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Clock Watchers

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It turns out that the best advisory firms are also most effective at leveraging their employees’ time, especially that of their principals. That’s one of the main findings in a new Schwab Institutional white paper, Best-Managed Firms: It’s About Time, that the custodian developed with Moss Adams LLP based on interviews with the principals of the 45 best-managed firms surveyed in the 2006 Moss Adams Financial Performance Study of Advisory Firms.

As compared to other firms, the latest in a series of Schwab Market Knowledge Tool (MKT) reports found that owners of the best-managed firms tend to: spend more time on client service and business development, and less on operations and portfolio management; hire more support and managerial staff per professional; standardize service delivery; and automate or outsource routine tasks.

The report’s findings might also serve to dispel the myth that working more hours accomplishes more: Owners who worked 60 hours per week, compared to the industry average of 50 hours per week, only generated an 18% greater pretax income per owner, leading to the conclusion that those longer-working owners generated less income on an hourly basis, a median of $83 per hour, compared to $93 per hour for the others.