As with most things in sales and marketing of professional services you can take a short-cut to success by learning the lessons of others – and then applying them.

Here is a quick checklist for running successful seminars as a method of attracting potential new clients:

1. Focused on a specific group of potential clients with common needs or interests, or a single “problem” theme.
2. Well promoted in advance, with personalised invitations (as far as possible) to invitees.
3. Actively promote the ability to provide invites for your prospects peers or friends.
4. Pre-seminar personal contact apart from the initial invitation (a phone call; social media or SMS follow up; etc).  HINT: sending a calendar appointment by email can be very effective.
5. Professional premises or location for seminar, with comfortable seating, good lighting and drinks.  Room size for anticipated audience is critical.  Best to have too big a room rather than too small, but too big can be just as deadly.
6. For initial set up put out seating for two-thirds of your expected audience.  Have more seats on standby able to put out easily, as required.  Generally there will be less actually turn up than you expected, and empty seats are a confidence sapper…but having to put out more seats because there are extra people gives the seminar a buzz to begin with.
7. Strong and confident openings that clearly lay out what will be covered, what people will get, and what you expect them to do make a difference.
8. Subject matter educates and provides SOME solutions and answers.
9. Content is tailored to the target group, and made to feel personal and relevant for them.
10. Ideal seminar length today is about 45-60 minutes.  People are time poor and generally impatient, but you have to provide enough depth and valuable content to make it worth their while coming.
11. No pressure selling, or dramatic “do it now” appeals.
12. Creates question in their minds and positively disturb the audience, so your follow up is natural and compelling.
13. Manage the agenda and the timing to ensure you stick to the planned times. Do not allow audience distractions or an abundance of questions during the seminar, but defer them to a one on one conversation on completion.  Respect the audiences time.
14. Give them an opportunity for feedback, and also to opt out of any follow up. Then respect any “opt out” requests.
15. Get specific suggestions in your feedback on content, presentation style, venue/logistics, timing, etc…then use it to refine your process.
16. Provide a “thank you” in addition to the seminar content.  Often very simple tools like checklists for them to take home and use in their own time, or information guides, are highly valued.  A real benefit of guides and checklists is that it continues to engage the audience after the event, linking to the next point: the follow up.
17. Follow up with every individual after the event.  The optimum time for follow up is about 48 hours.  Follow up too soon and it seems pushy.  Follow up too late and they have lost the impetus.  Offer to answer any questions or clarify any points that the prospect may have thought of after the event.  Engage them….
18. Qualify the prospects in terms of their degree of interest and level of ongoing engagement.  Determine who has a desire or need to follow through in the short, medium or long term. Or never. Get that information into your prospect database.
19. Have a clearly defined ongoing engagement strategy that keeps you in contact with prospects until the time or circumstances are right for them to follow through.
20. Be patient.  The majority of attendees will be potential clients for your firm at some point in time if your content is relevant, your delivery is professional, your follow through is appropriate and you continue to engage in a meaningful way afterwards.

The key thing with the seminar itself is that some value must be delivered that showcases your expertise and knowledge, and leaves the audience thinking that their time was well spent.  But it does not provide all the answers and help that they need.

Done well, it highlights the adviser’s ability to do valuable work for clients and establishes initial trust and confidence in a non-threatening environment.

http://financialadvisercoach.com

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What do buyers of financial practices look for?

Recently I discussed the irony of many financial advisers not understanding how to get a better return on what is often their biggest investment – their practice.

We highlighted areas where advisers can grow the value of their business – and get that better return they dream of when selling.

If you were buying a financial advisory practice what would you look for in order to determine whether it was a good “buy”?

We touched on some of this earlier of course, but there are other factors that a buyer looks for that make a practice a good investment for them.

Here is a list of factors that make a practice particularly attractive to a potential purchaser:

• Service propositions clear & process driven
• Differentiation in service offerings & clear client segmentation strategy
• Key revenue drivers & client profitability understood and measured
• Clear pricing strategies that are sustainable
• Fully compliant processes
• Range and depth of business relationships
• Quality and sustainability (persistency) of in-force business
• Effective and sustainable marketing systems
• Management systems and reporting (especially financial)
• Staff – both support and front-line advisory – experience, quality, qualified, stability, strong positive business cashflow after any financing costs, practice management systems and processes
• A clear strategic value proposition that fits with the buyers own market positioning is a must for the discerning and commercially-savvy purchaser.

Usually such a purchaser will also be ideally wanting something better than mere “compliance” – they want best practice in as many areas as possible.  That extends well beyond just the “advice” processes.  Best practice in management reporting, staff training and qualifications, service and communications process, and so on is on their ideal list.

There is value in adopting a best practice approach to building your practice – especially the value that can be obtained when it’s time to sell!

http://financialadvisercoach.com/about-tony-vidler/

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Let’s face it – at some point in your career you are going to be sitting down with a client and you will be struck with the realisation that things just aren’t working out between you two (or three if it’s a couple). For some advisers it will be a clarity that has been coming for a while; perhaps over several meetings whereas for others it will have hit them quite starkly: “This just isn’t working!”

While retail business coaches often argue that “the customer is always right” in the world of professional advice the reality is that there are times when clients are definitely not right. They’re not right with what they say or believe; they’re not right for the advice they need; not right for the type of services you offer and/or not right for you.

Early on you’ll take on pretty much anyone as a client just in order to survive both commercially and personally – after all, you can’t live on bread and water alone.  You’ll probably take on clients even when you know that the ‘chemistry’ between you and the client is not right.

It might be the way they ask questions or the way they criticise something you have done, or not done; it could be that in discussions they always find a way to slip in comments about your fees, disguised as humour or it could be that over time you decide you just don’t like the way they ‘operate’ – you just don’t like them.  Regardless, at some point, you will be wishing you hadn’t taken someone on as a client.

So the challenge is: how do you get them to go and can you do it in such a way that they won’t speak ill of you in your community for the rest of their days?

Broadly speaking there are two ways to ‘let a client go’; have the conversation with them or, write to them. That said it is by far the better approach to have a conversation with the client as this allows you to explain your reasons why the relationship should end. As you will see a little later, it also allows you the opportunity to manage the client’s initial reactions to such a suggestion, which is not possible via a letter for example.

