Business coaches and coaching models have become fashionable for financial advisers and practices.
Major dealer groups now provide business coaching as part of their dealership offer to their aligned practices.
The aim is to enhance the dealer group’s offer and improve the efficiency of the practices that join them.
Advisers who do not receive these services through a dealer group can choose from a growing list of professional coaching and training companies in Australia.
The question is: what should an adviser or practice look for and expect when using a quality coach or coaching service?
To be effective, a complete coaching system should include a process to analyse business issues, a set of tools to help resolve these issues and improve business performance, and specialist personnel to assist practice principals and staff in implementing appropriate solutions.
All businesses, including financial planning practices, move through different phases of what is commonly called the business life cycle.
Effective business coaching programs will start with an assessment of the characteristics of a business and the particular phase it has reached in its life cycle.
Once the particular phase has been identified, it is then possible to address the issues that are most common when that phase has been reached.
This method incorporates sound business theory with practical solutions to the most common issues that face financial planning practices in today’s highly competitive environment.
The life cycle of a financial advice business can be divided into four broad phases: establishment; management; corporatisation; and enterprise.
Within each phase there are common issues that need to be resolved before a practice can move to the next stage. There are also tools to assist practices resolve these issues and improve their performance.
In the establishment phase the practice is likely to be small (for example, one or two advisers), focused on generating cash flow and building a client base. It has little systematisation of processes or client segmentation. A defined business or marketing plan is unlikely. It may have part-time office support.
By the management phase, the practice is more client and adviser focused. It has a defined business plan — but may not have set its three to five year ‘vision’. It is developing its processes and procedures — particularly for administration, sales and service. It needs to focus on its expense management and pressure on its cash flow as it increases staff to handle growth. Client segmentation and a client offer are being developed and implemented. The practice is generally still ‘principal dependent’.
When the corporatisation phase is reached the practice is business rather than principal dependent. It has multiple advisers. It has a well-defined business plan with one, three and five year objectives. This business plan leads to the creation of marketing and human resources plans, as well as detailed processes and operating procedures for the practice. The business also has an agreed organisational structure with clearly defined roles and responsibilities for advisers and support staff. The business is profit focused with efficient financial reporting. It has also begun to build its brand in its target markets.
At the enterprise phase, the business pursues growth through acquisition, joint venture and merger. It seeks complementary businesses to enable it to grow and may provide a fully integrated range of services including financial planning, accounting and legal. It will have a detailed organisational structure, clear roles and responsibilities, and a succession process. When it has reached this phase, the business is a well established brand in its chosen markets.
When an adviser or practice principal decides to use business coaching and work with a coach or other qualified person, there are a number of steps involved.
The following is a typical eight-step process:
1. Complete a full analysis of the practice;
2. Understand the business life cycle model and agree what phase the practice is in;
3. Identify the issues that commonly occur in that phase of the life cycle — as well as the issues specific to the particular practice;
4. Have the principal or practice manager agree on how these issues will be prioritised for action and the time frame to complete. To ensure all parties understand what is involved, it is common for some form of ‘resolutions and actions’ pro forma or coaching agreement to be developed;
5. Identify the best means of resolving the issues relevant to the practice;
6. Identify the practice management tools required to resolve the issues;
7. Use these tools within the practice to resolve the issues; and
8. Measure and review the practice against the outcomes noted in the coaching agreement.
When practice principals or advisers are considering use of business coaching, they need to ensure their dealer group or coaching supplier has a process that can identify life cycle issues.
They also need to ensure their dealer or supplier has an adequate range of business improvement tools readily available to address any issue likely to emerge in the running and development of a financial advice business.
The process outlined above, for example, could only be successfully undertaken by a high quality dealer group or professional coaching company prepared to provide the substantial capital investment and trained personnel required.
Highly effective business coaching systems will make extensive use of specially created databases.
These list the issues that are common to the various business lifecycle phases — often in the form of a drop-down menu from a computer database.
For example, assume a practice is in the management phase of its life cycle.
Some of the issues it may be contending with will include: team building; financial management; development of information technology; segmentation and client offers.
If it decides that team building and staff development is one of the key issues it needs to address, then an efficient coaching process will identify a range of potential solutions.
These could include: funding models for new recruits; induction programs for staff and advisers; job specifications; performance management models; recruitment kits; and remuneration models.
A comprehensive business coaching process will utilise a toolkit database that ‘hot links’ each practice management issue to the appropriate solution tool.
Dealer groups will usually have skilled personnel available to work with practices to choose the tool that best suits their situation. They often have additional staff who are expert in the use of particular tools.
Issues are best dealt with in ‘clusters’ to enable a practice to both manage its ongoing business and improve specific areas of concern. Clusters of no more than two or three issues should be dealt with at any given time.
To keep a practice focused on improvement and to provide positive reinforcement for staff, a ‘measure and review’ process should be undertaken. At each target date, the performance should be reviewed and measured against expected outcomes.
As one cluster of issues is resolved, another can be added until all issues listed for attention are resolved. Once all issues are resolved, the practice can be assessed again to determine whether it is ready to move to the next phase in its life cycle.
The diagram (left) represents a fully integrated business coaching cycle or program. It is an approach to business coaching that can be undertaken by a practice of any size and at any stage in its development.
Coaching is not necessarily the province of large or highly profitable practices. In fact, coaching is a way of assisting practices reach their size and profitability objectives.
With the support of their dealer group or a competent and reputable coaching service provider, financial advice practices can benefit from use of proven business coaching methods.
Bruce Birchall is national manager,Charter Financial Planning.
