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It’s Not Just About Salary: Purposeful Staffing

I routinely get calls or questions from advisers about compensation for a staff position or junior adviser. Whether it involves hiring/retaining a junior person, or a staff member trying to make a case to their firm about how underpaid they are, the conversation is less about salaries (although it does come up) and more about incentive or variable compensation and bonus. Instead of providing a number or formula, I’ve been asking what would it take that person to leave your firm and why are you doing things? If you know what kind of firm you’re running, and what your goals are, you can be purposeful with compensation.

What Behavior Do You Want?

Over the years, I have lived by a simple rule when it comes to compensation: compensation, especially with variable comp, should be used to drive better behavior. More importantly, advisers shouldn’t have to stick with the same variable comp structure every year as priorities and goals may change. I ask the adviser to think about the goals of their firm, more importantly the leading indicators of success and tie the metrics around those indicators.

As I said, the conversations are changing lately—they are becoming broader. Today, we start with a conversation about work environment. We answer and discuss:

  • Is there a clear vision and purpose for the firm (Do you know where you are headed)?
  • Does the employee have/want the opportunity to grow and is the path laid out for them?
  • Is there a sense that the employee is fulfilled?
  • Is the employee valued?
  • Is compensation really the issue you are trying to solve for?

In my mind, staff more often leaves a business for reasons other than compensation. The biggest reason is always around the vison of the firm and where they fit.

Purposeful Staff

In our most recent paper, “The Purposeful Advisory Firm,” my co-author Raef Lee and I discussed the concept of value engineering for advisory firms. The idea was that an advisory firm has a few levers they can pull that can determine the firm’s direction. Moving a lever in the right direction can propel the firm toward successful enterprise or to a lifestyle firm. I think the people (staff) lever is the most important.

How you use talent can be the key to your success, so it is critically important to understand, communicate and plan for the direction of your firm before you discuss variable compensation with the staff. How can you decide on a number if you don’t know what you are paying for or the direction that the compensation will take your firm?

Lifestyle Versus Enterprise: Questions for You

Before you get into the dollars and cents of a compensation plan, I think it is important to ask questions that can help move that value lever:

  1. Do you aspire to take your firm to the next level? (In addition, can you define what that next level looks like?)
  2. Do you have the appetite for adding (and managing) more employees?
  3. Do you have it in you to fire yourself as adviser and hire yourself as CEO?

If you answer yes to all three of these questions, you are heading down that enterprise path. You will be busy with defining roles, job descriptions and creating a path for all your team members to grow within your firm. Yes means looking at a team approach to the client service model and possibly a chief operating officer hire. The enterprise variable compensation will look at the big picture of the firm and how you are building it for the future.

If you answer no, then the lifestyle approach may be calling you. And figuring out that variable compensation is going to be even more important. You should create a plan that reinforces longevity, continuity and service. The lifestyle firm cannot afford huge turnover that will force the adviser back in the day-to-day operations of the practice. Morale and culture are very important to retain existing clients and strengthen the brand of the no-doubt personality driven firm.

Consequences

Not having a purposeful compensation plan in place leads to employee retention issues. A purposeful plan leads to maximizing the hire for the future direction of your firm. I am often accused of sounding like an attorney (or an economist). When someone asks me about compensation, instead of a direct answer, I now say, “It depends on you.” What kind of firm do you want to be?

Editor’s Note: Join SEI and FPA for a webinar titled, “The Renaissance in Charitable Trust Planning,” at 2 p.m., Eastern, April 18. Register for the webinar here. Also, a version of this blog post first appeared on SEI’s practice management blog, Practically Speaking.

John Anderson

John Anderson is the managing director of Practice Management Solutions for the SEI Advisor Network. He is responsible for all programs focused on helping financial advisers grow their businesses, create efficiencies in their operations and differentiate their practices. He is also the author of SEI’s practice management blog, Practically Speaking.

 


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How Meditation Could Help Your Clients

Habits your clients have developed around money have most likely been with them for decades. One study from Cambridge University found that people develop money habits by the age of 7.

It might be beneficial to your clients to recommend meditation to tackle their bad money habits—whether it’s overspending online, living beyond their means to keep up with their neighbors, or continually financially supporting an adult child.

“When you just think about money, it’s all psychologically based,” said Michael Liersch, head of behavioral finance at Merrill Lynch Wealth Management, in a March 2017 article on TheStreet.com “To really be authentic about it, the whole premise of money is emotionally based in essence. Removing emotion from investment decision-making is just a false premise to begin with.”

