To move from DOL compliance to transformation, you will need to focus on several key issues to drive the speed and effectiveness of these changes within your business.
We've seen it before.
A major regulatory change like the recent release of the Department of Labor rule prompts firms to use internal and external resources to formulate an action plan to comply. Revenue forecasts, compensation reviews, intricate client segmentation and many other activities are scrutinized to help with the process. As must do's, these are all critical and necessary steps that have to be completed prior to the rule taking effect.
While these tasks are urgent, they can also prevent us from looking at the bigger picture and asking the transformative question: “What's possible?”
One thing that is clear to me is that progressive and visionary firms can use an industry sea change — like the DOL fiduciary rule — as a catalyst not only to comply, but also to transform their business. There will be a small percentage of forward-looking firms that use the new rule as a platform to drive an improved client experience, enhance incremental revenue growth and add economic value.
These firms take a disciplined, long-term approach to such substantive changes. They do so sooner, rather than later, and ultimately differentiate themselves from their competitors and end up the future winners. Sadly, however, such transformations are often stalled because a company doesn't want to be the first to market with changes of this nature, as they could impact revenue, recruiting and a myriad of other factors in the short term.
But this environment is different. The DOL fiduciary rule is forcing firms to take a hard, comprehensive look at their businesses, and almost all firms will have significant changes they need to adopt prior to the rule taking effect.
To take hold of this opportunity and move from DOL compliance to transformation, you will need to focus on several key issues to drive the speed and effectiveness of these changes within your business. To start, keep the following considerations in mind:
• How are you going to develop, empower and equip your sales and field leadership to deliver on the changing expectations and landscape? This is one of the most critical aspects around change management and improved execution, but it often is not addressed fully in these scenarios.
• What are you doing to ensure your advisers increase their effectiveness and productivity in the new environment? There will be pressure on revenues and margins over the coming months and years. The quicker you can get your advisers to pivot and deliver within the new normal, the less impact you will experience.
• Finally, what are you doing to accelerate technology and platform utilization among your advisers, within leadership and with clients? Proper use will improve the client experience and create efficiencies for your advisers and within the broader firm. In addition, while most firms have an aggregation and planning tool available for their team, broad penetration within the sales force remains elusive. In a post-DOL fiduciary rule environment, there will be an even greater premium placed on expansive and comprehensive financial advice. Leveraging these technology tools will be an important step in that process.
The time is now to begin thinking about how to transform, and not just comply, with the upcoming regulation. Using an objective third-party resource can also help tease out challenges, exploit opportunities and prudently push boundaries.
While it is essential to address the pending immediate hurdles, the DOL rule challenge can be today's opportunity. Harness the moment and incorporate a longer-term vision of where you want your business to be over the next several years. Doing so can be a leadership-defining success.
Scott Dixon is chief operating officer and senior managing partner at Red Rock Strategic Partners in Atlanta.
