by Kirk J. Hulett
Corporate wellness programs and even the new healthcare bill aim to shift our attention-and more importantly our behaviors-to preventive healthcare. That begins with a healthy living self-assessment that considers your diet, tests your cholesterol level and tracks how much exercise you get, etc. As a financial adviser, it would be wise to do a similar wellness assessment on your practice. It will indicate what new, healthy behaviors will help you achieve your business goals.
Step One: Niche Market
What is your market niche? If you say, "retirees," pull out a microscope and sharpen that view. It's likely you can identify more similarities. Do you serve a lot of clients from the same company, the same industry, the same profession? It's much easier to create a plan for growth if you are really clear on what niche you serve. By the way, our research shows that more of our $1 million advisers serve clients in the mass affluent market than the high-net-worth or mass market.
Step Two: Account Minimums
An account minimum does three important things. It imposes discipline on you to only take clients that are profitable-you can take some pro bono clients, but a significant chunk of your book can't be pro bono. Account minimums also create exclusivity, and exclusivity influences potential clients to want to be part of what you have to offer. Finally, account minimums communicate to your clients the type of person you work with; thus, when you ask for a referral, the client is more likely to give you a referral that meets your criteria.
Step Three: Operating Margins
Take a look at your operating margins and think about the components:
- Are you charging enough for the value you provide?
- Analyze productivity in terms of revenue per client, revenue per staff and client per staff.
- Consider the types of clients you serve. Think about how you could get benchmark revenue from 80 percent of clients.
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Look at your gross margin. You may need more right-fit clients, or you may find you're spending too much.
Step Four: Client Acquisition
Successful advisers will tell you that most of their clients come from referrals. A good rule of thumb is 12 ideal referrals per year with a 75 percent close rate. Ideally, you'd want 24 good referrals with a 90 percent close rate. So you're looking at about 10 to 20 new clients per year.
Be sure that everyone you work with knows you are "open for business" and what your ideal client profile looks like.
Step Five: You and Your Staff
Great advisers have great staffs. How would you categorize yours?
- They need constant direction on how to manage the day-to-day activities.
- They need limited direction to manage the day-to-day activities.
- They need direction only when a new project, process or change takes place.
- They need very little direction and think like owners.
How would you characterize your leadership? Do you set clear expectations and empower staff members to meet those expectations? Do you have written policies and procedures? Do you hold a daily huddle to ensure that all bases are covered and everyone is working on the right priorities?
Moving Forward
After you have conducted your self-assessment, consider working with a coach. It's important to find the right coach, but it's also essential that you have the right mind-set-that you're willing to be challenged and that you're open to new ways of thinking.
Be patient with yourself and with the process. Nothing happens overnight. You can't make too many changes to your business at once. Instead, each month change one thing about your business that will move you closer to your ideal business.
Kirk J. Hulett is senior vice president of strategy and practice management for Securities America Inc., member FINRA/SIPC, an independent broker-dealer based in Omaha, Neb. He hosts a bi-weekly practice management podcast on www.advisorpod.com.
Tools to Use
What type of coaching program is right for you? For a free five-minute, 12-question self-assessment, Your Business Growth Number, go to www.securitiesamerica.com/number.html.