Have you delivered?
Before having such a conversation you need to assess whether or not you have delivered on the services you agreed to when the client engaged you.  Take care here – what did you contract to deliver? What did your SoA and subsequent documents promise you would do?

Let’s just pause on the ‘have to let you go’ topic for a minute or so. What do your advice documents say? Have you, for example, in effect, promised to deliver on rates of return, certain tax outcomes, certain levels of capital by specified timeframes, specific levels of income? Does the language of your advice documents – in any way – suggest (reading from the client’s perspective) that you would deliver definite financial outcomes?

If they do, you need to be especially careful that you are able to ‘shake hands’ with the client when you say goodbye. If the advice documents do suggest definite outcomes in the future, you need to be cognisant that those advice documents – your written word – will live forever and that an aggrieved client might just use them against you in litigation.

This is about setting every client’s expectations properly. That is to say, don’t promise anything you cannot be certain to deliver. Don’t play ‘Russian Roulette’ with your advice documents – write them such that they can act to protect you in litigation, not attack you.

Back to our client with whom things just aren’t working out. So, assuming you have reviewed your advice and are comfortable with it, it really is preferable to have a one to one conversation with the client.  There is no simple solution here – every situation is different so you need to carefully consider how to raise the issue and how to deliver the message.

It could be that during a review meeting with the client you call a pause to the discussion and some words such as those following might be appropriate;

You: “John – from what I’m hearing from you today and in some previous meetings – you seem unhappy with us and I’m wondering if we perhaps need to speak about where we go from here? I guess where I’m coming from is that it might best if we ceased being your advisers so you can look to find another firm which might better suit what you’re looking for?  What do you think?”

Of course by asking the client that last question you run the risk of the client saying the want to stay – which is, presumably, not what you want. So let’s follow the conversation some more.

Client: “No, Susie, I’m OK – I’m happy to stay. I know I whine about things a bit but I want you to be my adviser.”

You: “Well thanks for that but I’m concerned that the ‘chemistry’ between us in not right. I mean – it seems from our conversations that deep down you might be expecting something we can’t deliver for you and if that’s the case, then – really – we should just finish up.  Please don’t misunderstand me – what I really want is for you to be truly happy with us and I just don’t sense that’s the case. I wonder if we should just think on it for a couple of weeks and let’s speak again?”

The client could respond in a number of ways. For example:

Response 1
Client: “Well – now that I think about it, you’re probably right. I’ve been thinking about it a bit for a few months and it probably is best to finish up, as you say. What would we need to do to make that happen?

Response 2
Client: “No – really, I am happy – I don’t want to change to another adviser. Besides it would cost to change.”

Response 3
Client: “You know – I think you’re right. I really do want to finish up here – I’m not happy and don’t think I’m getting good value for money. So let’s call it quits here and now!”

The first response is what you’re really looking for here. The client seems in a good frame of mind about it and you would move on to discuss what’s required to sever the relationship which of course would need to reference the relevant section of the original agreement the client and your firm executed.

In the other two responses you’ve got some problems ahead. In the second, the client doesn’t want to go but you want him to go.

You: “Well thanks for those comments, John, but I really do think we both need to consider finishing up. You know, I suspect if we keep going, at some point in time we’ll be back having the same discussion.  The things that you’ve been concerned about – we just can’t provide you with – it’s just not the way we operate as a business. And to be perfectly honest about this, John, we would prefer not to receive payment for services if a client is fundamentally unhappy with us. It’s just not the right thing to do. So here’s what I want to propose we do.  At the end of this month – or sooner if you prefer – we will formally resign as your advisers …”

Damage control
The third response is a bellwether to potential future problems. A suggested way to deal with that is:

You: “OK – that seems best, John. I really am very sorry we haven’t been able to meet your expectations. We do try our best however I also know that the type of services we provide do not suit everyone.  So what we’ll do now is write to all your investment providers and notify them that we’re no longer acting as your adviser – that will ensure that we have no access to your information from that point on. We’ll also cancel the fee debiting arrangement with XYZ account from X date (with reference to client agreement terms).  John, we’ll also write to you confirming what’s happening in regard those matters. How does that sound to you? Is there anything else you need information on?”

So what are we trying to do in such a scenario?

Firstly, we’re trying to let the client know we’re not going to try and hang on to them as clients.  “Ok – that seems best, John.” We’re trying to diffuse a potentially aggressive discussion – we know from what the client said (Response 3) that his mind is made up; that it’s beyond retrieval and in any case, you want to sever the relationship too.

However, we’re also trying to let the client ‘control’ the decision to leave. If the client, with a list of grievances, felt like he was being ‘sacked’, he might take umbrage and seek some form of recompense or retribution via, for example, a formal complaint to a complaints resolution service. Such an outcome would be time consuming and a cost to your business in more than just commercial terms. It’s a situation you need to carefully manage to avoid an escalation of the client’s dissatisfaction.

In such a response from you, there is also an apology: “I really am very sorry…” For many people, all they want to hear is that you are sorry.  The response also outlines a process, a way forward, for the client to finish up that doesn’t result in a lot of paperwork for the client.  In this situation, the result you should be seeking is a smooth separation while minimizing the risk of a complaint being made by the client, as retribution. Handling all the paperwork for the severance will go a long way to achieving that goal.

Give them an out
Looking more broadly, some people will have great difficulty in letting you know they are unhappy. It might not make sense to you (“If they’re unhappy too why didn’t they say so before?”), but for some people, by you raising the possibility of them ‘leaving you’, you will have lanced the proverbial boil that’s been festering in their mind for some time. You will have given them an out – a way to leave without the great anxiety such a conversation would have caused them if they had to initiate it.

Win-win
When this is all said and done, your overall objective must be to achieve a win-win outcome. The client needs to be able to leave without angst and without anger.  You need to be able to let the client go in such a way that you head-off potentially expensive complaints handling. 

