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Self-Imposed Slavery
Often, when we think of a practice we think of the doctor or attorney. In general, these professionals are held in high esteem by the populace, as they command high hourly fees for their time. But you and I know that anybody working on hourly fees is a slave to their office. Such a practice is not an esteemed position but rather a form of self-imposed slavery.
Yet for most producers, mimicking the practice of a physician would be a significant improvement. Let me explain.
Project vs. Process
Many financial advisors treat each individual client as a custom individualized project. Unless you have clients that will pay you a lot (i.e. your earn at least $15,000 annually per client), you will never have a good business with this approach.
Your business must be set up as a process. Every new client must get the same services and products. Sure, they may get them in different proportions, but every client who gets the "moderate portfolio" better own the same stocks or you set yourself up spending time on each account, providing personalized service when it’s not necessary and you’re not being paid enough to do so.
A really good business is a cookie cutter approach to dealing with clients. That does not mean clients get some impersonal program. It means they get a great program because you have honed the creation of your services and products you offer to the exact needs of the finely focused market you service. If you cannot treat your clients in a similar fashion, then you have not adequately focused your target market!
Does Intel design a new chip for each customer? No, they do not do projects. Their business is a process, producing millions of the same chips per month.
Should every business be designed as a process? No. Estate planning does not lend it self to a process as each client may need an individualized program. Just make sure that when you work on a project basis like this, you get paid a lot.
Models from other professions
Let’s take examples to make this clear. Do you think attorneys charge a lot? They have to because it's difficult to make process out of the work they do. Each client is s separate consulting project. But notice that doctors set themselves up as a process. Each patient gets 20 minutes:
4 minutes asking questions
8 minutes observation of patient
8 minutes to administer a treatment, prescribe a drug or refer to a specialist
NEXT PATIENT, NURSE!
So, the average physician has done much better than the average financial adviser in making their practice into a process rather than a project. However you can go one step further by turning your practice into a business.
Convert a practice to a Business
A few financial professionals, have successfully converted their practice to a business. Here's the distinction. When you have a practice, it only generates revenues when you are producing. A business however, produces revenues whether you're present or not.
Recently, I spoke to a top producing stockbroker who told me he was out of the office for two weeks of the previous month yet he generated gross commissions of $1 million. It was clear he had set up his practice as a business that operated independently of his presence and was designed and staffed by competent people who could continue the business in his absence. Let's look at how that's done.
First, you need to design a revenue model that generates revenues unrelated to your time investment. If you spend your day cold calling, that makes you a slave to your phone. Another advisor, who conducts a fee based business, generates fees whether he is physically present in his office or not.
Secondly, you need qualified staff to carry on the business in your absence. At minimum a licensed service assistant who can not only service clients but also take trades and follow up on notes you have left to generate additional business. The process of any financial services business is converting strangers to prospects and then to clients. Any well-trained service assistant can act on this process of converting strangers to prospects (by implementing a direct mail program) or help convert prospects to clients by scheduling appointments for you. Ideally, you will have both a service assistant who handles current client needs and a separate sales assistant who generates new prospects and clients.
Third, you need to design systems and processes for your staff. Many people with practices run each day by the seat of their pants. So when they are not present, very little can get done because systems processes and procedures don't exist to get anything accomplished. Designing such systems and processes is hard mental work. It takes time and it takes time to refine the systems once you start using them. But the payoff is a business that operates and generates revenues in your absence.
The concepts discussed in this article are covered in more detail in Larry’s book, “How To Become a Million Dollar Producer”.
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