Before they begin dispensing financial advice to clients, most advisors receive extensive training through college courses, professional certification programs and on-the-job experience. But few independent advisors are equally well-prepared to assume the roles of CEO and rainmaker—both of which are essential to a thriving practice. To help advisors gain a competitive edge by confidently embracing their leadership roles, Commonwealth Financial Network launched Power in Practice, a year-long business coaching program. In this four-article series, we’ll follow a group of advisors as they embark on the 2012 Power in Practice program, sharing key lessons and insights they pick up along the way.

Now in its second year, Power in Practice guides advisors in creating practice management infrastructure while renewing their focus on growth and business development. Unlike the typical training session, which introduces a lot of great ideas that may not get implemented, the program provides business owners with tactical steps and structure intended to serve them throughout their careers. Specifically, Power in Practice is designed to help advisors tap their potential by:

  • Identifying opportunities and developing a game plan for growing revenue in the coming year
  • Clarifying near- and long-term goals and implementing best practices to achieve them
  • Enhancing leadership skills and developing practices for more effectively managing staff and time
  • Creating a streamlined infrastructure to boost operational efficiency

Presented in three two-day workshops, the curriculum covers small business leadership, production enhancement, human resources, operational efficiency, marketing and risk management. In between the workshops, peer group conference calls help reinforce best practices and promote accountability and follow-through. Pre- and post-workshop assignments encourage participants to make the most of each session, while a series of one-on-one coaching calls gives advisors the opportunity to discuss their unique challenges with a certified coach.

At the program’s end, advisors walk away with a personalized practice management manual to support them in the CEO role indefinitely, plus a clear plan for enhancing their production and taking their firms to the next level—from practices to businesses.

Sounds great, but does it work?

Talk is cheap, so here are some hard facts about Power in Practice. Advisors who participated in the program’s inaugural year saw a significant increase in revenue compared with Commonwealth advisors who didn’t take advantage of the program. Participants who generated between $200,000 and $475,000 in 2010 GDC increased their 2011 revenue by a weighted average of 24% over nonparticipating advisors with the same 2010 GDC. Participants who generated more than $475,000 in 2010 GDC (including several million-dollar producers) increased their 2011 revenue by 44% over those in a similar revenue range who didn’t participate in the program.

Take Kris Maksimovich of Global Wealth Advisors in Dallas, who grew his revenue substantially in 2011. In his own words, here’s what Maksimovich took away from the program:

“It all started with clearly outlining our business and marketing plan for the next year. While we’ve done this every year, it’s a bit different when you’re challenged by your peers to address any gaps in planning and focus more intently on the strengths of your practice. In addition, over the past 12 months, we have:

  • Identified and fine-tuned our core processes, those most often used in day-to-day operations.
  • Analyzed our client base to determine which relationships were not profitable for the firm, and gained a clearer understanding of how much the time we spent on them truly cost us.
  • Benchmarked how our practice compared with firms of equal and larger size in several areas, including budget, client demographics and profitability.
  • Updated our employee manual and more clearly defined team member roles. As a result, employees have taken greater ownership of their positions.”

In short, Maksimovich says, “We now feel we have a laser-sharp focus on the drivers of profitability for our practice.”

Workshop #1

Ready to apply some of the program’s teachings in your own firm? Let’s recap the first Power in Practice workshop of 2012, which was attended by a diverse group of advisors from across the revenue spectrum.

Business planning. To kick off the workshop, participants were presented with a question: What is the value of a written business plan? Few had made a habit of updating their business plans annually, and some had never written one at all. Many thought of a business plan as a hefty 50-page document—an image that discouraged them from even trying to create one. Power in Practice takes a simplified approach to business planning, “right-sizing” it for small businesses. In the first workshop, advisors begin creating a streamlined business plan that consists of three key components: the firm’s business vision, strategic directives for the next three years and SMART (specific, measurable, achievable, realistic, time-bound) goals for the next year. By the end of the program, participants will have made significant progress toward completing a solid business plan.

Building on the approach to time management presented in Stephen Covey’s “Seven Habits of Highly Effective People,” we discussed the “nesting” principle of business planning. Consider a child’s stacking toy, where one piece nests within a larger piece nested inside an even larger piece and so on. Likewise, from a time management perspective, it makes sense to nest the tasks required to accomplish your goals within a longer-term strategy, which aligns with the business vision tucked inside your personal vision. When these components fit together, you’ve got a concise and precise business plan.