You can’t please everyone
In such situations it could be said that ‘knowledge’ is realising, as soon as possible, that the relationship has no future but that ‘wisdom’ is being able to end it casualty free.  Greater wisdom would also be evident if the advice documents are written in such a way that they set clients’ expectations carefully in terms of what an adviser can – and cannot – deliver.

Note: The accreditation for this CPD article is no longer current. Please visit our CPD section for current CPD quizzes. 

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Advisers historically – for all their networking and personal sales and relationship management skills – have not been terribly successful at creating long-term professional networking circles that continually deliver the right type of prospects though.

Why?

Generally because they don’t really understand how the potential center of influence (referrer) will win.

For example, it is often a logical fit for financial advisers to work with accountants.  They are after all dealing with related professional issues, usually with the same clients (or types of clients), and their respective knowledge sets are highly complementary.  Many times an accountant and a financial adviser will consider the concept of networking professionally, and cross-referring clients or working jointly….but the concept mostly never really takes off.

There are the expected issues that have to be resolved, like the professional danger for a referrer in transferring trust and lending their own reputation to another person.  But that is simply a necessary step in forming any professional business relationship, which is resolved by demonstrating the right behavior and level of expected professionalism repeatedly over tie.  The center of influence eventually is completely comfortable with lending their trust and reputation when you have repeatedly demonstrated that you are safe with it.

Creating the opportunity in the first place is the primary challenge though.  What is missing is understanding what the real WIN is for the center of influence – and how the adviser can help best.

Let’s use accountants as an example (and I know I am about to engage in a lot of generalizations – but it is the principle here that is important).

Most accountants are looking for the right job.

The majority of accountants are working in “compliance” type work for their clients.  The hard graft of sorting and preparing financial records, compiling tax returns and supporting information, trying to explain to their business clients how the tax system works….and often being seen by their business clients as the person who is “not allowing” (say) the family vacation to Disneyland to be claimed as a deductible business expense.

In this scenario the accountant is doing a lot of repetitive work, that is often uninspiring and professionally not fulfilling for them….and it is often a begrudging client on the other side of the table.  The client doesn’t want to pay any tax….would rather that their financial records were kept hidden from the rest of the world…wants to be able to use their business and its money however they see fit….and their accountant is the only human being they get to see standing between them and their desires. 

The business owner never, or rarely, actually interacts with the rule makers or tax department officials – it is the accountant they deal with.  And at some point the accountant gives them an invoice for dealing with it all, which the client resents to some degree as they didn’t want to engage in this process at all anyway.

Do you think that’s the type of business, and business relationships, that most accountants want?  Of course it isn’t….most would love to be able to get away from this type of financial compliance work – kick it down to the entry level accountant or junior associate to do that stuff!

A smart adviser would recognize this problem when forming the business relationship with the accountant, and an even smarter adviser would work out how to take some of the pain away and help the accountant get into the type of work they DO want to do.

When a professional financial adviser engages in their full process of discovery with a client they get a much wider view of the clients personal position, values and aspirations – very quickly.  Using a professional and comprehensive advice process uncovers the critical information that helps us understand what clients really value, and where they want to go.

For the accountant, that knowledge is gold.  It is the key to moving them out of “compliance work”, and into “business development” work with their clients.  That is where the enjoyment factor and the real business value is for both the accountant and the client.

The financial adviser’s real value in this professional relationship is identifying the opportunities for the accountant to get the types of jobs they want with business clients, and then positioning the accountant to do this work and create value for their clients – in both the accountant’ and the client’ minds.

As stated earlier, these are generalizations, but generalizations are generally correct!

Financial advisers can bring professional process that discovers valuable information of a much wider scope, and at a far deeper emotional level, than accountants generally uncover with their business clients.  Indeed, financial advisers HAVE to do this if they are doing their work properly – and they have a professional obligation to identify issues where other professionals have the requisite expertise that the client needs.

Financial advisers have the sales skills and relationship management ability to get clients to work with their accountant in new and better ways, on far more valuable and important issues than mere tax returns.  Financial advisers working professionally with the accountants own clients can uncover and create opportunities for the accountant to get the type of jobs they really want.

That’s the type of win-win that leads to successful networking for all – and for the benefit of the client.

All blogs are the personal views and opinions of Tony Vidler, Strictly Business Ltd, only. They should not be attributed or linked to any other organisation or business that Tony or Strictly Business Ltd may work with at any time. For more great ideas on how Strictly Business can help your professional advice business perform better and grow, visit www.financialadvisercoach.com

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A couple of points from the first days of the Symposium are set out below:

• Paul Auslander FPA chair in his opening made it clear in his opening that one of the clear goals of the FPA in the US is to “elevate the profession to a level consumers are confident about.”
• TD Ameritrade’s Skip Schweiss made the following points in his presentation: 
  – consumers wants are changing and this means for a number of industry participants business models may be at risk
  – ” human weakness is what causes every bubble or crisis” 
  – firms often think about revenue or AUM growth when focus should be on customer outcomes front of mind
  – consumers want advice that has a better grasp of their needs both emotional and intellectual.
• Overall it is clear there is a stronger and growing focus on the consumer, which is very positive. The US group really seems to grab the idea that is really getting some strong attention in AMP at the moment, namely what is the client experience while they are going through the six step advice process. They showed a lot of interest in the client experience work being pursued at Hillross
• There is an interesting initiative introduced at Cherry Creek mall in Denver where a Retirement store concept set up like an Apple store is being trialled – click here to see the website.

