Coaching and consulting hundreds of advisers over the years has allowed me to see several industry trends and lump advisers together into various buckets. One of these “buckets” is advisers who view human capital, technology, office space, coaching programs, etc., as an investment versus a cost. Advisers who view these areas as costs tend to experience less success and grow their business at a slower rate.
So, when investing in human capital, how do successful advisers get a great return on their investment? They understand their investment in human capital is made to achieve one of these three goals:
- Better client service
- Higher efficiency
- More time (free up the adviser’s time to do more adviser-related activities, such as grow the business)
Every time an addition is made to your team, have complete clarity on what exact duties this new person will assume and how this addresses the three goals mentioned above. Think about it in these terms:
Your team is there to be responsible for all of the service, operational and administrative functions—things that you, as the business owner/adviser, should be delegating to your team. If you have a great team that performs all these things well, it is now completely on your shoulders as the business owner to grow the business. You have no reasons/excuses for not growing the business because all of your time is now available to do adviser-specific items like strategic thinking, money management, financial planning, pursuing your passions and generating new business.
Once you have this team in place to do the service, operational, and administrative functions, be sure to compensate them for the behavior you desire. Remember, you want better service, a more efficient office and more time to do the things you need to. So, connect your compensation plan, specifically your bonus structure, to getting more of the performance you want. Implement a pay-for-performance model (Peak Advisor Alliance calls this Results-Based Pay) that rewards and recognizes the team on the things they can control. The team can not directly control the markets, portfolio returns, new business you close or the overall revenue you generate. But, they can control the service to your clients, efficiency of the office and keeping your plate clean. Incentivize them on the tasks they can control.
Meet with your team and explain they now are in control of their bonuses. Bring examples of goals to the meetings and ask them to do the same. These examples should correlate with items that can be put into one of the above three areas. Assign a dollar amount to each of the goals. Pay out the bonuses based on achievement of the goals.
We have dozens of suggested goals such as:
- The client service satisfaction score from your client survey
- The number of Random Acts of Kindness completed for clients
- The percentage of implemented items in the various sections of a systems manual
- The implementation of new client touches such as birthday calls, anniversary calls, weekly or monthly communication pieces, proactive outbound calls, etc.
- The incorporation of items currently done by the adviser into the team’s responsibility
Everyone agrees that hiring a great team is crucial to growing your practice. It may be the single biggest reason for your success … or lack thereof. So, I suggest when making this investment, be clear on what you want accomplished. Often times your additional hire will contribute to all three of the goals mentioned earlier. However, some advisers in larger practices are hiring personal assistants that essentially do nothing but keep the adviser’s plate clean.
Ask yourself how much you would invest to have your client satisfaction score go from a 3.8 to 4.8 on a five-point scale, or to have your clients go from fair-weather advocates to raving fans.
How much would you invest to have an office so efficient you never/rarely have a trading error, miss a RMD, forget a birthday or anniversary call, drop the ball with new client paperwork and asset transfer processes, etc?
And, how much would you invest to free up six, eight, or maybe 10 hours of your time each week to spend with your spouse/family, pursuing your favorite passion or maybe simply growing the business?
One of the best investments you will ever make for your practice is hiring the right people. So, where do you start? Start with downloading the Sample Base Salary Ranges document. Go to www.peakadvisoralliance.com, click on the Free Tools, and enter the code “FPASalary” to receive this document that will get you started setting base salaries when building your team. And remember, communicate to your new hires the things you want more of: better service, more efficiency and more time!