Just as mindfulness and meditation can help a person who is trying to lose weight, it can also help somebody who may be trying to overcome negative money habits. One study from Harvard University found that mindfulness meditation actually increases the amount of gray matter in the brain’s frontal cortex, which aids in memory and decision-making.

The New York Times reported that a different study from the same researchers found areas of the brain that deal with emotional regulation, learning, focus, and perspective were all thickened after just eight weeks of meditation.

“The payoff s that come from establishing a meditation practice are well worth the time invested,” Leisa Peterson, business strategist and money coach, wrote in a 2015 Huffington Post article. “When you become more mindful about money, you learn a great deal about yourself and also your ability to be creative and intentional, rather than reactionary,” Peterson wrote.

Peterson recommends guided meditation apps to get your clients started. Meditation to overcome negative money habits seems to have worked for some people.

Rebecca Velasquez told LearnVest in 2016 she was able to find financial clarity and save $25,000 by being more mindful. “Meditation requires guidance and support as well as a willingness to take it on every single day,” Velasquez said. “Once that willingness is there, it opens up a whole world of possibilities and revelations, which may end up benefiting your well-being—financial health included.

anaheadshot-e1497640260642.jpg

Ana Trujillo Limón is associate editor of the Journal of Financial Planning and the editor of the FPA Practice Management Blog. Email her at alimon@onefpa.org. Follow her on Twitter at @AnaT_Edits.


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Beta Testing Change in Your Ensemble Practice

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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New Idea? Try a Reality Check

Planners and advisers often ask about ideas they heard from another adviser, a conference speaker or something they read about in an industry publication.

These ideas generally relate to some type of marketing concept or client event. “Do you think this would work for me?” they ask. A good way to conduct a reality check is to ask yourself these four questions:

1.) What are you trying to accomplish? Every activity, communication or process that you put into place should have a clear purpose related to the vision you have for the practice you are building. Ask yourself whether this idea will move you closer to your vision for your ideal practice. If it does, it may be worth considering. If not, look for something else that will.

2.) What would this communicate to your clients or prospective clients? One of my core principles is to examine every decision from the perspective or viewpoint of your clients. Would this idea or concept enhance the value you bring to them in terms of your planning or advice? Would it step up your level of service to them? Would it enhance their perception of you as a professional?

3.) Is this the best way to accomplish what you are trying to do? Think about what you are trying to achieve and then consider all the ways that goal could be accomplished. Many times, we will hear about an idea, but don’t stop to consider alternative approaches that could be more effective and at a lower cost.

4.) How will you define success? It is amazing how frequently planners and advisers will implement new ideas, even marketing strategies, with no idea how to measure the results relative to the time and resources spent. Obviously, some results are easier to measure than others, but you should never undertake a new strategy or activity without clearly defining for yourself exactly what success would look like.

By taking the time to ask yourself these questions about any new concept you are considering, you are much more likely to pursue the strategies that make the most sense for you and your practice, and most importantly, for your clients.

susan-kornegaySusan Kornegay, CFP®
Consultant/Coach
Pathfinder Strategic Solutions 
Knoxville, Tenn.

 

Editor’s Note: Read more of Kornegay’s blog posts at the Pathfinder Strategic Solutions “Perspectives” blog. 


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The Reality of Creating a Record-Setting Year

Do you believe that achieving a record production year in your business happens by chance or by design? If you said design, you are right. However, while most advisers start off a new year with big dreams, few finish reaching them. The reality of creating a record-setting year is more than just great intentions and luck, you need thorough and consistently used systems.

As a rookie financial adviser more than 20-plus years ago, I struggled my first year. During my second year things were a bit better because I gathered three times the assets but I was still in no position to stop eating ramen noodles. It wasn’t until my third year that I made a commitment (and a plan) to create my success. As a result, I tripled my income from the previous year. I then repeated the process the following year and was able to double my income following the exact same system. I’m telling you this not to impress you but rather to impress upon you that you cannot leave success up to chance.

The following is a brief outline of how you too can plan for your success with a little upfront work:

Create an Unwavering Commitment

It was a simple statement to myself— “I’m never going below $10,000 gross per month this year,”—that led me down a path to changing my belief system that I could actually do it. I used this same strategy years later but doubled the number and hit a personal record high production in month five out of the first six months of the year. Why? Merely because I choose to believe that it was possible. Remember, the more you believe in your own potential the higher the probability that you will hit your goals.

