Tap role models to maximize efficiency

What, and how, financial advisers can learn from successful practices

Nov 6, 2017 @ 3:36 pm

By Drew Jackson

Every financial adviser wants to serve his or her clients, operate more efficiently and effectively, and build their business. But how do you divvy up limited time and resources? How much of your day should be spent managing assets and how much managing clients—talking to current clients, cultivating prospective new clients and proactively growing your business?

Some might say it depends on circumstances, personal preferences and priorities. But there is a right answer, and it's not complicated: If you want to know what success looks like, ask successful people.

Sounds simple, right?

From business mix to technology tools, and product mix to time management, larger advisory practices with more assets under management run their business in ways that are fundamentally different than smaller organizations.

That's no coincidence.


The Investment Management Consultants Association (IMCA) Research Quarterly recently published a Cerulli Associates study that highlights those differences. It reports that smaller advisers are generally more transaction oriented, spending more time designing and managing custom strategies and portfolios.

Larger advisers spend less time on operational mechanics and more time engaging with clients. They're also better at leveraging new technologies and offering new services that help them stand out.

Practices with greater than $500 million of assets under management spend about 59% of their time engaged in client-facing activities. Practices with less than $25 million of assets under management spend just 47% of their time in the same activities. A similar pattern exists in percentage of time spent in routine investment management: 21% in smaller practices versus around 16% in larger, more profitable practices.

Most larger practices generate more revenue from fees and less from commissions—precisely the opposite of smaller practices. Some of that is a byproduct of regulation, but more of it is connected to business structure and strategy. And, greater revenue potential leads to expanded growth potential, which affords greater economies of scale, unlocking new opportunities, and feeding into a self-reinforcing cycle of success.

Ironically, advisers who spend the most time buried in the details of custom management strategies are not only unlikely to achieve their growth potential, they're not serving the best interests of clients. It might seem counterintuitive, but extensive customization isn't an asset—it's a liability!


The big question is how to change those habits and break those patterns that are holding you back.

The following strategies can help you begin to "think big":

Boost efficiency by using more models and relying more on outside management resources. Optimize workflow with platforms that make it easier to trade and rebalance across multiple accounts. Take advantage of proprietary investment tools, in-house models and investment research resources. Consider outsourcing back-office maintenance functionality.

Get better at defining clients' goals and objectives, leading to more effective strategies to achieve those goals.

Leverage internal resources like business development groups to identify potential targets and new opportunities.

Talk. Advisers are generally open to talking about what's working for them. Start with resources within your own organization plus wholesalers, product reps and other professionals.

Industry conferences can help you find new ways to structure your practice and become more efficient—look at who's doing innovative and unique things and how they are structuring their practice. Pay attention to workflows and strategies, team makeup, skillset and collaborative efficiency. Focus not just on what, but how: did they evolve or were they coached/directed? What were their hiring protocols?

Be proactive: take a leadership role and start a networking group. Ask about best practices and what business strategies are working for your peers.

Consider financial planning. Larger practices offer more financial planning services. Financial planning helps connect today's strategies to clients' longer-term goals, leading to strong and enduring client relationships.

The bottom line? If you want to grow your practice, think like a larger firm. Consider spending less time on "busy work" and more time with your clients exploring their goals and objectives, and deploying programs and solutions to meet those goals.

Drew Jackson is the president and CMO of Concorde Asset Management.


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