Advisers, with few exceptions, these days need to grow their businesses in order to generate sufficient income to provide an acceptable lifestyle. After so many difficult years, however, it is not easy to find the motivation needed to do so. Yet the solution may be not much more than a clear understanding of the types of activities needed to provide the desired result.
The process is quite simple. The starting point is to calculate how much revenue your business has to generate above your recurrent income in order to deliver the minimum lifestyle that you are prepared to accept.
Then, you need to shift the basis on which you measure success, from dollars to specific activities. When starting our businesses, we instinctively knew that activity generated revenue. We assessed how successful our week had been by looking at the number of referrals we received, appointments made and portfolios implemented rather the actual dollars we made.
So, the place to start is to quantify the amount needed each year to reach your minimum acceptable lifestyle. The difference between this goal and recurrent income has, with few exceptions, to come from new business.
It is then a matter of calculating the level of the various activities that are essential to bringing on a new client. Each advisor operates differently, but for this exercise the following assumptions have been made: two SoA’s have to be presented to bring on one new client, two Fact Finds are needed for each SoA, two appointments are needed for each Fact Find and four new people have to be sourced and contacted for each appointment.
Now, consider this. Assuming the average fee income from a new client is $5,000, then the value of each SoA presentation is $2,500, for each Fact Find it is $1,250, each appointment is worth $625 and each person contacted would net $156.
People happily accept that financial advice is a numbers game, but I often wonder whether we properly understand what we are saying. If we have to approach an average of four people to make an appointment, then based on the example above every time you approach a potential client that action is $156 whether they agree or not. Understanding this concept puts a whole perspective on rejection.
Let’s take this a step further. If you need 20 new clients a year to attain the minimum acceptable lifestyle, then you need to present 40 SoA’s, conduct 80 Fact Finds, 160 first interviews and make 640 approaches. You have to average of 12.4 approaches each week.
Many would look at this and say it was unrealistic. Perhaps so, but the fact remains that doing less yields a result that is unacceptable. There are really only a few choices – either accept less than you have nominated as your minimum lifestyle, give serious consideration to an alternative career or get out of your comfort zone and get serious about doing what must be done.
Lately, using the approach outlined, I have been coaching our advisers on how to break the old habits and replace them with those that will see their businesses give them what they need. The logic is hard to argue. The choice is failure or get out of your comfort zone.
Curiously, what starts out as being unnatural quickly becomes accepted. We have seen extraordinary increases in business volumes from within our network. In fact, a number of established offices who chose to get out of their comfort zones have enjoyed revenue increases exceeding 50% within a six-month period.
Dennis Bashford is Managing Director of Futuro Financial Services Pty Ltd
