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Financial Planning > Behavioral Finance

Danger & Opportunity: Manual Labor

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Even in these most challenging of times, advisors can prosper by focusing on maximizing their unique strengths, rather than trying to fit into some predetermined business model. This month’s case study, the final installment in my three-part series, definitively illustrates why comprehensively documenting a firm’s practices and procedures is more than just a boring, nerdy waste of time: it’s the key to building an efficient advisory practice.

In his 21 years as a financial advisor, Bill Morrissey of Sound Financial Planning in Washington State has found more than a few creative ways to maximize efficiency. At a time when many advisors are scaling back their comprehensive financial planning services because they are just too inefficient and labor intensive, Morrissey has built a streamlined ultra-comprehensive planning firm–having seen and worked with over 400 firms I know it’s one of the most efficiently running life planning practices in the country–that helps 60-plus clients use their financial resources to create the deep enriched lives they truly want to live.

One of Morrissey’s secrets is copious documentation of each and every procedure performed by anyone in his firm–from how to answer the phones, to who makes each client contact, about what, and when to how to use each of the firm’s 12 technology programs. His 130-page, 11-chapter operations manual is updated continuously, and includes visual flowcharts, lists of each process, and explanations of how each software program is to be integrated into a seamless flow of client service.

The manual includes directions to each of the firm’s two offices from three directions, how to open the office in the morning (turn on printers, make coffee, adjust thermostat, check fax and emails, etc.), a list of all vendors, what needs to be done for each new client, and every existing client, when to create a file for prospects, and two firm “elevator speeches”–one for individuals, and one for owners of businesses. There are chapters on marketing, setting up new client files, advice philosophy, and how each portfolio is allocated and managed.

Armed with Morrissey’s Ops Manual, a person right off the street could walk in and start helping out with the workflow. I suspect that many advisors fear that creating such a detailed operations manual will vastly increase their workload, but as Morrissey’s experience shows, the reality is very much the opposite: because everyone in the firm knows exactly what they need to do, when, and for whom, the work and stress for both staff and advisors is greatly reduced.

Once clients have bought into the life planning regime, Morrissey carefully controls the process in three follow-up meetings. Two to three weeks after a client signs the client agreement, Bill calls to schedule the first appointment, and a “New Client Kit” is mailed out, which the client completes and brings to the first meeting so he can go over the worksheets.

Nothing in the New Client Kit is left to chance. It contains agendas for the next three meetings; Sound Financial Planning’s latest newsletter, an “invitation to a Successful Financial Planning Relationship;” a form ADV; a Business Continuity Planning Summary; an Information Interview Appointment Letter; a Fact Finder Questionnaire; a Detailed Budget Form, and two sets of Holistic Forms (one for each spouse) that explore each spouse’s perspectives on their past and present financial lives, as well as their definition of True Wealth, their idea of a balanced life, their goals, and their personal mission statement. The folder’s back pocket contains an authorization for information form, and a Confidential Estate Planning Questionnaire (with instructions to complete in pencil), and a risk tolerance assessment.

In the first client meeting, which typically takes two to three hours and includes a junior advisor to take notes, meet the clients, and gain insight into the client’s goals, Morrissey goes over the worksheets associated with the clients’ history and Holistic Forms. The purpose of this meeting is to make sure he fully understands the minds of the clients: how they view their past and current circumstances, their true goals for the future, and the role that their finances play, and will play, in their lives.

The second meeting focuses on the technical financial and investment information, and well as any obstacles to creating or implementing a financial plan, which is revealed in the Fact Finder, and the Estate Planning and Risk Tolerance questionnaires. The clients bring all the documents necessary to complete a financial plan, including account statements, loan statements, agreements, wills, insurance policies, and employment benefits packages. In this meeting, the lead and junior advisor review the data and documentation, asking questions to be sure they have all the information they need for a clear picture of the clients’ current financial situation and to create a suitable plan to take the clients from there to achieve the goals they described in the first meeting.

After the second meeting, the support advisor reviews the notes and all the documents, following up with the clients if additional information is required. Then she inputs the data into the appropriate technology programs, reviews the results, makes appropriate changes, and sends the whole plan to the senior advisor for additional comments (the plan is to be completed within 45 days from when any missing information is received).

The goal of the third client meeting is to present the financial plan to the clients, including assumptions upon which it’s based, the metrics that will be used to measure its ongoing success, and the advisors’ comments and observations about significant elements such as when the clients might reasonably expect to run out of money, suggestions to improve cash flow, and the likelihood of reaching secondary goals. The investment allocation is also discussed, including the Investment Policy Statement, and the risk parameters.

Again, Morrissey’s goal isn’t just to get the clients’ approval for the financial plan and the investment strategy, but to be sure the clients are on board with goals that the plan is designed to achieve, believing that they are both the right goals for them, and that they are, if not easily achievable, at least extremely likely. For his part, Morrissey then meets with his clients twice a year: once to monitor the progress toward (and any changes in) the life planning goals they mutually agree upon; and a second meeting to gauge investment performance, rebalance the portfolios if necessary, and update the financial plans accordingly.

What’s been the actual impact of ultra-documented operations on Morrissey’s practice? In addition to running his firm with the equivalent of one professional and one staff employee, he has high staff retention (his support advisor has been with him for nine years), and client turnover is essentially non-existent. The bottom line is that he has a very high-touch, high level of client services, great client relationships, and loads of professional satisfaction. Morrissey takes nine weeks off per year and the office is never open on Fridays. I know that creating that ops manual sounds like a major pain, and it’s not an easy task. But when Bill and I started working together four years ago it was essential to his strengths as a business owner, his highly personal mode of operation, and today we both can say that it was more than worth it, both in job satisfaction and the bottom line of his business.

Angela Herbers is a virtual business manager and consultant for independent financial planning firms. She can be reached at [email protected].


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