Several participants mentioned how difficult it can be to make a goal SMART—specifically, the challenge of writing a goal specific enough to measure. But the advisors agreed that it was worth the effort, as the added clarity on the front end would help them and their staff members actually achieve the goal.

Human resources. The human resources segment of Power in Practice focuses on creating fundamental HR documents—job descriptions, performance reviews and employee handbooks—all of which will end up in the participant’s practice management manual. Using the Gallup Organization’s 12 dimensions of “best places to work,” the advisors discovered how execution of the fundamentals is critical to creating an exceptional work environment. Participants were asked to anticipate how employees would rate their firms on dimensions such as:

  • I know what is expected of me at work.
  • There is someone at work who encourages my development.
  • The mission/purpose of my company makes me feel my job is important.
  • My fellow employees are committed to doing quality work.
  • In the last six months, someone at work has talked to me about my progress.
  • This last year, I have had opportunities at work to learn and grow.

It can be even more enlightening to ask employees to rate your firm on these elements confidentially.

Marketing. Marketing is the nemesis of many an advisor. Although it may seem exciting initially, many advisors can’t sustain their marketing efforts over time. Not surprisingly, an occasional marketing blast has little value it it’s not part of an ongoing strategy. Additionally, advisors often fail to identify a niche to market to. Marketing collateral that’s not directed toward a specific audience tends to be bland and watered down rather than speaking to an ideal client’s most critical issues. Disappointed by their results, many advisors abandon their marketing efforts altogether.

Power in Practice addresses these common marketing pitfalls by helping advisors build a foundation for long-term success. First, the participants isolate a particular niche they wish to target, identify its hot issues and define what makes them uniquely qualified to serve the chosen niche. Next, they create a monthly marketing calendar of tactics they will deploy to market to existing clients, prospects and strategic alliances. They also select a staff person to whom they will delegate responsibility for implementing the calendar. The participants felt that these two steps—defining a niche and creating a marketing calendar—would provide the kind of structure they need in order to stick with their marketing efforts.

Production enhancement. Finally, we covered production enhancement, a topic that’s addressed in each of the three workshops. In the first session, we introduced the three A’s of production success: aptitude, attitude and activity. Of course, advisors naturally have different aptitudes for rainmaking. Some individuals will introduce themselves to others in an elevator instinctually, while others need to learn how to deliver an “elevator speech.” Some advisors constantly network, gaining the names and addresses of people they meet without even thinking about the fact that they’re prospecting; others must make a point of reaching out to new contacts.

No matter their natural tendencies, most successful advisors start their careers with a focus on activity. The 20-point system we introduce in Power in Practice reminds participants that focusing their time and energy on revenue-generating activities works. First, the advisors pinpoint the activities that will become part of their personalized system for allocating time and energy to achieve the greatest profit. Whether it’s asking for introductions, networking with strategic alliances or hosting informal events for clients and their guests, each action item is defined and assigned a certain number of points. Depending on the advisor’s existing business and desire to grow, he or she sets a goal to tally 20 points of revenue-generating activity per day (for early-career advisors) or per week (for established advisors).

Many advisors will admit, “I used to focus on revenue-generating activity. In fact, it worked so well I quit doing it.” It’s interesting to note that even highly successful seven-figure advisors eagerly adopt the 20-point system, and many share the idea with other advisors in their firms. The self-imposed tracking starts in the first workshop and becomes one of the items the peer groups monitor as the program continues. Of course, any advisor in an ensemble practice can easily apply the concept with another colleague; solo advisors can seek out a personal coach to support accountability.

Opening up to new possibilities

In talking with their peers during the first workshop, many of the participants found that they’re in similar situations when it comes to carrying out their duties as CEO and rainmaker. As one participant noted, “It’s important for me to be honest and admit my business shortcomings. I don’t need to be afraid to admit that I need to work on them because they are fundamental to my future success.” Indeed, that openness is essential to making the most of the program and realizing one’s fullest potential as a business leader.

In the second article of this series, we’ll share how the participants implemented the concepts after the first Power in Practice workshop—and we’ll look at the new concepts introduced in the second workshop.