Why you should see your clients less, not more

Let’s face it. Starting and running a financial planning practice is hard work. It often takes years just to break even. As you grow bigger, you face a different set of problems. Compliance, staff, and of course, trying to be more efficient.

Efficiency is not a buzz word. Far from it. In fact, I would argue it is the single biggest factor that separates high-performing firms from the rest of the pack.

Find a firm that generates significant profit for its owners. Chances are, that ‘being efficient’ is one thing – and perhaps the major thing, at which they excel.

Allow me to demonstrate how and why.

Unlock more profit 

We provide software to firms of different sizes, business models and client demographics around Australia. But the common goal they have is to be more efficient. 

These firms understand the link between efficiency and profit. They are intertwined. The more efficient you are, the more profitable you can become. 

Example:

Let’s look at an example of two hypothetical firms, which is a common scenario we see in practice.

Firm A services 200 ongoing client groups and charges a fee of $5,000 per client group making a total annual revenue of $1 million. 

Firm B, on the other hand, services 250 ongoing client groups and charges a fee of $6,000 per client group making a total annual revenue of $1.5 million. 

And the winner is…? 

At first glance, firm B looks to be the winner. Its annual revenue exceeds its competitor by a substantial $500,000.

However, that’s not the full story. 

Firm A is more efficient than Firm B. It uses better technology, has a more systemised review process and employs less human capital in producing ongoing advice.

Firm A incurs an annual cost of $2,000 per client group, while Firm B has a much higher annual cost to service its ongoing clients, at $4,000 per client group. 

Firm A is the overall winner. It is more profitable than firm B despite charging less per client group with fewer clients. The message is powerful. If you want to unlock more profit, you need to be more efficient. But how?  

How to be more efficient 

In our experience, the review process is the most time-consuming area of a practice, particularly for larger, more established practices with many ongoing clients to manage. 

The good news is that small improvements to your review process can make the single biggest improvement to your bottom line. The opposite also holds true. An ad-hoc, unstructured review process not only costs you time, but also ties up valuable resources which could instead be spent on business development and growing the practice. 

Build a winning review process 

The goal of your review process should be to ‘amaze’ your client, while automating the non-value added parts of the process. There is no substitute for you, the Adviser, but technology can help you with the rest. Your review process, combined with technology, should cover the following three steps. 

First, it should automate the entire pre-meeting step. That is, initiating and booking the meeting. Plus, it should allow your client to update their financial data, risk profile and discussion points through an online client portal so that both you and your client come to the meeting prepared. 

Best of all, this entire pre-meeting step can be automated with technology. Yet, in practice, many firms use little, if any, automation. This has flow on effects to the rest of the process. You will either come to the meeting unprepared, need to schedule multiple meetings instead of just one or worse still, be unable to deliver accurate advice.

Secondly, once data is captured, your management system should process it systematically. This allows you to conduct strategy modelling, identify areas for improvement, track the client’s changing position to their original goals and automate the production of a Review Statement of Advice. For portfolio management, a live data feed from your investment platform into your management system will allow portfolio recommendations to be seamlessly included.  

Finally, once the meeting has concluded, your system can run the workflow and compliance checklists necessary to implement the advice. 

What is the outcome of implementing these changes? We have seen examples of firms achieving a 50% reduction in overall time, report better quality client meetings and a more satisfactory client experience leading to more client referrals.

Concluding remarks  

Finally, we’ve highlighted what efficiency looks like, but also worth mentioning what it isn’t. It’s not about underservicing clients or taking risky shortcuts. Quite the opposite. An efficient, well-oiled review process should not only save your business costs but deliver a better client experience with less compliance risk.  

Vincent Holland, financial adviser and co-founder of financial planning software company, Plutosoft