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Practice Makeover: Season 1

Practice Makeover: Episode 2

Feb 20, 2014 @ 12:00 am

Runtime: 11:30

In episode two of InvestmentNews’ “Practice Makeover”, expert adviser coaches brainstorm and form an action plan for makeover recipient Trent Bradshaw to help solve his firm’s numerous time management problems.

The Renovation Room

Industry experts and executives offer strategies, tips and ideas on how practices can improve their business.

Ray Sclafani

Ray Sclafani

Founder and CEO of ClientWise LLC

Robert Sofia’s conversation with Thomas and Robert Fross provides some powerful insight into what they correctly refer to as an investment in human capital. This comparison should resonate with advisers who pour hours into investment planning for their clients. As a team leader, the analysis and assessment of who they invest in to include on their team should require just as much effort. Once advisers have invested in building their teams, they must have active faith in the investment decisions they’ve made. As Thomas Fross so accurately points out, they made the mistake of introducing an adviser on their team as a “junior advisor” early on, which resulted in not “building him up enough in the eye of the client.” Thomas’ point about getting the client as excited as he was about the involvement of a second, rather than a lesser, adviser would have demonstrated much more faith in his decision to invest in that team member. Many of the firms we work with will call the experienced financial adviser a “Senior Lead Advisor” and the less experienced advisor a “Lead Advisor”, and refer to their service professionals as “Service Advisors” and their support staff as “Client Relationship Managers”. These titles express a level of talent and experience in keeping with how the team and its members want to be viewed.

Frank Maselli

Frank Maselli

Founder of The Financial Lifeguard Academy and The Maselli Group

There are several layers to Trent's case. He certainly needs better trained support people to whom he can feel comfortable delegating. 370 clients and $100 million in AUM isn't an overwhelming problem. With proper systems and processes, three skilled people should be able to handle that load. But it's clear that he is taking too much on himself.

Trent's apparent need for control and micromanagement could be a lack of confidence in his people, or it could be a symptom of a deeper issue. Sometimes it's easier to focus on the daily minutia of client account management rather than do the hard work needed to grow and solidify your business.

If he's serious about raising $50 million in new AUM or migrating his practice to higher-net-worth clients, he needs to streamline his existing business model and build a comprehensive prospecting and referral plan. For example, when he was asked, "Where's the money in your town?" his answer was "There's money everywhere." That's adviser-speak for "I have no coherent marketing strategy. I just take whatever falls into my lap."

Step 1 is to do a team evaluation to identify everyone's deepest strengths and most successful behaviors. This will also tell him specifically what kind of person he might need for additional staff.

Step 2 is to segment the client base and begin to differentiate the service level he provides to his A, B & C clients.

Step 3 is to step back and take a serious look at why they're both doing so much work…and maybe begin to transition his wife out of the practice.

Often when spouses work together, it becomes difficult to leave the job at the office. You're always talking and thinking about the business. Together they may want to set clearer boundaries between focused work time and family downtime. The lines may be too blurred for anyone to ever relax and put life in proper perspective.

April J. Rudin

April J. Rudin

President of the Rudin Group

Advisers often make the mistake of choosing other advisers who have changed careers as their coaches or consultants. This is totally insular and doesn’t allow for change or growth.

When the Fross Brothers claimed that “they made many of the same mistakes,” it demonstrated once again to me that the industry needs to seek outside advice on how to run a small business. That is what Trent needs help with. I am guessing that he has no business plan nor marketing plan.
While the Fross Brothers may be successful advisors and business consultants for some, their solutions to Trent’s problems and others may be limited to their own experience. I find that when financial advisers speak with other advisers, they reinforce existing myths like “if I want it done right, I must do it myself.” This mindset cannot allow a small business to grow. Trent needs to learn what he is best at and “stay in his lane” so I suggest that Trent have the personality profile completed so that he can be placed first into his organizational structure. Perhaps he is detail-oriented and should be functioning as the chief investment officer. It sounds like that to me. He might best served being the inside operations guy, and hiring someone to do business development and outside relationships with centers of influence, etc. Most advisers are more comfortable with inside quant tasks than outside relationships and business development.

While I definitely agree with their suggestion of segmenting the clients, Trent needs to see how profitable each segment is and have the proper staffing in place before he attends any social events, charity events, etc. He cannot onboard any new clients until he decides how, and who to service from his existing bases. I thought Trent was trying to improve his quality of life and spend time with his family?

