This is an extended version of the profile that appeared in the May issue of Investment Advisor, part of AdvisorOne's Special Report profiling this year's members of the IA 25, the most influential people in and around the advisor universe. See the complete list and Special Report schedule for extended profiles of all the 2011 members of the IA 25.
For some time now, most advisors have understood that the key to growth, the key to success, is to turn their practices into businesses. While there has been plenty of good advice on how to conduct this transformation, the practical, quotidian tools to do so have been lacking. That’s where ActiFi and its founder and CEO, Spenser Segal, stand ready to serve.
The markets and economic crisis of 2008–2009, Segal suggests, was “a wake-up call” for advisors. While in the past “just being a good advisor and letting everything else take care of itself” was workable for most advisors, the crisis showed the value of running a more effective business.
What do advisors need to create businesses out of practices? It’s education, finding the right partners, hiring the right people in your firm, Segal agrees, but “ultimately, it’s execution that’s the key,” starting with a decision to devote the “will, skill and time.” Noting that “will” tends not be the stumbling block, Segal argues that for many practice management tasks, like picking a CRM system, “there’s more to it than meets the eye,” and that in tackling such issues—which he notes are often one-time tasks—they need “more skills than what they have already in their practice.”
Part of the solution, which he says ActiFi is already seeing occur, is that advisors’ partners like TAMPs and BDs and custodians in particular, “are raising the bar in their ability to provide more insight, [and] more effective resources to the advisor to decide and implement” key practice management tasks ranging from segmenting their clients to choosing technology.
“What we’re seeing and pioneering,” Segal says, is a “scalable practice management workstation” that allows advisors’ partners to deliver advice, to be a true partner on implementing that advice, or even providing that advice “on a silver platter.”
The goal that ActiFi’s Roadmap program helps make a reality, along with its research on a range of technology options for advisors, is “How do we track the implementation and execution, how do we deliver that in a consistent scalable way, and how do we quantify the benefits” of those practice management changes in terms of meeting the goals of the advisor? “Did the strategy yield the proposed benefit? Today, it’s very anecdotal. We bring science to the process—just like advisors do with portfolio construction.” So far, says Segal, most advisory firms don’t apply that same rigor to business and practice management advice.
Advisors’ partners are embracing this approach, not merely talking about it, says Segal, because it benefits those firms as well. “There’s a lot of incentive for them to grow their existing advisors—it’s a win-win-win,” for that BD or custodian, for the advisor, and for the end client. “We strongly believe that we’ll continue to see” significant improvement in “the quality, consistency and depth of practice management advice and execution provided through the advisor’s partners,” Segal predicts. “That will be game changing.”
One catalyst for advisors that will lead them to embrace this more scientific, measurable approach to practice management, says Segal, is succession planning. “Their biggest asset is their practice, so how are they going to be paid for it? You’re either going to sell your firm to somebody else, groom your NexGen successor internally and get involved in financing the purchase, or let it die on the vine.” To secure that succession, Segal suggests, advisors have to “make sure you’ve got a practice that runs efficiently without you, to ensure your continued revenue stream.”
Read more about the rest of the IA 25.
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