion rate.

The role of BDMs

Can an external facilitator, such as a quality BDM, offer planners this framework and discipline? Yes.

As the financial planning industry becomes more sophisticated, in line with investor trends, the role of BDMs is forced to adapt appropriately to address adviser needs.

In a time poor universe, quality BDMs can act as a business facilitator to help advisers manage their businesses, assist in making principals accountable to themselves and execute practice management tasks.

The goal for product providers is to work with their BDMs to ensure they are appropriately and regularly trained by financial services organisations to meet this vital business requirement of advisers.

A BDM is no longer just the ‘brochure delivery man’ — they should be solutions focused with skills such as practice management embedded into their service. The ideal scenario would be to have a team with financial planning experience.

It is also important they work in partnership with the adviser through this process to provide them with a sounding board, an additional objective layer of accountability, and a market touch point, rather than merely deliver an off-the-shelf solution.

In order for this facilitation to work, both the company providing the BDM and the adviser’s practice model must be aligned. There needs to be a clear understanding that the basis of support is practice management and that the BDM is not looking at ways to push more product.

Underlying products should be able to stand on their own two feet and a planning practice should not feel overtly tied to a financial provider purely because it is offering practice management support.

Ultimately, such a service will allow providers to become closer to their clients, improve understanding of their business and needs and add true value.

Richard Borysiewicz is the director of sales and marketing at Skandia (Australia).