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Journey Strategic Wealth

Four Common Practice Management Mistakes to Avoid

As advisors scale and grow their business, they constantly have to toggle between strategic, big picture thinking and tactical doing.

Advisors do not get enough credit for how difficult it is to build a business while working in the business. In addition to wearing a million hats, you constantly have to toggle between strategic, big picture thinking and tactical doing. Occasionally the latter takes precedent, leading to less-than-thought-out decisions.

Below are four common practice management mistakes you should be mindful of as you continue to scale and grow. 

  1. Not taking the time to clarify your vision and decide whether you want to build a lifestyle practice or an enterprise.

Deciding definitively whether you want to maintain a lifestyle practice or build an enterprise is one of the most important decisions you can make as business-owner.

Many of the advisors I have spoken to over the last decade actually enjoy running lifestyle practices but feel like they should be building enterprises. They invest heavily in tech and infrastructure and start hiring people, only to realize that these investments in the business will require them to take home less pay and spend most of their time doing things they don’t enjoy.

It’s important to understand the differences between the two business models. In an enterprise, the advisor will not be able to wear “both hats” forever. At some point they’ll either have to run the business full time and limit their advising responsibilities or bring on partners to run the business for them. Additionally, in an enterprise, there is a strategic focus on driving long term enterprise value whereas in a lifestyle practice the advisor can prioritize maximizing cash flow and/or their income.

Deciding on which direction to go will help you prioritize your strategic initiatives and business decisions in the coming years.

  1. Making a new hire without auditing your systems and processes first.

Oftentimes, our gut reaction when we feel like we are at capacity, is to hire an additional person to help as soon as possible. In some cases, this new hire is warranted. In other cases, the capacity issues could have been solved with technology and by implementing a few new workflows. 

Before hiring your next service associate, investment operations associate or paraplanner, make sure you audit the following:

  • How you gather data.  Many advisors still use fillable PDFs or forms to gather critical client info. Make sure you’re using digital client questionnaires that sync and integrate across your tech stack. This will ensure that most of the data input is complete and doesn’t need to be reinputted across multiple tools. If your tools aren’t “speaking to each other,” consider a service like Precise FP that can help plug the data holes.
  • How you prep for meetings. Advisors often mention how much time their team spends updating financial plans before review meetings. Save time by sending a digital questionnaire to clients that includes entries for all of the updated information you need. This increases the likelihood you will get all the information in one shot. If you can direct clients to sign into their account and update for you, that’s even better!
  • Your repeatable processes.  Create automated workflows in your CRM for all of your repeatable processes, including onboarding a new client, preparing for a review meeting, opening a new account, starting a new financial plan, etc. You can also use automated calendar tools like Calendly so clients set up their own meetings and automatically get follow ups and reminders.
  • Your contacts in your CRM. Get in the habit of using tags in your CRM so you can quickly and efficiently communicate to certain groups of clients with similar circumstances and needs.
  1. Signing up for every new piece of technology.

It is very easy to fall victim to red, shiny object syndrome with all the new fintech tools and capabilities available. Before signing up for a new system or tool, make sure you do the following:

  • Optimize your three core tech pieces—your portfolio management software, your planning software and your CRM. Ensure that you have integrations between these systems and your custodial platform working as well as possible. 
  • Audit all of your tech at least twice a year to make sure that 1) you know what you are paying for and 2) you are getting the biggest bang for your book. The fintech space is consolidating; many of the tech platforms you are using have acquired or merged with other platforms. Consider where there are opportunities to go deeper with one tool you already use, rather than introducing new ones.
  • Only add tech if it is valuable to your clients, and you are willing to take the time to adopt it fully. This may seem obvious but truthfully, it’s easy to get excited about a tool, and quickly sign on without fully assessing whether our clients really need it.
  1. Not setting proper expectations when hiring a new advisor.  

Oftentimes (and I’m generalizing here) advisors will hire a younger advisor with limited experience to fill the role of lead or associate advisor. The expectation is this new advisor will be eager to hit the ground running and will be focused on both client management and new business development. In many cases these expectations are never clearly articulated to the new hire resulting in disappointment on both sides. Before hiring the next advisor on your team, consider the following:

  • Set proper expectations for yourself. Integrating a new advisor into your practice takes time and should be done in phases. First, they’ll need to learn and observe, then they’ll need to shadow you and practice, and then eventually they’ll be able to lead the relationship.
  • Provide a roadmap for success. If your expectation is they’ll come in and work your book, be clear about what that means. Which clients will they reach out to? What should the talk script sound like? What’s the time frame for “taking over” the relationship? What role will you play?
  • Determine success by assessing how much capacity they create for you. If you are the primary revenue generator, the fastest way to see ROI on an advisor hire is to have them manage relationships in-house so you can go business develop, not the reverse.

On a final note, keep in mind that there are so many options for advisors who are looking to completely outsource the practice’s operations. There is no single right solution for every advisor, but likely there is a single right solution for you somewhere. 

Penny Phillips is the co-founder and president of Journey Strategic Wealth. 

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