From the May 2007 issue of Wealth Manager Web • Subscribe!

Best Practices

Think of it as the bible of your practice, not merely a routine operations manual that spells out office policies, vacations, HR rules and whose turn it is to make the coffee. A true best practices manual is a detailed breakdown of each of the practice's business systems that are germane to the generation and preservation of revenue--a complete guide to running your firm--for yourself and your staff. In fact, a best practices manual can even make the firm more valuable if and when it is put up for sale--especially for anyone who may buy your practice in the future.

There are eight business systems common to all financial service practices, broken into the Core Four and the Infrastructure Four.

The Core Four include:

o Client Acquisition: Attracting quality prospects, including identifying a referral process, seminar procedures and product/service-driven marketing campaigns. These processes are spelled out in detail and coordinated with available staff, database capabilities and tracking accountabilities.

o Client Management: Maximizing client satisfaction through segmentation and service protocols delivered to each identified tier. What processes--including staffing, database coordination and accountabilities--are in place to attract additional assets from current clients, and how can the practice encourage quality referrals on a regular basis?

o Sales Process: Orchestrating the experience from gathering a prospect to creating a client. Best practice steps include initial contact with the prospect, first appointment, discovery interview (facts and feelings), post-discovery communication, presentation, close, issue, delivery and entr?e into the client management system.

o Case Development: Analyzing the discovery materials to prepare solutions, recommendations and presentations.

The Infrastructure Four systems include:

o Time Management: Keeping the advisor in charge of his own time as opposed to allowing it to be controlled by clients and other environmental factors, and maximizing the advisor's time as a rainmaker by meeting face-to-face with top clients and prospects, as well as other business-building activities.

o Communication: The practice's systems for interacting with staff, non-client centers-of-influence, networks, community contacts and company contacts.

o Education: Acquiring and encouraging designations, staying current, proactive Internet usage, staff development and growth and client education.

o Financial Management: The practice's systems for creating a business entity that will stand up to the due diligence requirements of a potential purchaser.

Infrastructure Four systems do not directly generate revenue but instead, build efficiencies into the practice, permitting the advisor to concentrate on the Core Four systems. With each system, the advisor needs to pinpoint best practices, identify duties and assign them to him/herself, junior advisors, staff members or other support services.

As an illustration, consider Laura Jacobs, CFP, who asked us to assess her practice in mid-2006. At the time, she had developed a team of three (Anna, Linda and Jon) to help her grow her financial planning practice in the direction of gathering assets under management while maintaining her traditional insurance and annuity business.

Taking a business systems approach to the best practices section of her operations manual was an eye-opening experience for Laura. Breaking her operating systems down to their component parts, she says, was a journey through her career in a way. "We tried so many things over the years, and these were the ones that worked." She also realized that there were some shortcuts being taken that shouldn't have been.

Client Acquisition (CA) is the first of the Core Four business systems. The grid above is an overview of CA activities from a best-practices perspective and identifies the parties responsible for each activity. A given practice might not utilize all of these activities; others can be added as an advisor sees fit.

Laura's best practices manual is a simple binder with the grid and resource documents. Her CRM database also contains documentation in a retrievable format. Advisors should use a format that they will actively implement, whether it's paper, electronic or a combination of both.

Laura will apply this grid analysis to the remaining seven business systems in her practice. Upon completion, the value of her practice should rise significantly. Eventually, she will find a successor advisor to buy the practice and encourage that advisor to work with Anna, Linda and Jon. Laura's wish is that with the help of the manual, the transition will be so seamless that her top clients will never know she stepped away from the day-to-day operation of the business.

An added bonus is knowing that, if one team member leaves for any reason, the blueprint is there for both cross-training and bringing on a new hire. All the systems are recorded instead of being locked away in the advisor's head (or those of other staff members, for that matter). In addition, breaking out accountabilities by team member facilitates the performance review process. Expectations are clear and more easily supervised. Laura's team meets once a year to review the best practices manual and update whatever is necessary--with input from everyone. The best practices manual is a companion piece to the general practice operations manual, which is also scrutinized periodically for necessary revisions.

When all is said and done, the best practice of all is to create a best practices manual to infuse your practice with value above and beyond mere book value.

Al Depman, CLU, ChFC, CMFC, BH, a.k.a. "The Practice Doctor," is's Business Practice Consultant and the creator of "The Practice Management Assessment" tool ( He can be reached at

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