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Hands-On Practice Management

Hands-On Practice Management

Waddell and Reed rolls out a new practice development program to drive productivity and enhance advisor understanding of their practice as a business.

Every advisor’s practice has some area it can improve, that is why advisors always need to be investing time and effort to better their businesses.

Waddell and Reed Financial Advisors has chosen to create a practice development program that takes the traditional picture of practice management to a new level through its GPS: Great Practice Solutions Program. The top 250 advisors annually qualify for the program that entails quarterly peer interaction, quarterly one-on-one meetings with directors of practice development (all former producers) with monthly follow-up calls, and monthly webinars that maintain accountability and allow for further peer guidance on practice direction. 

“This program has been in development for about five years,” says Tate Kerst, Waddell and Reed’s director of practice development.  Kerst utilized Mark Tibergien and Rebecca Pomering’s book Practice Made More Perfect to identify seven key areas to focus the program around:

1.     Strategy – defining a vision

2.     Operations – implementing effective systems

3.     Resources – leveraging human capital

4.     Finances – knowing the numbers

5.     Marketing – replicating best clients

6.     Culture – creating positive environments

7.     Succession – planning for the future

The GPS (Great Practice Solutions) Program

Kerst shared that the program was set up during the last half of 2012 and kicked off Jan. 1, 2013 to provide their advisors, all independent contractors, the ability to deepen their understanding of their practice as a business and more efficiently set up their practices to help advisors reach their goals of more revenue, more time or both. 

“Advisors have the knack for creating relationships and helping clients but typically advisors in our industry don’t have business backgrounds,” Kerst said. “We believe that an understanding of business basics coupled with deeper understanding of their unique business aspects of their practice will enable advisors to build in solutions that will enable them to drive revenue or create efficiencies to provide them more time away from the practice.”

Kerst and his team analyze revenue and expenses, as well as practice structure and team interaction, and create a track for every advisor in the program with Actifi’s RoadMap tool. Kerst, along with four regional directors, travels to advisors each quarter to provide one-on-one consultations that provide the individualized action tracks for advisors. 

On top of these meetings, advisors participate in group meetings the first month of every quarter at one of 12 locations around the country.  These meetings provide the general focus for the quarter and allows for peer interaction and sharing.  Combined with frequent webinars, twice monthly, advisors receive ideas and actions in bite-sized pieces that allow them to implement ideas and not be overwhelmed by trying to change too much too quickly.

“The program allowed me to look at my practice differently and the time that was spent understanding how we currently worked and the economic structure of my practice allowed me to better structure my team and become more focused on productive client relationships,” said Laura Jacobs, an advisor out of Campbell, Calif., who has worked with Kerst for the last six years.

Since Jacobs first started working with Kerst, her revenue is up 57 percent. “When I first started working with Tate my practice was running me. I was working 16 to 18 hours a day six to seven days a week.  I wasn’t getting the free time I thought I should have after building my practice for 13 years.  I was making pretty good money but not enjoying it.” 

“For advisors it isn’t always about driving more revenue,” said Kerst. “A good program needs to be able to define success with other metrics.”

Another advisor in the program, Bennie Schmidt, out of Chandler, Ariz., has seen his revenue rise by 137 percent in the last three years with his revenue per household up 215 percent over that time and his net operating profit per client up 338 percent. 

“Before I started working with Tate, I was doing what every other advisor in my office had told me to do.  The program helped me to understand that more revenue isn’t always the answer if you don’t have a structure to help you be efficient with creating it.  When I saw in 2010 that my net operating profit was only $13 per household and I was making more money than I ever had, it got my attention,” said Schmidt.

Waddell and Reed now uses Actifi’s sales planning and tracking tool to provide the breakdown of practice numbers. “The numbers are only part of the process of understanding a practice,” said Kerst. 

He added, “Working with advisors one on one is partially about understanding the numbers but it involves a lot of art in interpreting and understanding the underlying issues in the practice that need to be created, eliminated or tweaked to get the results the advisor desires. Having a team filled with individuals that had been advisors in the past helps to get the right answers.” 

“Tate helped me understand what type of client helped me to be more profitable and how to structure my team to provide higher levels of service and deliver those more effectively,” Schmidt said. “Too many of us start in this business and think an infinite amount of clients and assets will create the practice we want.”

Already the program has been successful at identifying trends, recognizing the needs for succession plans and cutting back the number of clients.

“Like the industry, we have a number of advisors looking to transition into the next phase of their lives,” said Kerst. “One of the offshoots of the program we didn’t expect to develop this quickly was the ability to place new advisors to the firm in a successful position by adding them to the teams of existing advisors to facilitate eventual succession plans.

“The difference between what we do with our practice development program and where the industry is in practice management is the difference between theory and actually coaching advisors and making their practice better,” Kerst said.

Mike Byrnes is a national speaker and owner of Byrnes Consulting, LLC. His firm provides consulting services to help advisors become even more successful. Need help with business planning, marketing strategy, business development, client service and management effectiveness? Read more at and follow @ByrnesConsultin.

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