From the October 2011 issue of Investment Advisor • Subscribe!

Want a More Efficient Practice? Examine Your Core Processes

Advisors need to look at their practice from all aspects to identify where they fit into the firm’s processes

If you’re intent on increasing your firm’s efficiency, you’re no doubt aware of the importance of documenting your processes and procedures. And if you’re like many advisors, you may even have multiple binders full of written procedures for a wide variety of office tasks. But have you documented the right kinds of processes? While instructions for taking out the trash, sorting emails or answering the phone may be useful, what you really want to document are core processes—the sets of activities that deliver value to your clients and impact the firm’s bottom line.

By documenting your firm’s core processes, you can:

• Ensure that all employees understand their roles and how they intertwine with the work of others, creating a seamless experience for clients

• Promote consistency, reducing the chance for error and possibly lowering your firm’s operating costs

• Ease the training burden when there is staff turnover

• Facilitate continuous improvement

In the first article in this series, “Unchecked Growth,” (September 2011, Investment Advisor), we addressed the use of checklists as an easy-to-use format for documenting processes. But what if how the practice performs those processes is not efficient? Making a sloppy process into a checklist just creates a sloppy checklist. Sometimes, before a firm can move forward with documentation, it has to move backward and assess if the steps that are currently being followed are as efficient as possible. 

Core Processes: Not Just For Staff

Many advisors associate consistent processes with the work of front-office staff, not their own activities. While it’s certainly important for staff members to follow consistent processes, it’s just as important for advisors. In fact, core processes usually include both advisor and staff contributions, with the advisor directly involved in certain steps of the process. Unlike making coffee or ordering supplies, core processes can’t simply be delegated to staff with no advisor involvement.

Keep in mind: All work is a process, regardless of your profession or responsibilities. Some people resist that idea, thinking, “I’m a financial advisor [or a doctor, lawyer, researcher, etc.]. How can I boil my work down to a process?” No matter how individualized your job may seem, it’s part of larger, firm-wide processes that involve other members of your team. Identifying those core process and breaking them down into their individual steps can help you achieve consistent, cost-effective results.

Documenting core processes is especially crucial in multi-advisor firms. Many advisors merge seeking economy of scale. But if each advisor insists on doing things his or her own way, the opportunity for scale is lost. The bigger the firm and the more advisors it has, the more important it is for everyone—including the advisors—to follow consistent processes.

What is a core process, exactly? defines a core process as “a key activity or cluster of activities which must be performed in an exemplary manner to ensure the firm’s continued competitiveness.” So, what does that mean for a financial planning practice? While every firm is different, some core processes are standard in our industry. How these items are accomplished might vary dramatically, but almost all firms:

• Prepare for client review meetings

• Conduct client review meetings

• Follow up after client review meetings

• Decide on clients’ asset allocation

• Service client needs between review meetings

• Engage in business development activities

Depending on its business model, a practice may also have other core processes. For example, if a firm does its own investment management, the advisor must:

• Conduct investment product due diligence

• Create client portfolios and choose appropriate asset allocation models

• Monitor portfolios and models

• Rebalance portfolios and models

If the firm outsources investment management, the advisor will instead need to:

• Conduct turnkey asset management program (TAMP) due diligence

• Monitor TAMP providers

Firms that offer financial planning services will also need to define their core processes in that area.

Does your binder of written procedures include these types of big-picture processes? If not, ask yourself: Which actions and activities have the greatest impact on clients, operational efficiency and the cost of running the business?

As you begin identifying your core processes, it’s important to note the difference between a project and a process. Core processes are repeated regularly (daily or weekly, depending on your practice and number of clients). Projects often have a series of steps, but once those steps are completed, the project is done and doesn’t need to be repeated, perhaps for years. Projects like implementing a new CRM system, changing your fee structure, creating a brochure or defining your tiered service matrix may make your firm more efficient, but they aren’t core processes. Think of a core process as how you do what you do every day.

Flowcharting Greater Efficiency

Just as a picture is worth 1,000 words, a flowchart can often convey much more about a process than a written document. Typically, flowcharts are more specific, clearer and less open to misinterpretation. Because a flowchart uses few words, a quick glance tells you where you are in the process. Flowcharts also make it easy to diagnose where a process breaks down and to propose solutions.

Although flowcharting can be done on a computer, many firms find it useful to start with a much more low-tech medium: sticky notes. If you’d like to give this technique a try, gather your office staff and any other advisors together and follow the steps below. The first time the group uses the flowcharting method, take care to explain each of the steps as you move through them. Remember, you’re documenting the process as it currently stands; once it’s documented, you can work on improving it.

1. Pick a process. Start by identifying the core process you want to chart. (Try to choose a less involved one the first time around.) Because processes typically flow into each other, define a specific start and stop task to delineate the process. For example, preparation for a meeting might start when the appointment is scheduled and stop when the client arrives at the office for the appointment. Don’t be surprised if you need to go back and adjust the parameters as you move through the steps below.

2. Jot down the steps. Brainstorm all of the steps between the start and stop tasks without worrying about sequence. Write each task on its own square sticky note and post the stickies on a flip chart, whiteboard or wall. You may discover that different individuals take different approaches to accomplishing a task. If the process is currently completed in different ways, include all of the variations.

3. Chart the decision points. If an “it depends” moment arises, you’ve reached a decision point: “If A, then we do X; if B, then we do Y.” For example, if it is an A client, you give him or her a leather binder. If not, you give the client a folder. Any time such a decision is involved, simply turn the sticky note, making it a diamond instead of a square, write the decision on it, and post it.

4. Put the tasks in order. When all the tasks and decisions have been posted, reorder them in the correct sequence. You may need to adjust the sequence several times before the group is satisfied.

5. Make the connections. Once you’ve established the sequence of steps and decision points (or multiple sets of steps and decisions points), add arrows between the tasks. At a decision point, you’ll need to draw multiple paths depending on the answer to the question.

You can also color-code the flowchart using different colors of sticky notes. Use one color for advisor tasks and a different color for staff tasks (or even a separate color for each staff member, depending on the size of the office). For an even more detailed flowchart, use smaller sticky notes to break out the subtasks of a particular action.

Once you have a picture of a process, or perhaps multiple pictures, the team can look objectively at what could change. This is the time to identify opportunities to eliminate steps, modify the sequence of tasks or reassign tasks within the group. After discussing the options, the team collectively decides what should be done.

At this point, it’s time to convert the flowchart into a checklist that will be included in your procedures manual. Part III of this series will focus on how to implement the processes you and your staff have agreed upon.

One Step at a Time

People support what they help create. The sticky-note approach to flowcharting your firm’s core processes is a great way to get everyone in your office on board and ensure that they all understand the process as a whole. Remember: Like eating an elephant, flowcharting is best done in bite-sized pieces, one process at a time. Stick with it, and I think you’ll find that this relatively simple activity can have a dramatic effect your firm’s efficiency.  

Joni Youngwirth is the managing principal of practice management at Commonwealth Financial Network, member FINRA/SIPC, a registered investment adviser, in Waltham, Mass. She can be reached at

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