Some other trends/comments:

• Larger firms are trying to centralise their planner supervision by having plans on a central server.
• There appears to be a strong move to flat fees but I am not sure there is a strong enough view on making sure a planners customer value proposition is defined clearly enough.
• Got a great quote on the planning process which traditionally has focused too much on investment return – quote is from Lennick Aberman group – ” planning is about helping clients prepare for their future, not predicting the future.”
• As Major Firms progresses, it seems the concept of customer experience is resonating very well and promoting a bit of really progressive thinking for the group. This prompted a very good discussion about a behaviour approach to planning.
• Advice IQ looks interesting. It is a service were an adviser can promote their practice to a wider audience. They promote that they can connect clients to planners and help promote their expertise. Click here to see their website.
• Sungard kept the client theme going with a session titled creating positive experiences and showcased 3 tools they promote in working with planners – Mobile meeting, myRetirment and an integrated platform – click here to view these tools. 
• The closing session of the Symposium was entitled Pursuing Practice Excellence presented by Jamie Green (Investment Adviser Group/AdvisorOne) and Spenser Segal (Actifi) who jointly conducted an extensive study (950 planners and 50 industry leaders) in relation to practice management.  They believe the study bridges a gap in information that is currently available. The findings of the study are: 
  – an opportunity exists because there is not one clear definition of Practice Management across the industry so an opportunity exists
  – planners indicated that their relationship based around with their firm/licensee is growing. Planner expectations to be assisted by their Licensee are increasing
  – planners rated sales and marketing, strategy,client service, operations/technology and business services rated highest of what planners require, they want a coaching relationship
  – planners want training and someone to assist in implementing improvements in their practice
  – planners are willing to spend money on sales and marketing but are prepared to put a lot of their time into client service
  – industry leaders see a strong practice management capability is critical to attracting and retaining planners. It is a major priority in the budget cycle.  But here is no formal ROI done to approve the practice management budget
  – less than 40% of planners take advantage of the practice management solutions on offer and it is clear there is stronger take up where the planners pays for the support
  – many of the solutions that would be valued by planners are simple basic education opportunities. One on one coaching was ranked higher by industry leaders than by advisers yet it was ranked by both as the most effective tool BUT it really only works well with motivated planners who are looking for improvement and changes. The magic happens at the executional level – to be able to deliver well and in good form to the planner
  – staff efficiency is a big opportunity for the larger revenue practice. Working with he am rather than he planner is the real opportunity
  – as you would expect, social media at this stage is more important with younger planners 
  – 41% of planners didn’t have a formal business plan! 54% DIY on practice management, 20% spend $10k or more a year on marketing. Strong focus on revenue but not enough focus on costs and efficiency at most planner practices.

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It isn’t that they don’t have points of difference, or that they struggle to put ideas into words…generally they are very good at both. Each adviser has a unique way of interacting with customers, and maintains relationships a little differently, and has slightly different views of how and where product solutions fit in, and what the relative strengths and weaknesses of different strategies are.

Despite that, a room full of advisers when working through the process of trying to articulate their value proposition, almost always come up with the same line of thought (and often use the exact same words) to try and describe themselves and their businesses. 

It ends up sounding something like this:

“you should do business with me because I am honest, trustworthy and a nice person. I care about people and am very good at my job. I am clever and have qualifications and you will have peace of mind if you work with me”

This is the very simple summary of the typical statement advisers first come up with – as a customer might hear it.

So what’s wrong with it? Well, pretty much everything….So let’s pull it apart.

1. Honest, trustworthy, etc…these personal attributes are simply expected. There is no value-add here – customers expect this as a minimum standard of integrity.
2. Nice person…of course you are. If you weren’t you would have no customers, in fact, you’d have no business if you had no ability to relate well to others and be a decent human.
3. I care….well, once again, you are expected to aren’t you? If you did not actually care about others you would not be in a profession of trust where an essential component is the ability to think of the other persons objectives and be willing to work with them to get them the results they want.
4. I’m clever & have qualifications, etc….of course you do. Otherwise you shouldn’t be in the business of advising people about money.
5. You will have peace of mind. NOW….the big problem with this is no customer actually believes it, and not very many advisers can actually deliver it.

So let’s recap….5 parts to the typical value proposition statement designed by most advisers and 4 of them are “hygiene factors”, and one is frankly unbelievable in the minds of the customers.  By “hygiene factor” I mean it is a given in the customers mind…as in any hospital will be hygenic.  It is not in itself a point of difference for hospitals.

In a previous post I outlined the formula, or the questions that must be addressed, to come up with a genuine point of difference that really means something to a customer. 

Basically when trying to create an articulate value proposition it falls down in 2 key parts:

The adviser doesn’t think of how different they are to other advisers. They think of how different they are to the customers. So the proposition ends up sounding the same as all other advisers’ value propositions…hardly a unique point of difference…and simply highlights the distance between the customer and the adviser. 

Secondly, the value proposition doesn’t really capture what benefits the adviser actually delivers to the customer.
And that is the core objective of it:  articulate the benefit to the client that cannot be obtained from someone else.

Here are some general areas where you might be exceptional and doing unique things, and are able to do what customers value:

• Customisation:  using the masses of data and information in a highly personalised manner, or perhaps providing service or advice that is tailored to highly specific customers
• Risk Handling:  taking away risks for customers; transferring responsibilities; removing the need to consider specific risks – making their world less risky than it was
• Convenience:  being able to combine things in a way others can’t; getting access to what customers need and value faster, easier, and so on; being there – instead of them having to initiate action, etc

This is just a short collection of concepts to highlight that creating a value proposition is not about you.  It is about the end result for the customer – the thing they value.  When you get that, and are able to express it succinctly, then they will get you and the value you bring. 

All blogs are the personal views and opinions of Tony Vidler, Strictly Business Ltd, only. They should not be attributed or linked to any other organisation or business that Tony or Strictly Business Ltd may work with at any time. For more great ideas on how Strictly Business can help your professional advice business perform better and grow, visit www.financialadvisercoach.com

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In this edition, Ray discusses the benefits and ‘how to’ of conducting a SWOT analysis on your business (or your planned business) as a means of getting a deeper insight into what’s working in the business and what’s not.

SWOT Analysis
One business tool often used to assist both with initially going into business and post-establishment is the so-called ‘SWOT’ analysis which has been used to varying degrees in both large and small businesses since the 1960s.  The process of understanding your business Strengths – Weaknesses – Opportunities and Threats is designed to get business owners and managers closer to the truth about the status of their business be it already operational, or in planning mode.

While other, sometimes more complex, businesses measurement tools have been developed since the SWOT process first appeared, it remains a very useful aid for a hundreds of thousands of businesses around the world.

In its simplest form, a SWOT analysis is a one page chart laid out as follows:

Broadly speaking, there are two environments which affect businesses and they are Internal and External.  Strengths and Weaknesses fall under the Internal environment whereas Opportunities and Threats are External to the business.

