As a senior market financial advisor you have a collection of specific skills and expertise. For example, you might have excellent selling skills. Perhaps you’ve mastered the intricacies of managing retirement income distributions. But if you haven’t focused on running your advisory business efficiently, your financial results probably are less than they could be. It’s a common problem, according to many in the field. “It’s a high percentage of advisors and advisory firms that struggle with running a business,” says Greg Friedman, CFP, founder and chief executive officer of wealth management firm Private Ocean in San Rafael, Calif. “Nobody said that being a great advisor or a great salesperson or just any of those things automatically qualifies you for making good business decisions.”
Recognizing the problem
Dave Lee, director of practice management with Raymond James Financial Services in St. Petersburg, Fla., cites author Michael Gerber’s book, “The E Myth,” in explaining why many advisors have trouble running a business. There are three different main “actors” in the business, Lee says. The technician does the work, such as selling or advising, while the manager creates the systems that allow the technician to do the work. The entrepreneur has a long-term vision of which direction this enterprise should go in.
Advisors are often great technicians but that role isn’t sufficient for business success. “You have to realize that you’re a small business owner,” says Lee. “If you don’t realize that you’re a small business owner, you fall into the trap of just constantly working in your business as opposed to on your business. Then what happens is the business degrades to such a degree that you can’t even afford to do the good work you do as a financial advisor in a lot of cases. And, we, in this industry, see it every year with people that leave the industry.”
The three S’s
Lee recommends that advisors who wish to improve their business management skills work on what he calls the three S’s: self, staff and systems. The first step in that process is to take an inventory that helps identify gaps in the key areas. Raymond James Financial Services offers its advisors business coaching and online diagnostic tools combined with self-study materials to identify and improve those gaps.
This approach works, Lee maintains. When he asks advisors whose businesses have improved dramatically, they frequently respond that they finally realized they are business owners and started acting the part. Two distinct but linked realizations stand out. First, the advisor realizes that he or she prefers to use or develop specific skills and work in a particular market niche. Those preferences lead to a second realization: there aren’t enough hours in the day to do everything successfully. At that point the I-do-it-all advisor can begin to genuinely work on the business and not just in it. “They realize: I’m out of time,” Lee says. “If I’m going to spend time in this area, that means I’ve got to delegate to someone else.”
Steps to success