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The Four Fundamentals Of Practice Management

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Every day, financial advisors must make critical decisions on behalf of their clients. These decisions always are well thought out and never taken lightly. However, many financial advisors do not apply the same level of scrutiny when selecting a broker-dealer–even though this choice just as easily can make or break their careers.

How can financial advisors know if they have selected the right broker-dealer? What support and guidance can they receive, and what should they expect in return for committing to do business with a broker-dealer? By looking at the four fundamentals of practice management, financial advisors can help themselves answer these questions and make fully informed decisions about who should receive their business. The four fundamentals of practice management are:

1. Marketing Management

Marketing should be as much about the financial advisor as it is about the broker-dealer. Instead of focusing on what benefits can be gained from their own marketing, good broker-dealers should be more interested in helping financial advisors make a name for themselves. Whether it is a complete turnkey marketing program, co-op advertising, help with printing of brochures or even offering essential tips on how to play the marketing game, there needs to be a basic level of support and encouragement. Marketing truly can make or break a business; there is simply no substitute for what a good marketing program can provide financial advisors.

2. Relationship Management

More than half (56%) of an advisor’s growth comes from existing relationships. Question is, does this figure accurately distinguish between referrals and the more highly valued introductions?

The distinction is a crucial one. There is, of course, nothing wrong with broker-dealers giving referrals to advisors. In fact, these gestures are to be applauded and encouraged. But most advisors will agree that receiving an introduction, or warm lead, is much more likely to result in new business.

There is a more personal touch involved with an introduction that all advisors can and do appreciate. Broker-dealers always need to go the extra mile to help grow the businesses of the financial advisors with whom they work.

3. Resource Management

Providing education and coaching–along with the right resources–can go a long way. Sometimes it might be a human resource that advisors can rely on for compliance assistance. At other times, it might be a technology resource or platform that can help them run their business in the most efficient manner possible. Either way, the right resource can help advisors save valuable time, provide superior customer service to their clients and even help them gain an overall competitive advantage.

4. Business Management

This is where many broker-dealers fail on the job. There might be a certain level of support on the tactical level, but many broker-dealers forget to help advisors develop and adhere to a solid business plan. Goals, objectives and strategies need to be in place before implementing tactics.

Too many advisors lose sight of the “big picture”–how their business will succeed in the long term–by getting caught up in day-to-day operations. It is critical that the broker-dealer offer business guidance and strategic planning support.

A good example of this is helping advisors define and communicate their capabilities to clients. Advisors might rightfully focus on selling the client on a specific investment tool. But with the proper support from a broker-dealer, they might be better positioned to market themselves as a total wealth manager, which can be of greater benefit to the client.

These four fundamentals of practice management are key to the value proposition that broker-dealers can offer financial advisors. It is this value proposition that will determine if the relationship is going to succeed in the long term.

Can financial advisors always be sure they made the right choice in selecting a broker-dealer? Like the solutions that matter to clients, the answers are not always black and white. However, with the proper research and analysis, the best options can become much more clear.


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