In every respect this is an exercise in honesty – an exercise in being honest with yourself about what you are good at in business, or at least what you think you will be good at (your strengths), along with admitting your weaknesses.  Next is to open your mind to what opportunities might there be outside of the business.

A successful SWOT usually reveals new services or ideas to enhance existing services which can help grow the business.  Finally, it’s important to identify what threats are emerging or have already emerged externally which could impact on your business planning and we’ll look at each of these in more detail shortly.

If you are already in business, ideally, a SWOT analysis should be conducted away from the business premises.  You need to free your mind of ringing telephones, staff questions and chatter, emails and all other day to day work related matters.  You need clear thinking time which is uncluttered in order to get the best, most honest, outcomes from such an analysis.

For existing business owners, a SWOT is often a good way to start a review of where the business is and where you would like to take it over the next one, two and five years.  But to get the best results from the process you need to be free of distraction with an open mind.

One more point for existing business owners about to embark on a SWOT analysis is to ensure that your employees are part of the process.  You should require your staff to attend such processes and impress upon them the need to be open and honest about their views on, among other things, what’s ‘right’ and what’s ‘wrong’ with the business.

As a business owner, you can be sure that your employees will see things in the business that you cannot and there should be a workplace atmosphere in which everyone feels free to openly express their views.

It could be confronting but you might well be surprised what you cannot see.  This requires your leadership skills to ensure the meeting environment is conducive to open discussion.

Existing business owners might also wish to consider arranging for a specialist consultant to lead the SWOT analysis as part of a strategic planning exercise which, again, should involve all employees. This allows the business owner(s) to participate without the need to ‘chair’ the discussion.
If you’re not already in business, it’s a good idea to sit down at the ‘kitchen table’ at a time when you can be free of interruptions and just ‘white board’ your honest assessment of the various components of your business planning at this point in time.

If you are able to, you should ask your spouse or an experienced and trusted colleague to review what you have compiled in your analysis and ask them to critique it from his/her perspective.  Again, this person is likely to see things that you cannot.

Strengths
Your strengths should be both intangible (personal) and tangible.  That is to say, an intangible strength might be that you are a good communicator – someone who is a ‘good with people’ as the expression goes.  Note that, among other traits, many successful business people are good at understanding people; ideally you need to be that type of person.

While financial planning businesses are intensely focussed on financial matters they are equally, intensely, businesses which are very much about people.  Other strengths might include that you are a good public speaker and/or a good writer.  Note that both of these are also ‘communication’ skills.

If you don’t already know, you need to find out about your personal strengths and the personal/behavioural profiling discussed in the first edition of our Mini-Series of CPD is an ideal way to acquire a science based, unbiased, assessment of yourself.  It will reveal all that which is strong in your personality type along with other areas where you perhaps are not so strong.

Another strength which is not necessarily a personal strength but is nevertheless a tangible strength is that you could be well capitalised in your business planning, be that for a start-up or expansionary phase.  This could mean, for example, that you have sufficient capital to pay for all business expenses for say the first six months.

Or you have enough capital available to cover the office costs for a new branch of your business for the first twelve months.  Note however that, in this example the strength is also a weakness because unless sufficient income can be generated within the first six months, the cash will simply run out and your business journey could come to an abrupt end.

Yet another strength might be that in the suburb or town you are going to establish your business, there is very little competition from other financial planning businesses although it must be said that this not such a high probability.  However, you could be a specialist at what you do against which other financial planning businesses cannot compete.  An example could be that you are a specialist Self Managed Superannuation Fund planner whereas your competitors might not be. This gives rise to marketing ‘opportunities’ – see later.

Weaknesses
This is where you really need to be honest with yourself.  What aren’t you good at and/or what is the business (business planning) not strong on?  By having an understanding of these issues – and be certain in the knowledge that you/the business does have weaknesses – you are able to identify what additional skills you might need to acquire personally, or resources such as staffing for the business generally.

A personal weakness could be that you, as intelligent as you otherwise are, are not good on administrative detail or good on following through on such detail.  It might simply be that you don’t enjoy such tasks and find your job satisfaction in other aspects of business.  This is nothing to be ashamed of but it is important to be aware of it so that your business planning can take account of it.  Again, if you don’t already have such self-awareness, a good way to find out is via a personal profiling exercise.

A business weakness for a start-up is likely to be that you have no clients or very few.  If you’re a relatively new financial planner you probably won’t have many, if any, clients.  If you’re already in business and looking to expand, a weakness could be that you don’t yet have systems established to cope with processing administrative matters which would arrive in opening/acquiring an external office.

Or you could be exposed to compliance issues which cannot be properly managed from a distance.  Again, for existing business, you could be understaffed and you need to be aware of the effects on work-flow and efficiency along with the often quite deleterious human effects of overworked employees.

All such weaknesses need to be addressed and actions planned and implemented to ameliorate the situation.  While not all weakness can be turned into strengths the vital issue is to become aware of and fully accept that you/your business will have weaknesses.  And recognise that every – every – business has weaknesses at every stage of the business life cycle from start-up to maturity and beyond.

Opportunities
In some respects this the time in the SWOT analysis where more creative thinking can take place.  It’s the section where ideas and thoughts on how to establish and/or grow the business can bubble to surface.  It’s the time when – to some extent – you can unshackle your thinking from the day to day planning or management and contemplate what could be in the business.

An opportunity could be to, for example, approach your local community radio station to suggest you could comment on financial news items (we’ll have more information on this in a later edition).  For those still planning the establishment of their business, an opportunity might be to use the very fact that you are establishing your own business as a reason to send a short letter to that effect to other professionals in your suburb or town. (note that this will likely have little initial impact for you however it’s an important step in announcing your business).

Another opportunity could be that a change to retirement income legislation has just been announced which will affect all retirees. This gives you the opportunity to plan a communications programme to a target audience be that potential clients or existing clients and other professionals.

Threats
Firstly on threats, please note that they are not weaknesses.  Threats are external to the business and are issues or aspects which could damage your business. Such a threat in a financial planning business could be the onset of new regulation which increases the cost of providing financial advice. The recent concern regarding the impact of the Future of Financial Advice (FOFA) legislation is a perfect example.

