If you ask a financial planner, ‘How did 2007 treat you?’, there would be a bevy of answers all undoubtedly leading to a similar point: ‘It was hectic — we all put in some really long hours to make sure we got to see as many clients as we could’; and, ‘We invested a lot of money and created a significant increase in our revenue as a result’.
Two pieces of regulation kept the majority of planners busy in 2007.
I’m sure I don’t have to remind you of the two opportunities in detail, epitomised by two dates — June 30 and September 20, 2007.
Not since the allocated pension changes, which ended on June 30, 1994, has there arguably been such an impetus to invest in our superannuation system.
Most planners hopefully got the chance to put their feet up and enjoy a well-deserved break during the quiet period over Christmas and New Years, reflect on 2007, and ponder the year ahead.
Many would have given brief thought to making a New Year’s resolution, regrettably though, that’s where it would have started and finished for most business people.
Here are five New Year’s resolutions we’ve thought of on your behalf and would encourage you to take action on during 2008.
1. Plan for business growth
Like a road map, a business plan tells you what to expect and what alternative routes to take to arrive at your desired destination (your goals).
Planning helps you to work smarter rather than harder — helping you to use your time and resources more effectively. And I don’t have to tell you how important that is, since we are all so time poor these days.
Being future-oriented motivates you to achieve the results you want by developing strategies to achieve them, tracking progress along the way and helping to anticipate problems.
Most planner businesses, irrespective of their licensee:
> are owner operated;
> have experienced a significant increase in the number and quality of clients;
> have increased staff numbers;
> have had a rise in overall expenses;
> have demanding clients; and
> are operating in a much more competitive environment.
These consequences of growth are normal and can be easily managed and indeed positively leveraged with the help of a thoughtfully constructed and maintained plan.
The benefits of such planning are often truly appreciated when planners consider retirement and, therefore (in many instances), the imminent sale of their businesses.
In fact, there are more planners now than ever before looking to sell — call it the ‘baby boomer effect’.
Anticipating growth and planning for it can help ensure prosperity in retirement.
As we move to more businesses being valued using the earnings before interest and taxes (EBIT) formula, just maintaining valuation without a well considered and documented business plan will be a significant challenge.
Careful planning for growth assists you to effectively navigate your business to success, saving time and possibly dodging potholes along the way.
2. Manage client expectations better and more efficiently
Superannuation statements for the half-year ending December 31, 2007, will be with investors shortly and most clients who invested before September 20, 2007, will see a reduction in their account balances, as stock markets here in Australia and around the world have experienced some contraction. That might not be a surprise to you, but is it a surprise to your clients?
Results from Business Health’s CATScan survey, as noted in their Future Ready 3 report, suggests there is a “level of disconnect between the adviser and client perceptions of how the value propositions are being delivered”.
The questions for most planners should be, ‘Is my value proposition still relevant?’, and, ‘Have I enabled regular, coherent communication between my client and I?’. Check you’ve achieved both and, if so, you are on your way to managing your clients’ expectations efficiently, irrespective of market movements.
3. Keep the good staff you have as new ones are hard to find
As you know only too well, there’s a worldwide talent shortage at the moment.
Advisers, paraplanners and administration staff are hard to find and remuneration packages are rapidly becoming expensive.
In order to tackle this challenge, make sure each staff member has a detailed job description, a documented performance plan and ensure you are conducting regular, at least annual, appraisals and salary reviews.
Additionally, make sure you’re providing the transparency necessary for them to see the career opportunities that exist within your business.
Remember, your current administration staff members might become the next paraplanner or financial planner. Before you know it, a succession plan develops.
4. Invest in yourself and your team
If you manage staff then be conscious it’s a two-way relationship.
If there is more than one staff member (that is, business owner and at least one staff member), then you’ve automatically become a team. And a team requires leadership.
Former US President Eisenhower once said, “Leadership is the art of getting someone else to do what you want done because they want to do it”. If your team members want to do it rather than have to be told to do it, then you’ll probably have a far more efficient result in a much happier work environment.
Identify your learning preference and invest some time and money to become a better leader.
Investing in your team is essential and you may be surprised to find that adding such intrinsic value to your people is even better received than a basic pay rise, particularly among generation Ys.
Regular (such as quarterly or half yearly) training programs, whether they cover technical, management, or market intelligence skills or a combination of all three can add considerable value to your business and its people. It is quite easy to tailor the level of training to the skills at hand and your own resources.
It’s also time to re-invigorate sales processes and techniques. What worked yesterday may not work tomorrow. Clients, the environment, competition and expectations change. New and revised techniques may mean new and enhanced results.
5. Review three core processes
The most important of the five resolutions.
Service standards
Start by building your offering from the bottom up. Create a base level of service and communication for each client who generates revenue for the business. From there, add services and values to each client service package and apply a time and profitability test.
Additionally, review the delivery and content of each package to ensure they are tailored to the current needs of each client.
Continually check your client’s progress against their goals. This means that the relationship between the adviser and the client continues to be delivered in a prospective rather than retrospective manner.
Pricing policy
Are you being rewarded for the value of the job you’re performing and the responsibility you’re accepting on behalf of the client, and not just the time spent on the job?
Put simply, are you valuing your experienced advice and ongoing service, dependent on the client’s needs and what they can afford to (or want to) spend on advice?
We must think about our preferred pricing models not in terms of what we’ve done in the past, what has been successful, the most common one or what we feel most comfortable with, but what will provide business owners with a foundation for future success given the quality of the advice/service offered.
Consideration needs to be given when formulating pricing policies — consideration of all tasks and responsibilities delivered up to the date of implementation, the experience of the person giving the advice and different and separate consideration given to the policy for ongoing service.
Segment for results
This is the most important link in the process chain.
Once you’ve established the method and dollar charge of your pricing policies then it’s critical that you service and charge people without discrimination. In other words, the right client pays the right amount.
Don’t let the revenue from the higher value clients in your practice subsidise the service provided to the lower value clients. Segmentation is not a one-size-fits-all approach.
When segmenting by service levels, care needs to be given to many deciding factors, not just how much they have invested, or the amount of revenue generated.
Make 2008 the best year for your business. Good luck!
Jon Remmington is the national manager of business partnerships at Skandia .
