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Can you measure practice management success? - Advisor Practice Management


Can you measure practice management success?

The landmark practice management study by ThinkAdvisor [AdvisorOne/ActiFi Pursuing Practice Excellence practice management study, 2012] revealed that 64.1% of advisors received practice management services from their broker dealer in the United States. A majority (65.65%) of those advisors rated the practice management they received from broker dealers as valuable or extremely valuable. The services they valued the most were:

Sales and Marketing 56.8%
Client Service 52.1%
Operations and technology 44.2%
Business services 42.9%

Practice Management is a critical (and increasingly) important to the relationship between advisors and the institutions they work with. Practice Management themes include: Service, Efficient, Process, Time, and Financial Planning. Advisors want advice and best practices tailored to their needs and want someone to assist them in implementing improvements. Advisors said they will devote significant new investment dollars to sales and marketing to attract new ideal clients, while advisor time spent is most weighted to building ideal client service experiences. Practice management is becoming a critical part of the value proposition and firms are budgeting significantly to improve their practice management offerings to advisors. Practice management remains an immature area without clearly defined goals, budgets, staff and agreed-upon methods to measure the effectiveness of practice management programs. While almost all firms try to offer advisors help in any area they can, there is a need for specialization in terms of focus on specific areas of assistance. Most institutions currently still focus on product capabilities. Future differentiation will depend on their ability to help advisors leverage those existing capabilities versus simply developing more product.


Five keys revealed from the AdvisorOne/ActiFi Pursuing Practice Excellence practice management study, 2012:

 Practice Management is a relationship. It’s clear that practice management is critically important to the relationship between advisors and the institutions that serve them and will become increasingly so. It’s obvious why so many firms are investing in practice management, with two-thirds of advisors saying it’s critical to their relationship with their partners.
 Define it. The definition of practice management is broad and varied, yet key themes emerge: service, efficient, process, time, and financial. However, advisors rank sales and marketing as the highest need. So there is an opportunity to expand the advisor’s definition of practice management to include sales and marketing.
 Several areas. While sales and marketing is the individual sector that scored significantly higher than any other area in which advisors said they most needed help, all areas scored highly with even the lowest (operations and technology) hitting almost 40%.
 Assist in implementation. While there are a wide variety of methods to deliver practice management services, advisors want advice and best practices tailored to their needs and want someone to assist them in implementing improvements.
 Time Management Advisors said they will devote significant new investment dollars to increase sales and marketing, while advisor time spent is most weighted to client service.

[AdvisorOne/ActiFi Research July 2012.] AdvisorOne/ActiFi Pursuing Practice Excellence practice management study, 2012

The only constant in the financial services business is change

If we wrote practice management strategies 20 years ago before the Internet, the components would be quite different. Today, with online webinars, online training and online resources, remote advisors can access and implement best practices to grow their business. How do advisors go about implementing a practice management process or implementing key strategies in their practice? Successful financial advisors realize the power of implementing, not just planning. As General George S. Patton said, “A good plan violently executed now is better than a perfect plan executed next week.” Soon advisors surprise themselves and find themselves at the top of the field. These advisors are seen as leaders in the industry and sought for their expertise.

The most important goal
If nothing else changes and we carry on with business today, what is the one main goal of practice management that can make a difference? One thing executed above everything else that will make a difference, is training. Training advisors to “implement key practice management processes into their business.” This is the one idea that is similar to when John F. Kennedy said, “Land a man on the moon and return him safely to earth before this decade is out.” What are we trying to do? It is not several goals and programs, it’s one main goal. Until organizations and advisors figure out that in practice management, the goal is training, we can design create and implement concepts, solutions and ideas until the cows come home. Ask the top financial advisors in the industry in North America and the top 5% will have utilized some type of training to achieve their success. Without coaching and training, practice management is just a basket of ideas and concepts.
How do you measure practice management?
Measuring the success of practice management can come in many forms. It can be retention of assets or advisors through succession planning. It can be recruiting advisors who want to join your company because you have practice management, for the support it gives to their business. However, the most important measure is the right type of training to generate the ideal growth of business or revenue and distribution of products and services. For example, take a group of advisors in a region and train them for a year and compare them to a group without training. Tracking the two groups will give you measurable results. The two groups, when measured over 1 and 2 years, the results should speak for themselves. Just like a hockey game, keeping score for all parties helps people find out what they need to win, and how far behind they are. Training is all about keeping score and telling the players exactly what they need to do and how to do it. Just like training a hockey team. The goal is to prepare your team to play your system consistently, execute your system without compromise over and over from defense to offense until the other team makes a mistake, or you score a goal. The goal is not to just score a ton of goals; the goal is to execute the systems repeatedly over and over, better than any other team (or advisor).

The legendary basketball Bobby Knight had a couple of great quotes that help capture the essence of coaching. Bobby Knight said:“Most people have the will to win, few have the will to prepare to win." "You don't play against opponents, you play against the game of basketball." "From a coaching standpoint, the greatest fear I've ever had - and it doesn't take a Final Four to bring it out - is that in some way I might not have prepared my team as well as I could have."

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