In this regard, in the very early years of the first decade of this century, the looming threat of the Financial Services Reform Act (2001) related to a more imposing legal compliance environment for financial planning businesses commencing March 2004, and was cited by many financial planning business owners as a very large threat.  Another recent legislative threat which remains prominent for those yet to make changes in their financial advice business banning of commission payments to financial planners.  In such an environment, business owners should have been conducting a SWOT analyses as a first step in understanding how to deal with the threat.

Another threat could be declining levels of consumer confidence such as those that beset the Australian economy at the height of the global financial crisis in early 2009 and which in many respect continue to this day.  This has generally resulted in decreased numbers of new clients for financial planning business plus the loss of existing clients.

The preceding examples in the discussion on SWOT give rise to a table as follows in Table 1:

Typically in a SWOT process each column will initially have quite a few entries or items listed however a reality check should tell you that you cannot work on every item.  Ideally, you need to refine the lists to perhaps a maximum four – no more than six – items of the highest priority or importance in each segment.  The overriding emphasis in a SWOT analysis should be to reveal the most important issues that relate to the primary business objective.

SWOT – it’s not the end of the story
A SWOT is really only a tool to look at what’s happening and what’s not happening in/to your business.  It alone cannot action changes and improvements in a business.  That falls to you as the business owner and you have to convert the revelations from the SWOT into actions – otherwise you’ve wasted your time if nothing changes in the business.

In actioning the decisions which arise from the SWOT findings you will need to develop a timeline of – What (has to be actioned)– When (must it be started and completed) – Who (will action it and who has primary responsibility) and How (will the action be taken – what resources required).  This is the actual planning which will put the changes in place to improve the business.

As the business owner, you will need to monitor and review the implementation of agreed actions from the SWOT process and we’ll look at this in the next edition of AdviserVoice CPD Mini-series.

This is not set and forget
With your first SWOT analysis done you might be tempted to let things rest for a while however I suggest you conduct a SWOT analysis at least once a year.  You can be sure Strengths can weaken over time – some Weaknesses can get even weaker – Opportunities will not be actioned and new ones will arise – and new Threats will emerge while this year’s threats might become less of an issue.

Take some time now to plan your first SWOT analysis even if it’s just you sitting down with a pen and paper on a Sunday morning at home, thinking deeply about your business.  Better still think about holding a formal business planning event, which kicks off with a SWOT analysis, as part of your annual calendar.

To see the first article in this series, click here.

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In the first in the series, former financial planning business owner Ray Griffin, who built and sold a successful advice  business, discusses some of the more fundamental issues which advisers who are either thinking of setting up their own business or who are in the early years of getting established in business, will face.

You and your business decision
A decision to go into any form of business is a major decision and if your business of choice is in the financial advice arena it has the added complexity of layers of compliance laden risk.  It’s not a decision to make lightly and the reality is that some people are just not suited to being in a business of their own.  Indeed, some people set up their own business only to discover that it’s not really their skill set.

So in this first edition in our mini-series on Financial Advice Business Management CPD we’re going to look at how to gain a deeper understanding of you and how you might function in business along with helping you refine why you want to go/stay into business.

Win or lose – it’s all down to people!
Businesses either succeed or fail due to people and the decisions (or lack thereof) they make.  While external forces are constantly at play in business outcomes, it is people who make decisions which either protect or expose the business to the effects – positive and negative – of the external forces.  And it is people who sometimes avoid making decisions which might otherwise make a business successful.

Understanding people is a vital skill in any business; the capacity to understand and relate to your clients, your employees, your business partners and other stakeholders is an essential component in the skill set of a successful business owner.  It really isn’t an optional extra.
However, understanding you – how you: think, process information, make decisions, act in certain situations along with a substantial range of other behavioural traits – is a good first step in deciding whether or not to go into business and indeed, in making subsequent business planning decisions if you do take the big step into your own business.

Myers Briggs Type Indicator® (MBTI) and DISC® behavioural profiling systems are but two services which could aid you in better understanding your behavioural preferences or tendencies.   Gaining a deeper insight into you might assist you in, for example, critiquing decisions you are about to make or implement.

Sometimes businesses fail due to, for example, overly ambitious income forecasts which are not achieved. In such a situation, it could be that the personal preferences or behavioural style of the business owner sees that person have a bias to always see things in a positive light – to not take proper account of data or information which might otherwise see them develop an alternate – perhaps more realistic – income expectation.  In contrast, it could be that an overly cautious or conservative behavioural profile might see a business owner fail to take advantage of opportunities that might arise during their business career.

Behavioural profiling can also aid existing business owners who might be considering going into partnership with another person(s). Understanding yourself and the person(s) you might be about to enter into business with could be one of the best investments you make.  It should equip you and the other person(s) with deeper insight into yourselves and each other and help you better understand or interpret particular behaviours in business partners which will at some stage inevitably be on show.  It might also be that such profiling might suggest that the people planning to join forces in business might be better off not doing so.

Personality or behavioural profiling is usually conducted by completing a questionnaire which is then analysed by the service provider.  The questionnaire can be completed in hard copy or on-line.

Please note that there is no suggestion that any particular behavioural or personality profile is superior to another in business.  Indeed, the world is full of successful business people who exhibit a range of behavioural profiles.  However, it is reasonable to suggest that a common factor in almost every business success – save perhaps for the one-off technological discoveries sold for vast sums – is that the business owners have really understood people and some of those would have had a deep insight into their own behavioural preferences. Such people knew what they were good at and knew what skills they lacked and as they grew their businesses ensured that they filled skills gaps with suitably skilled people.

If you wish to explore this issue further, an internet search will reveal several service providers who can provide professional assessment and guidance on understanding your profile.  There are even smartphone ‘apps’ which can be downloaded however if you do wish to find about your personal behavioural profile, it is strongly recommended that you subscribe to a service which provides you with personal service, even if this is only in the form of a follow-up consultation after completing an on-line questionnaire.  There are numerous ‘free’ profiling services available however it is unlikely that a personalised follow-up consultation will be provided through the free sites.

