Readers of FPPad.com know that we’re in a recession.  Not very many needed the National Bureau of Economic Research to tell them that we’ve been in one since December 2007.  While little can be done to cure the ills of the global economy, advisers can evaluate how their business is positioned in order to thrive in the face of economic pressures.

I want to comment about positioning a practice in a recession after reading David Drucker’s article on Morningstar Advisor, Practice Management in a Recession.

Drucker interviewed two broker-dealer firms to discover what their reps are doing to respond to the recession.  What are they doing?  First, reps are committed to continued spending on marketing to new clients, and second, they are looking to reduce operational inefficiencies in their practice.

Market Your Business, Yourself

I absolutely agree that continuing marketing efforts (and arguably increasing them) is essential to firm growth, and it must be done strategically and with purpose.  Still, I’m an operations guru, not a marketing guru, so I’m going to defer to others on the best, most effective techniques advisers can use to market in the face of a recession.

For some advice from industry marketing consultants, read Bob Veres’ January 2009 edition of Inside Information.

Reduce Practice Inefficiencies

Aha, now here is where I have something to add!  In his Morningstar article, Drucker counsels advisers to streamline the onboard process when new clients join the firm.

While reducing inefficiencies when signing a new client is valid, I don’t think it’s where advisers should primarily focus their efforts.  Unless you’re a gigantic firm and are adding 30+ clients a year, you should look elsewhere to streamline processes where they have a more significant impact on the firm’s bottom line.

Think about it: onboarding a client is one of the few specific processes that varies client-by-client.  Now if we’re talking about streamlining the configuration on your internal systems (e.g. adding the client to your CRM, your document management system, your billing program, etc.), certainly, advisers must have this process clearly defined so that it’s easily repeatable.

But if we’re talking about simplifying the ACAT process, gathering of client documents, etc., this is much more difficult to streamline.  Each client’s situation is unique and not all clients reply quickly to your requests for financial information.  Also, say you cut half a day of time it takes in the onboard process.  If you add a dozen clients in 2009, you save only 6 days of employee-hours in your operating expenses.

While good, advisers must focus on streamlining processes that can save weeks of time. So think about things that are done hundreds or thousands of times over the course of a year.  How do you handle the following?

• Client check requests
• Required Minimum Distribution tracking
• Trading and portfolio management
• Gathering price, transaction, and balance data for captive assets not held at your custodian (e.g. 401(k) plans, annuity products, cash value life insurance plans)
• Quarterly report generation
• Uploading reports to client web portals

This is just a small sample, but these are the areas advisers need to streamline in order to stay competitive.

So evaluate those processes that occur on a daily basis, and begin asking yourself and your staff, “What can be done to simplify what we do today?”

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This entry was posted on Sunday, January 4th, 2009 at 12:32 pm and is filed under Efficiency, Practice Management. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.