As I said before, Trent needs to “fire” clients—and the only way he will know who is by segmenting and then cutting off the unprofitable accounts or hiring someone who is junior to manage smaller accounts if they are even profitable to keep. Hiring someone junior to manage small accounts makes sense. Hiring someone to do outside business development might make sense too. But without knowing what Trent’s strengths are, who his target (and most profitable) clients are, he should not make any hiring decisions.

He needs to think of staff as part of his business model and essential for future growth. It should not be a “hard step for advisers” nor should he think of it as an investment or, worse, as a cost and look for ROI. Instead, Trent should be thrilled that his growing business requires more hands and different skills sets. He needs an organizational chart and job descriptions. He needs to meet with his own CPA to determine his budgets for hiring, events, etc. This should be the cornerstone of his 2014 plan.

Mark Matson

Mark Matson

CEO of Matson Money

Quality of life should be a huge concern for Mr. Bradshaw. There comes a time in every planning practice where growth is stymied by time. Not only do personal relationships suffer, but client relationships suffer as well. Segmenting clients would be a huge mistake. The solution is coaching and escaping a traditional one-on-one planning model. Not only is it rewarding to inspire others through coaching but once the investor has experienced a new capability to experience life and money as abundant, then they become leaders and share that with other people in their community. Segmenting clients definitely does not truly empower them to share that experience with others. You grow your business through coaching in groups which creates leverage and improves quality of life.

Kelly LaPalio

Kelly LaPalio

Vice President of National Accounts, FocusPoint Solutions

As an adviser and business owner who is seeking better work/life balance, Trent can no longer maintain the workload he’s established for himself. At the same time, the Fross brothers have discovered that Trent has had employee retention issues. I am in full agreement with their recommendation that he begin laying out the long list of tasks he now handles that could and should be delegated to another trustworthy party. If Trent establishes automated processes for most of his firm’s day-to-day tasks and minutiae, it’s possible that his two-person staff could successfully assume these responsibilities. But the key is that Trent must feel comfortable that things are being done properly, consistently, and to his satisfaction—with very little hands-on involvement. Also, with respect to servicing larger or smaller clients or accounts, we’ve seen firsthand that, with the right systems in place, it is possible to offer a consistent, high level of service on all accounts, regardless of size.

If you’re going to do something more than once, develop and document a system for it. We support many advisors who run highly efficient practices with minimal staff, and still have time to spend on the things they are best at and enjoy most. After committing to make some big changes, they spend much more time working on their businesses now than they did working in them before. It’s really motivating and rewarding to see the progress advisers are able to make when they’re driven and remain focused on their big-picture goals.


Your Practice Partner

Valuable information and assets provided by OppenheimerFunds, this season's sponsor of Practice Makeover.

Your Practice Partner

Practice Management tips and commentary on the first season of Practice Makeover, brought to you by OppenheimerFunds.

