One of my favorite shows on television is Kitchen Nightmares with Gordon Ramsey. I like it so much I've seen every episode of the US version that airs on Fox, then I found all the original UK episodes that air on the BBC from time to time and I DVR'd those as well.
Aside from the fact that I'm really into food and restaurants, I think the show's real appeal lies in the simplicity with which a business can be turned around – once the people involved are shown how ridiculous they are. Chef Ramsey breaks down owners and chefs, forces them to face the fact that the problem is not the customers, the economy, the neighborhood or the staff. The problem is the owners and chefs themselves. (Also, Ramsey has awesome hair.)
When I watch the show, I can't help thinking about the obvious parallels with running an asset management or investment advisory practice. The restaurant lives and dies by the quality of its product (the food), the service and ambiance, and its ability to satisfy old customers while enticing new ones. You could say the same about any financial practice that deals with the public - quality of advice, alacrity of service and customer satisfaction are the keys to running a money management firm - everything else is just conversation.
Ramsey's fixes are often simple - while the restaurant business is gruelingly difficult in terms of physical labor and long hours, it is nothing if not repetitive in terms of a successful daily routine. But what he encounters each time he walks into a failing business is typically one of the following scenarios:
1. Owners who had no business buying or starting a restaurant to begin with
2. Chefs who have gotten lazy, lost their passion and let their cooking quality fade away
3. Menus that are way, way, way too big and complicated given the kitchen's ability to turn out dishes
4. Dining rooms with hideous themes and dated decor
5. A staff that has given up on the owner and has turned apathetic or disrespectful
6. An owner or chef who refuses to change what they've been doing for years or decades despite the obvious lack of business and customer satisfaction
7. Neglect throughout the house and filth in the kitchen
8. Poor business acumen, costs that are too high, unsustainable business practices
Ramsey encounters some combination of these same eight things each time he drops in on a capsizing restaurant. He is usually greeted by chefs and owners who think they are doing everything fine and already have all the answers. It typically takes a humiliating wake up call during a catastrophic dinner service for Ramsey to get through to them. Then comes the tears (they are almost uniformly in debt up to their eyeballs) and, at last, a chance for change - usually the last chance the owner will ever get.
If we think about this formula, we see a new way to look at our own practices and force ourselves to admit that there are probably some issues that will fester and get worse over time unless addressed. Among the hundreds of questions we can ask ourselves to get to the truth and find the areas that need improvement:
Am I updating the clients often enough about how they're doing and what I'm thinking?
Am I process-driven and data-oriented or am I flying by the seat of my pants, making it up as I go?
Do I have workflow and procedures in place for prospecting, new account opening, evaluations and portfolio rebalancing?
Can I continue to do this the way I'm doing it and scale up? Can I get bigger and still service my accounts as effectively as possible?
Am I managing assets the way I'd want my own family's assets to be managed?
Am I coming across in marketing and advertising the way I'd like to be perceived?
How much time am I spending networking and attending events? Is it working? Is my follow-up working or am I spinning my wheels? Am I talking to the right people and presenting myself correctly?
Am I keeping up with the latest trends in investment strategies and methods? Do I know the new products and how to use them effectively?
Am I delivering what the clients expect? How can I get better at aligning what I say I'll do with what I actually do?
What kind of capital investments have I made in my practice? Are they paying off? Am I under-investing or throwing money at the wrong solutions?
You'll notice that some of these questions may apply to you and some not, but by asking them we are forced to consider that there is always room for change and improvement.
Ramsey's encounters with restaurateurs across America reveal a tableaux of stubbornness, misplaced pride and an institutionalized unwillingness to admit mistakes, especially the ongoing kind. You only need to see the show once or twice to recognize how far away from these people you want to be in your own business. Looking within and being honest about your own flaws is a very important step in that direction.