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?
BusinessDictionary.com 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