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Video Transcript

[MUSIC] Last time on Practice Makeover, we met Financial Advisor Trent Bradshaw. Trent's problem was that he had too many clients, not enough support staff, and now his lack of time was trickling over into his personal life. At this point now we've completed our discovery, I'm gonna go meet with the Frost brothers. We're gonna have a brain storming session that we'll use to generate an action plan for Trent. [MUSIC] Had a great meeting with Trent Bradshaw. Excellent adviser, built a $125 million [INAUDIBLE] business in a fairly small town. But he had some very real challenges too, because he did it all through his own blood, sweat and tears. So he's a point where, believe it or not, he only has two employees, and 370 clients. Oh my goodness. He's doing almost a million dollars in production, or over a million, with two employees. He's doing over a million in production. Wow. With two employees. He says he's working 70 hours a week. But if you get down to it, he puts his kids to bed, and his wife, who works with him in the practice, then helps him do work so they can be ready to go into work the next morning. Trent's staff, they're, they're so overworked. I mean, they're carrying the load of probably five employees. And just the two assistants. And, and they're at their wits' end. His wife is at her wits' end. It's, literally they're waiting for the, for the, the last straw, to break the camel's back. And so, they, they need, they need some reinforcements to help them with the weight that they're carrying. Basically he's a quarterback that wants to do everything. Yeah. He's. And that's one of his problems. He's a Type A personality. He does everything his way. Which is the only way. Mm-hm. The right way. And he has a really hard time delegating, so, when he does delegate he then micromanages the process. So much so that he drives himself crazy and his employees crazy. Which has led to a retention problem. That's a challenge for many financial advisers. Many, many struggle with that very same thing. Yeah. Because it's an intricate business that we're in. Mistakes can't be made. Right. Depends on whoever's concerned. So he's, he's thinking it, it, it's just gotta be done right, I'll do it myself. Exactly. Where does he see himself in say three years, five years? I mean, what's his goal, is it growth? Is it working less? What, what is he trying to accomplish? Based on the hours he's working. Quality of life is his biggest concern. Okay. I understand. So, when he looks down the road three to five years, what he really wants is to be working 35 to 40 hours a week. Instead of 70 to 100 hours a week. And he wants to continue growing $30 to 50 million in assets over the next few years. He'd be very happy with. So, it's not so much a growth issue as it is a quality of life issue. Okay. Does he ever do expand to, to hire more people? Actually, he does. That's one of the great things. He's just invested in a new building right across the street which has about 4500 square feet build out, ready for them to move into. Okay. So, he needs more space. He needs more space. But it sounds like they're working towards that. Yes. He needs more staff. Okay. And to that point, it's not just an administrative staff problem. I mean, he's placing all his own trades right now. Oh, wow. But I, now, that being said, I remember that. We were at the same, we were in the exact same boat. If you were to go back ten years. Sure. We were doing everything ourselves. Mm-hm. And it's a hard step to take hiring staff, you always wonder are you're gonna get the return off that staff. Is it just and investment, or is it a cost to a business, so that's a real challenge for, it was a real challenge for us, I know its a challenge for a lot of advisers. No adviser is uniquely qualified to be doing HR. Or following up on new business. so, it's to get the adviser to change his mindset, and look at hiring people not as a cost, but as a investment into his practice. So, to free him up to do what he, what it is that he does best, and that's to work with. Clients and manage money. When we looked three years or five years into our future and we realized there simply wasn't enough hours in the day, to be able to do all the reviews and, and service all these clients and give them the level of service that, that they had become accustomed to, we had to take that next step and, and hire a, a, junior adviser or associate adviser. Mm hm. He's open to that idea? He is open to it, yeah. One of his concerns is how he's gonna introduce that person to his clients. Yeah. Aah. So that they are comfortable with that person. And, how he can also ensure that person does their job. Well, fortunately, we've been there. And we've, we've done it the right way and the wrong way. So we'll be able to help them with our experience. Yeah, certainly. But, in that regard. No doubt about it. [INAUDIBLE] But we made a mistake at the beginning. So. Well, what was that mistake, if you don't mind? Introducing them as a junior adviser, not building the, them up enough in the, the, the eye of our client. Mm-hm. If we were to do it, now, to do it all over again, we'd bring that person in, and say how humbled we are to be able to have them now as part of our practice. We're just gonna, we're gonna sit in this meeting ourself and sort of enjoy the meeting. And let, let the client think, wow, this is really exciting rather than, oh I'm being handed down to a junior person who lacks the experience. If I was one of Trent's, clients, one of my concerns would be what happens if something happens to Trent? Mm-hm. So, I think it would be a plus for me, to know that Trent had other advisors working with him. You have to present it like, in order to provide the best service we possibly can, we've, we've, we've brought on someone to be able to help me, to be able to assist me. Mm-hm. With Trent, it's, he's, he micromanages too much. He knows that. He needs assistance, he knows that. He knows all of his problems. It's, it's, it's typically not a surprise to us. What's always surprising is that advisers know their problem, but then finding a solution to it is the challenge. I think that's where we come in. They know their problem. They need someone like us to give them the step-by-step procedure