Business Vision – what does your business look like?
When you’re in business or planning to go into business, it’s quite easy to become immersed in business jargon and terminology and to think that the answer to success lies in knowing and applying academic rules and procedures.  For decades now, business schools and business leaders have developed terminologies which are attempts at identifying key aspects of business planning and operations which can give businesses a competitive advantage.  Among the plethora of terms are: Capital Expenditure, Cash Flow Forecasting, Marketing and Public Relations, Customer Service, Strategic Planning and on the list goes.  These terms are of course readily used each and every day in large, well established businesses but what about a brand new financial advice practice?

The reality of the early weeks, months and years of small businesses – which most financial planning businesses are – is that survival is the first objective.  Just making it through the first few years of operation is, for many people, the objective.  If they survive in business and can then take some time to think more deeply about what they are really trying to achieve – then the more academic aspects of business become quite important.

That said however, as you set out to build your financial planning business, you need to have a vision of what your end goal is; how you see the business at a certain time in the future.

Vision statement
Large organisations develop quite formal Vision Statements and they do provide some value; they are something which internal stakeholders can refer to from time to time to check how the business is going in pursuing its goal.  Such vision statements can appear in some business documents, form themes for staff meetings and the like as well as appearing in annual reports.  However, for small businesses where in the early years the principal(s) and perhaps one or two employees are the business, a formal vision statement might not be so necessary and might not be so beneficial.

That said every business owner or person planning to go into business should have a vision – a view in their so-called ‘mind’s eye’ – of what they are trying to achieve with the business. A vision statement (or ‘mind’s eye’ view) is not a panacea for bad business decisions however it can act to be regular reminder of what you are trying to achieve in business over the longer term and help maintain the required focus during difficult times.

What’s your vision?
There are varied views on what a vision statement should be based on.  Yours could be something quite simple and nebulous such as “Providing advice to 100 clients by 20XX” or something much more definitive.  If you choose the latter, much more precise, option you could chose to base it on three perspectives: personal – professional – financial.

In its simplest form the personal component of a vision statement is how you see – how you envision – yourself and your lifestyle to be in say five years time. How long might you want to work each week? Where might you want to live? How do you spend your leisure time and a range of other possible ‘visions’ of how you would like to be living out your life at that future point in time. One further suggestion to consider is: How much work pressure to do you want to be under in business?

The professional perspective could address:

• What type of clients would you like to be working with? So-called young ‘accumulators’ or the generation of their retiring parents/grandparents? Or combinations of both perhaps?
• Will you, personally, still be seeing clients in five years from now?
• What might typify a satisfied client in your business?

The financial perspective will deal with ‘bottom line’ matters:

• How many clients do you want to be caring for?
• What level of funds under management do you want to be charged with managing?
• What level of business income would you like to be generating – and what profit might you be seeking?
• What personal salary package might you be earning in five years?

Of course it will be difficult to encapsulate these three aspects into a succinct vision statement however it should help you form a view as to what your business will ‘look like’ at your chosen point in the future and how you fit into it.

It’s likely that some people reading this might want to go straight to the numbers – straight to the financial perspectives.  For some it will be a natural attraction.  However, I can only encourage you to start thinking about your visions from the personal perspective.  As former Eagles drummer Don Henley wrote in his 1990 song ‘Gimme what you got’ – a comment the greed culture that enveloped ‘Wall Street’ in the late 1980s and which remains relevant today in the post Global Financial Crisis era:
You spend your whole life
Just pilin’ it up there
You got stacks and stacks and stacks
Then, Gabriel comes and taps you on the shoulder
But you don’t see no hearses with luggage racks

That verse confronts the human instinct to get more and more of many of the ‘physical’ things that can be accumulated in life – given sufficient income.  In business, having more of everything – more clients – more funds under management – more staff – more technology – more money, will not be a panacea to a life only half lived.  As you go about your business career, perhaps occasionally take some time out to check that you’re in the business to live, not living to be in business.

Competencies
In business you need various core competencies some of which are unchanging over time while others, often more technical based skills, by necessity need to change and adapt to changing conditions.  A primary example of the latter in the financial advice profession is the constant changes to superannuation and taxation laws.

A prime example of a competency which, generally speaking, does not change over time is the need to manage the business cash flow – income and expenditure.  No matter what increase in client numbers and fees occurs in a financial advice business, managing cash flow – as in any business – is a constant function; a constant pressure.  It is vital that you become skilled in managing cash flow certain in the knowledge that there will be times in your business career when cash flow will be tight – that is to say there will be times when income reduces through myriad reasons; loss of clients, investment market downturns (this particularly affects asset fee based businesses), loss of investor/consumer confidence and so on.  Or it could be that your business expenses grow too rapidly and the prevailing income is either insufficient or, at best, a break-even position from which no profit arises in the business.

Note: The accreditation for this CPD article is no longer current. Please visit our CPD section for current CPD quizzes. 

We’ll have more on cash flow management later in this mini CPD series, in the meantime stay tuned for the second in our series which is about how to carry out a SWOT analysis on you and/or your business.

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A lot of the process of reducing government debt will keep coming back to tax both as a revenue source and also how it circuitously acts a ‘Catch 22’ like brake on economic growth, reducing a government’s tax take. 

So for professionals giving financial advice to taxpayers in such economies, it’s a new paradigm even in economies like Australia where government debt sits below 10% of GDP.  But while in academia the decades old reliance on theories like ‘Keynesian economics’ is being brought into question on a daily basis, for consumers it’s still about managing their financial lives in their ‘real’ world.

Their real world is going to look different for quite some years to come – in fact it already does. People are borrowing less and saving more – cue John Maynard Keynes’ Paradox of Thrift conclusions! Businesses – especially retail and construction – are being forced to find new ways of maintaining revenue and profitability.  Safe to say a lot of businesses will not survive the transformation of economies moving to lower levels of consumption and household indebtedness.

Investors are going to have to alter their expectations about investment returns and financial advisers who have staked their business raison d’être on investment returns are going to have to re-work their business model. While it’s always been a risky strategy to stake client satisfaction on investment returns, in the new world such a business model might be more aptly termed ‘Russian Roulette’ – eventually the chamber with the investment returns ‘bullet’ in it will get you.

