“Sometimes we stare so long at a door that is closing that we see too late the one that is open.” This astute observation by Alexander Graham Bell, inventor of the telephone, is just as relevant to the advisory industry today as it was to Bell’s peers.
The closed door? After a tough 2008-2009 in which registered investment advisors experienced contracting revenues, assets, and profit margins, some advisors were forced to cut back on support and administrative staff. The average number of administrative staff per average RIA firm decreased from three in 2007 to one in 2008, and the average number of customer service team members fell from four in 2007 to one in 2008.
Staff cutbacks are always difficult, but these cutbacks, combined with clients’ demand for more time with advisors, created a significant challenge for advisors–providing clients with the face time they sorely needed in the wake of less staff.
Many advisors (30%) believe that having the right team of people is the key driver of growth in the near future. While many firms trimmed staff to survive the market turmoil, there were other firms that managed their practices exceptionally well and maintained client service support levels. The good news is that there are steps all firms can take to turn this challenge into an opportunity–or, as Bell says, find the open door.
How to Reengineer Your Practice with Fewer Resources
In fortifying your business, it’s vital to focus on client relationships. It’s also equally important to focus on your employees, as they can broaden your ability to support your clients’ needs. So even in a time when your resources might be constrained, be sure to continue to:
l Communicate consistently–whether it’s good news or bad. Personnel costs are among the largest expenses for the average advisor, so getting a return on human capital is vital. One third (33%) of advisors surveyed admitted that successful communication with employees can be a barrier in strengthening their business. However, communication provides a proactive approach to maintaining employee engagement. Once considered a “soft skill,” communicating to employees is now widely accepted as having “hard” business impacts including reduced turnover and absenteeism as well as increased client satisfaction. Whether communicating your vision for your firm’s future or soliciting employee ideas for fortifying your practice, open and honest communication with employees will make them feel more invested in your business–and motivate them to put in extra effort. Remember to communicate both the positive and the negative–if it’s relevant to employees.
- l Invest in training. Even with limited resources, investing in your employees can be a solid investment. Those identified as “best practices” by Rydex|SGI AdvisorBenchmarking view staff development as critical. Paul Bennett, managing partner at the Great Falls, Virginia-based c5 Wealth Management, says that personnel is one area his firm doesn’t skimp on. His firm pays for employees’ advanced degrees and certifications and, as a result, has a highly credentialed staff. But what if you don’t have the budget to send members of your staff to formalized training or help them get securities licenses? Invest your own time to mentor and cross-train your employees to maximize their value to your business–and to your clients.
- l Share client relationship responsibilities when possible. Instead of trying to handle all client relationships on your own, explore how you can have your staff share client-relationship responsibilities with you. This is a win-win for you, your staff and your clients. By sharing client-relationship responsibilities with your staff, you’ll be taking some pressure off yourself, demonstrating the faith you have in your team, giving your staff additional growth opportunities, and, most important, increasing the amount of time your firm spends with clients–your ultimate goal.
Benefiting From the Silver Lining