to be able to reach their goal. Well, now you guys have heard the problems, so let's talk about solutions. Sounds like we've narrowed down to a few key areas. So, what do you recommend? Well, I think first of all, he needs space. Yeah, you said he's open to the idea. Does he have any relationships with CPAs, attorneys, anybody that for, perhaps he could forge a relationship with, more space, give him more room for growth? It's funny you should ask that. Actually, the building that he's going to possibly be moving into, will be relationship with a CPA partner in the area. Okay. So it sounds like that issue will be taken care of, pretty easily moving into the new location. Let's talk about the, the, the staffing issues. Yeah be, here's my concern. If, if we can't get him to stop micromanaging, then it doesn't matter how big his, his office is or how many people he hires, he's still gonna wanna do everything himself. So, I think we really need, we need to really get him to see that he is not the one that should be doing a lot of the mundane things in the office. Right. Right? So what I'd like to see him do is, is, give an entire list of all of his duties, and then we start picking the ones off the list that he can delegate. I think that is gonna be an eye opening experience for him. Yes, once he goes through and realizes all of the duties that he's doing, that he shouldn't be doing. That's gonna give even more impetus for him to hire someone else. So, he's gotta hire more people. He wants to hire the right people. From what you said, he's had a hard time finding the right people, and then retaining them. I think it's important that he do personality profiles, on those potential employees before he hires them, to make sure that he's putting the right person. In the position at, from the outside. So, one of the first things that we're going to do with Trent when it comes to a staffing issue is make sure that he's got the right staff in place. So we're going to be having him do a personality profile on his two existing employees, to find out where their strengths and weaknesses are. The last thing we want to do is set either of them up for failure. Once we've done that and clearly identified where, where they're best used in the office, then as Trent starts to bring on those reinforcements to help, making sure that he's doing a profile on them also. Make sure that they have the right strengths for the. Like for example, Tre, Trent's a very detail oriented person. He needs someone in the office who has the eye to detail. like, like he has. Another challenge we identified of Trent's is his issue with his current clients ,versus his ideal clients. So right now, he has 370 clients he's working with, as you know. And many of them, really don't meet his ideal clients profile anymore. They're $10,000, $50,000 accounts he took on in the early day of his business. And now he's working with clients at 200, 300 and upwards of a million dollars to invest. When it comes to moving up market for him, going from $100,000 clients to a half a million dollar clients, what are some of the best practices that you'd recommend? To begin with, has he rated his clients? Does he know who his idea client is? No he has not. Oh. So the very first step of the, of the process is identifying those clients that he wants to, to duplicate. Another issue that we saw with Trent, was he hasn't segmented his clients. So very simply. He, he doesn't clearly understand who he's trying to duplicate. And so, getting client to seg, or getting Trent to segment his clients is important. That way, he's gonna be able to provide a, a certain level of service to his, his platinum clients, and also his other clients won't necessarily feel like they're not getting well-served, because they're gonna understand clearly what it is that, that they can expect from Trent. Is he doing client events? Is he socializing with his clients? He uses our annual state of the markets and halftime report presentation, which are educational. Okay. But he's doing no social events at all. Okay. So, I think getting involved with more client events, both educational in nature but also I care events spending time with his clients on a social basis. I think that would, I think that would be very important. I think the other thing that would be very important, would be for him to get involved with local charities. Because, typically your higher network clients are drawn to people who give back to the community. Mm-hm. Excellent recommendations. Trent knows where his, his challenges fall. He, he, that, that's the good news. I think the, the benefit of, of working with us is that we, we've been down that road before. We, we sat on the, we sat on the same side of the desk as Trent does. So this isn't just great theory but not in reality. We're, we're gonna, we're gonna show him what we did along the way, to be able to get to the point where he has more free time. He's able to spend more time with his wife and, we, we want him coaching his, his son's soccer game. This process is all about collaboration. My meetings with the Frost brothers went great, they shared some excellent insights, and now we're ready with a solid three-step plan. First, we're gonna help Trent with his human capital strategy. Second, we're gonna teach them how to delegate responsibility. And finally, we're gonna help them get in front of the right prospects. Now it's time for the exciting part. Let's go present our plan to Trance. Next time on Practice Makeover. Candidly, I'm worried about you. I'm even worried about your marriage, because, you and your wife don't get to enjoy your evenings and weekends. You don't get to enjoy the time with your kids, that you want, because you spend so much time working. [MUSIC]


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Over the last 15 years, InvestmentNews has heard - and told - the stories of thousands of advisers. Now we are going one step further: InvestmentNews is now working with some of the industry's top coaches to identify advisory firms that are in need of a "Practice Makeover". Our mission with this exclusive show is to help advisers take their practices to the next level - while providing our audience with practice takeaways that they can apply to their own businesses.

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