Daily Discipline of Prospecting

Part of that unwavering commitment was to start every day prospecting. This may seem like a no-brainer but it’s not easy unless you do one important thing, learn to enjoy doing it. It might sound crazy but if you make a game out of how many dials, contacts and appointments you do while prospecting, it can actually become a lot of fun.

A Systematic Way of Selling

Although hope is a good thing, it’s not the best strategy for sales success. Instead, you need a systematic way of selling so that you can duplicate every step of the way, from the initial contact to closing the sale. In my third year, I also learned from a top producer how to cross-sell to my client base. This opened my eyes to how to gather additional assets and commissions but more importantly to increasing my value to my client base.

A Detailed Tracking System

In order to keep the momentum of activity and results going it was important for me to create a great tracking system that was simple enough to fill out during the day but effective enough to keep a tally and tell me if I was going to achieve my monthly goals. I created a daily score card that tracked my contacts, presentations, orders asked for and gross commissions. Next, I created a sales pipeline of prospects and clients so I knew how many people and how much potential business was possible. Finally, I tracked daily gross production and knew exactly if I was above or below my goals at any given time. When you make tracking a priority you get excited to achieve more.

A Strong Reward

At the end of my third year I was shocked at the amount of success I had achieved by greatly surpassing my goals. Looking back at it now, it’s not about the numbers it’s about all of the other things that are obtained when you surpass what you believe you are capable of, confidence, pride and increased self-esteem to name a few. However, that’s not to say that you shouldn’t have a strong reward system. In fact, I went from eating ramen noodles the previous year to buying my first house! When you have a strong reward system you have an extra added incentive to achieve your goals.

Old Dogs CAN Learn New Tricks

2016-02-28_finleyBy now you might be saying to yourself, “You can’t teach an old dog new tricks.” If so, just know that isn’t reality. In fact, in my book 101 Advisor Solutions: A Financial Advisor’s Guide to Strategies that Educate, Motivate and Inspire, I tell a true story about my client Gale Z., who after 25 years was forced to realize that she was barely hitting the corporate minimum production standards at the end of a year. We applied the aforementioned strategies and by the end of the first quarter she was the top producer in her region. She exceeded her numbers by reaching 66 percent of the previous year’s production goals.

If you read this article and need help creating a record-setting year, email Melissa Denham, director of client servicing, to schedule a free complimentary consultation.

Dan Finley

 

Daniel C. Finley
President
Advisor Solutions
St. Paul, Minn.

 


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Goal Setting: How to Make 2017 Your Best Business Year Ever

Investing time to strategically plan their goals for the upcoming year is the single greatest return on investment an adviser can make. If you’re looking to create a breakout year and accomplish your most important goals, read the following to make 2017 your best year ever.

STEP ONE: Review Your Year
This step helps you focus on what you should be doing more of and what you should be quitting completely. Identify your successes and where you came up short. Figure out what worked and what didn’t. Which were good decisions and which were bad?

Answer these questions to properly reflect on your year:

  1. What did you accomplish this past year that you’re most proud of?
  2. What did you do to earn this accomplishment?
  3. What disappointments or regrets did you experience this past year?
  4. As you look back, what was missing from last year?
  5. What are three things you want to stop doing next year?
  6. What are three things you want to keep doing next year?

STEP TWO: Define Areas of Attention in Your Business
There are seven main areas of your financial practice that you want to be in optimal shape to see breakthrough success. Rank each area on a scale of 1-10 to see which are the lowest and need your attention.

  1. New business and client acquisition. Are you talking to enough qualified prospects and turning them into clients?
  2. Marketing and branding. When people get introduced to you or your brand, can they quickly identify how you can help and benefit them?
  3. Do you have all-star employees who are easy to manage?
  4. Client service and experience. Are your current clients receiving the right amount of contact and care so there’s no reason they would ever leave you?
  5. Do you have the systems and processes set up so that the office can run if you’re not there?
  6. Time management and productivity. Are you spending time only on $1,000-per-hour tasks rather than $10-per-hour tasks?
  7. Expertise in planning and investment management. Are you continually increasing your knowledge in order to offer the best advice and recommendations to your clients?

STEP THREE: Create Your Future
Here’s the framework to follow when identifying your goals. Use this framework to develop five to seven goals for the next year:

  1. Write it down. Research shows that written goals are much more likely to be achieved.
  2. Suspend reality. Decide later if a goal is realistic.
  3. Think big. Have goals that are challenging enough to demand your full effort
  4. State in the positive. Focus on what you want to move toward.
  5. Have actionable goals. Write your goal as if it is already achieved. For example, say, “I have hired one new all-star employee that handles all paperwork prep and processing by 6/30/2017.”
  6. Time bound. Make sure there is a date of completion.
  7. Be specific. The more specific the goal, the better.

