Put everything in writing. Involve your staff more in the process. Identify your target market. Trust your instincts. Hire quickly. Trust your friends. Be yourself. You don’t have to have a perfect plan.
The pithy prescriptions above for a successful advisory practice came from participants in a Dec. 3–4, 2012, workshop that wrapped up Power in Practice, Commonwealth Financial’s year-long coaching program for some of the independent broker-dealer’s advisors.
This final in-person workshop was guided by Commonwealth’s practice management experts, led by the sui generis, Joni Youngwirth. However, as a guest at the workshop, held in Boston, my biggest takeaway was that the genius of the program was provided by the participants. Good workshops of any kind make sure to involve the participants in a significant way, of course. Good advisors are particularly eager to learn from each other.
The 42 participants in the two-day final workshop of the 2012 Power in Practice program coached each other and gained insights into their own practices. Of those advisors, a number were alumni of the 2011 program who were there to share their stories with the 2012 “graduates.”
The goals of the final workshop were to reinforce the key lessons learned to date in the program:
- Firm business planning and financial management
- Human resources
- Operational efficiency
- Production enhancement
- Risk management
The overall goal of the final workshop was to create a system to sustain the progress participants had already achieved. That system, however, is not a static plan that sits on a shelf: The underpinning of the program is to allow participants to manage change on an ongoing basis, built on a plan designed to achieve clearly laid out goals to improve each participant’s practice.
The Year-Long Process
This article is the fourth and final in a series describing the Power in Practice program, which Commonwealth launched in 2011. The previous three articles, written by Joni Youngwirth, describe the entire program, which comprises three two-day workshops. Between those in-person workshops, participants hold peer group conference calls designed to reinforce the best practices learned in the workshops and promote accountability to the advisors’ peers in the program. Participants are given specific assignments to complete, and in addition, there are one-on-one personal coaching calls with Youngwirth and a team of certified coaches. By program’s end, participants are presented with a personalized practice management manual designed to provide ongoing support in their CEO role, along with a plan for increasing their production and taking their firms to the next level, which Youngwirth describes as taking their firms “from practices to businesses.”
According to Youngwirth, Power in Practice participants are more successful than those Commonwealth representatives who don’t participate in the program. Commonwealth’s internal tracking found that in the inaugural year 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.” Larger producers—those who generated more than $475,000 in 2010 GDC—“increased their 2011 revenue by 44% over those in a similar revenue range who didn’t participate in the program.”
If the overall goal of the program is to turn already successful firms from practices into businesses, for principals, the goal is to give them the tools to be successful CEOs. In the first article in the series, Youngwirth quoted one of the 2011 participants, Kris Maksimovich of Global Wealth Advisors in Dallas: “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, Maksimovich said he had identified and fine-tuned his firm’s day-to-day operations; analyzed his client base to determine which clients were not profitable and what serving them cost; benchmarked his practice against similar firms; and “more clearly defined team member roles,” which had the effect of those employees taking “greater ownership of their positions.”
Summing up, Maksimovich said, “We now feel we have a laser-sharp focus on the drivers of profitability for our practice.”
Making a Plan, Getting Focused
Power in Practice has two major tracks: increasing production and building an infrastructure to systematize your business. In the first of the three workshops, participants begin to create a “streamlined” business plan based on defining the firm’s business vision, listing strategic directions for the following three years and setting SMART goals for the next year (SMART stands for Specific, Measurable, Achievable, Realistic, Time-bound). Much like a financial plan, a business plan need not and should not be complex and long. As Jim Komoszewski of Investment Centers of America said, “even the most detailed, well-organized and handsomely bound business plan is useless if it isn’t being referenced and utilized often.” Power in Practice suggests that a two-page or even a one-page business plan—one that is “right sized” for a small business like an advisory firm—can be sufficient.