Beta Testing Change in Your Ensemble Practice

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I’ve spent decades consulting on practice management issues and had countless conversations with advisers wanting to make some sort of change in their practices. One adviser might want to hire a new employee to increase efficiency. Another might want to move into a new, more upscale office space. Yet another might want to bring other types of advisers into the practice, such as rainmakers or service advisers.

As the trend of shifting from a solo to a group or ensemble practice continues to gain steam in our industry, it’s important to realize some of the challenges going into partnership with other advisers can present.

Barriers to change

A partnership is a bit like a marriage. Your adviser partners come to the table with their own established values, perceptions and opinions. And just because one partner thinks a particular business change is a profoundly good idea, it doesn’t mean another partner (or partners) will share that belief. For example, say you think your firm should incorporate a formal business management process to help you target client acquisition and revenue goals. Your two partners disagree, arguing the following:

  • Why do we need to have a business plan? We know what we’re doing.
  • What’s the point of defining a niche? We’d have to turn down business.
  • There’s no need to create and stick to an ideal client profile.
  • Why is it important to track overhead? We can pay our bills just fine.
  • Documenting processes seems like a waste of time.
  • Who needs production goals? We’re earning enough.
  • Why do we need to create continuity agreements? None of us is going anywhere.

What do you do when you feel strongly about how to run the business more effectively and your partners put up barriers like these? Do you ignore the issue and simply learn to live with the status quo? Do you have a serious life-or-death discussion with them about the future of the firm? Or is there another option?

Beta testing change

Instead of giving up, or beating your head against a wall trying to convince others to see things your way, offer to implement the change you’re seeking in your own corner of the firm as a beta test. Of course, this requires your full commitment to the change. You’ll also need to develop a formal method for measuring the impact of the change you make. After an appropriate period of time, you can then share the results of your beta test with your partners and see if they’re now ready to agree with you.

Here’s an example: Let’s say you want to grow revenue. To do so, all new clients you take on have to meet your ideal client profile. You’ll want to calculate the return on this investment for your partners. You might also want to track how you help prospects who aren’t a good fit, particularly if your partners were adamant about not turning away any clients. The bigger the change you want to make, the longer it will take to document results, so try starting with a small change first, to make your point.

What is the value in this sort of beta test? You get to implement a change you believe in. You eliminate some of the frustration you were feeling. And everyone in the firm moves toward data-driven decision making.

Will this approach work in every situation? Probably not. But it can be a particularly effective technique for positioning specific changes to your partners. After all, results speak for themselves.

Joni Youngwirth_2014 for webJoni Youngwirth
Managing Principal of Practice Management
Commonwealth Financial Network
Waltham, Mass.

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