STEP FOUR: Bulletproof Your Goals
Advisers who achieve their goals are the ones who are motivated and who have a compelling reason why their goals must be achieved. So you can create powerful motivators for each of your goals, which will increase the chances that you’ll achieve them.

Take these steps to create motivators for your goals:

  1. (Again) write down each goal.
  2. Connect emotionally and logically with each goal by determining why the goal is important and what is at stake (both the positive and negative).
  3. Write down the top three to five motivators
  4. Review them regularly.

STEP FIVE: Take The Next Step
The last step—the most important step in the process—is where we start to take action to make our goals a reality.

  1. Don’t over plan. We naturally are attracted to planning. But sometimes it turns into a fancy way to procrastinate. We want to make sure we get started on our goals as soon as possible.
  2. Work backward and break up your big goals. Imagine the goal is already complete. What do you need to do each month in order for you to that moment? This will help identify manageable action steps.
  3. Schedule your goals. Set aside time each week to review your goals, motivators and progress. At the end of each session, identify the next step you need to take to reach this goal.
  4. Celebrate the small wins to motivate yourself.
  5. Start now.

Download this step-by-step worksheet to help you with this process.

dave-zoller

 

Dave Zoller
Financial Adviser
Streamline My Practice
Warrenville, IL

 


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Business Planning: Déjà Vu with a Twist

Another December—and another opportunity to write up goals for the coming year. It feels like déjà vu. Some of you view writing and revisiting your business plan as nothing more than practice management mumbo jumbo. To the rest of us, it is an essential business management habit. For both groups—those of you who go through this exercise every year and those who do it reluctantly—I have some ideas on how you can set up your business plan in a way that will pay off by the time you’re sitting in this same spot next year.

Keep It Simple
Too often, I see written business plans that are beautifully designed and bound but also big and cumbersome. I am usually left wondering, where’s the beef?

You can have meaty content without loads of pages. Keep things simple: all you really need is a document that outlines the vision, the long-term direction of the firm over the next five years and a set of SMART goals for the upcoming year. You want just seven or fewer of these goals (which need to be specific, measurable, attainable, realistic and time bounded). By keeping the number small, you can narrow your focus on the few things most important to the firm.

Personally, I like to include one or two stretch goals even though they don’t quite fit the “R” (realistic component) of SMART. Doing so pushes you outside the comfort zone. It works as long as you don’t get hung up or feel like a failure if you don’t reach one—or any—of your stretch goals. More likely than not, you’ll at least move beyond what the realistic goal would have been. Just remember that beating yourself up when you don’t reach a goal is totally counterproductive.

Additional documents that support your plan warrant attention. For example, a SWOT (strengths, weaknesses, opportunities and threats) analysis tends to embody why you think the goals for the current year are important. You can also fold in analysis of the previous year’s goals to provide a contextual lookback that will enhance your planning process.

Here’s the Twist for 2017
One new concept for 2017 concerns the “time-bounded” component, or the “T” of SMART. Many of us are inclined to set all our due dates to December. New research tells us to do one thing at a time instead. It even suggests that multitasking is bad for our brain.

So this year, instead of putting December 31, 2017, on each of your goals, prioritize and schedule them one after the other. While you may not be able to do it perfectly, staggered due dates can help you focus on each goal and enhance your brain function at the same time.

Find the Missing Ingredient
There are no guarantees. Just because you’ve written down that you’re going to do something, the action still has to happen. The plan only goes so far in keeping you accountable.

In fact, the one missing ingredient of what business planning and goal setting can specifically provide is accountability. The way goals are written matters here. Clearly designed SMART goals can be measured. They can also increase accountability. You’ll be absolutely clear on whether you have achieved your goal or not if you’ve written your goals in such a way.

To make sure you do, it helps to find a coach, consultant, colleague, boss or mentor who can keep you on track. You want someone who will help you stay focused on your goals and your progress toward achieving them. Any associated expense will be worth it when you solidify the right goals and realize you have a support system grounded in your long-term strategy.

The closer you can keep your firm tracking toward your vision, the more likely you’ll realize value from your business planning efforts. Perhaps this time next year, planning will have become a welcome habit.

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