In the same way that western governments will have find more inspired policies than ‘tax cuts’ to seduce voters into re-electing them, financial advisers and planners are going to have ensure that their service offering is truly holistically based and not return centric.  This will come down to some key issues including:

• Committed, ongoing, service
• Regular communication – written and in person
• Attention to detail in all service areas  – have you returned that client phone call yet?
• ‘Going the extra mile’ with service delivery – do you sign your client mail-outs in real ink?
• A whole of business belief in service – how does your receptionist deal with clients?
• Portfolio construction – what worked in the 90s will not work in the 20 teens.

Clients can be assured of several things:

• It’s going to be a rough ride for a while yet
• Capital growth is going to be constrained for some years to come
• Early 2000s style income tax cuts are unlikely
• Maximising the utility of their income will be increasingly dependent on legally minimising tax. This does not automatically bring negative gearing strategies back to prominence in a financial adviser’s toolkit.

If ever there was a time when financial advisers the world over are really going to have to provide value for money it is now.  Historical norms for investment returns are being challenged every day and keeping clients engaged with your firm will stretch many advisers.

While challenges aplenty abound for advisers I firmly believe this will be a period of refinement for the financial planning profession.  This is business evolution laid bare – those that can adapt to the new environment of service delivery as the primary business function will definitely survive and go on to build robust businesses.

As governments grapple with finding the most efficient and equitable way of dealing with their debt ‘ball and chain’, eventually tax payers will have to foot the bill.  There is now an even greater need for a very high standard of professional financial advice across the world. In very many respects these are the times which even more fully justify the existence of the financial advice profession.

Long may it live!

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But at some stage it will be worthwhile taking the time to improve your practice management.  It’s about working on your practice as well as in your practice.

The benefits of doing so include higher revenues and profits and a higher business valuation.

There are a number of key goals you should strive for when designing your practice management methodology, which I call the Ten Commandments of Practice Management.

Drive down costs by Increasing efficiency;

1. Increase revenue without increasing costs, e.g. increase fees;
2. Improve systems and processes, e.g. simpler SOA process – 15 pages.
3. Grow the size of the client base, by attracting more of your preferred type of clients;
4. Increase the profitability of each client, e.g. pricing relevant to the service you provide;
5. Reduce the reliance on a key person (i.e. the planner);
6. Develop and implement marketing and business plans;
7. Improve conversion rates for the first interview;
8. Increase conversion rate at seminars.
9. Highest possible compliance rating.

In order to succeed at achieving the Ten Commandments of Practice Management you need to develop a plan that is measurable, achievable and reviewed regularly.  To do this you need to focus on each of the key areas of the management of your business, and while all these areas are interlinked they can be broken down into five key areas of management:

• Commercial
• Marketing
• Client
• Operational
• People

Commercial management is ensuring that you have systems and processes in place that include cash flow management, capital and debt management, business planning, management reporting, financial management including management of expenses etc. With effective commercial management of your business you will be able to manage and drive down costs. (commandments  1, 2).

Marketing management includes developing an efficient and cost effective marketing plan, pricing, service offering, referral management, managing relationships with centres of influence, client retention etc. Many financial planners have marketing strategies that are costly and ineffective, and can significantly curb the success of the business.  The goals of the marketing function of your business should be to increase the size of the client base, increase revenues, increase the profitability of your clients, implement  effective seminar programs and other business development initiatives. (commandments  1,3,5,6,8,9,10).

Client management is primarily how you service your clients on an on-going basis and the information you provide them. Developing an ongoing private client services program that is focused on keeping clients informed, making on-going adjustments to their financial plans and re affirming they are on track to achieving their goals and objectives and doing this efficiently is a must. (commandments 1,3,6,)

Operational management is focused on product selection processes, recommended lists, compliance, use of technology, and administration. Without effective and efficient operational management all the other areas of the management of your business are unlikely to succeed. (commandments 1,2,4,7,).

People are the key assets of a financial advice business as with all professional service based businesses.  People management should focus on HR management, communication, STAFF RETENTION, key person dependencies etc. Remember losing a key person in this business may mean losing a large part of your client base – this is one of the biggest risks in our industry.

Implementing Your Practice Management Methodology –

What You Should Expect from Your Dealer

The management team of your dealership should have the skills to assist you in your practice on all issues – if they do not you are aligned with the wrong dealer.   The following is a guide as to how your dealer group should be able to help you:

Dealership Head:

The head of your dealership should be able to spend time with you defining and refining your business strategy and be able to assist you with its implementation. This implementation includes working with you to win over and activate centres-of-influence who can refer pre-vetted and pre-sold prospects. Remember it is in the dealer head’s interest that your practice is successful.

Practice Manager or Dealer Business Relationship Manager:

You should be able to utilise the services of a practice manager or BDM-type person to run a diagnostic over your practice to identify issues and deficiencies and work with you to coordinate the required expertise from within the dealership. This person won’t have all the expertise you require but should be a good starting point.

Marketing Manager:

Your marketing manager should be able to work with you to develop a marketing strategy aimed at growing your business via a lead generation program that targets higher quality prospects who fit into your preferred client profile.  Your marketing manager should also help you build your own profile in your local area as a financial planning expert.  They should also provide you with the tools which assist you to generate leads, educate clients and win centres-of-influence.

Legal and Compliance Manager:

The legal and compliance manager exists not only to protect the dealer group, but also to deliver a service to you that ensures your practice is running compliantly and in an efficient manner. This is a crucial component of practice management as practices with a poor compliance record will have their sale value discounted.

Dealer Services Manager:

Your dealer services manager should be able to assist you in implementing systems with the aim of making your practice more efficient, including client review processes, efficient SOA writing processes, work flow systems, efficient portfolio reporting, and so on.

Technical Services Manager:

The technical services manager is a resource to help you improve your technical  skills.  They should also help you win clients by being available to review and/or design appropriate planning strategies.  In addition, they should help you work with centres-of-influence by developing technical strategies that may be used by the centre-of-influence to market to their client base.

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