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Taking your practice to the next level: a 5-stage guide

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Is it time to re-invent your practice?  Are you spending enough time working on your practice, rather than just working in your practice?  If you hold the rank of captain or above, how much of your work should be done by Lieutenants and enlisted personnel?  How much of your work should be done by majors and above?

Think of your practice as an “S” on its side, rotated clockwise.  There are five stages of development:

  1. Start-up — learning, licensing, developing a clientele

  2. Survival — Making a good living, but substantially less than the top advisors.

  3. Growth — Now you are sitting at the big kids’ table.

  4. Maturity — Is your practice still growing, plateauing, or beginning to decline?

  5. Transition — Are you planning to retire, or should you re-invent your practice and begin another “S” curve?

How do you advance your practice to each next level?  Don’t be a lone wolf.  You need to partner, formally or informally, with others.

Getting from stage 1 to stage 2

To achieve the survival state, you need someone to service your existing clients and the centers of influence (attorneys, accountants, property and casualty insurance agents, bankers, etc.) you’ve cultivated, and to handle all of your paper work.  Please don’t think of this person as an administrative assistant. 

The individual needs to be your client (and COI) service manager.  Hire someone, or share someone with others.  This could be another advisor or someone less experienced than you whom you can mentor.

Please don’t think that you can wait until you can afford this person to hire him or her. To make more money, you have to spend some money.  You have to invest in your practice.

Getting from stage 2 to stage 3

You need to build a team.  Your existing clients (now considered “B” and “C” level) are holding you back from working with your newly defined “A” clients.  This is the classic point where you are spending 80 percent of your time deriving 20 percent of your income. 

If you’re thinking to yourself, “The service work is killing me,” them let your protégé or client service manager take care of your “B” and “C” clients.  That leaves you more time to develop more ”A” clients and develop more centers of influence.

Getting from stage 3 to stage 4

You need to expand your team — starting with hiring one or more additional protégés to service your growing client-base.

In addition, you need direct access to case design specialists.  Insurers’ home offices have great teams of experts.  However, they work with a great many advisors.

You may be better served having the experts available to join you on appointments, in person.  Waiting for home office experts to get back to you may no longer be acceptable.

You don’t want to be up at midnight putting together a presentation for an “A” client or new “A” prospect.  You are no longer in school where last-minute cramming and all-nighters may have worked for you. 

However, securing an expert for such appointments can be expensive. Alternatively, you may want to join forces with other mentors.

Or, you may want to be part of an advanced planning firm where these specialists are already on staff. One such example is Baystate Financial Services, LLC in Boston.

In 1996, Baystate Financial was in its 95th year of operation.  The company started out in 1901 as a life insurance agency and then added investments in the 1970s and 1980s.  It was deep into Level 5 (transition).  It had been declining in size.  There were 44 people; 29 advisors supported by 15 staff, a 2:1 ratio.

The company needed to be re-invented.  So, a new management team came in and designed a new “S” curve.  As of 2015, the firm has grown to 500 employees, but now with a 3:2 or 1.5:1 ratio; 300 advisors supported by 200 staff ranging from:

Management (who recruit and train protégés for you) and

  • Outside specialists in each of the financial planning disciplines
    • Estate planning
    • Business succession planning
    • Retirement planning
    • Elder care planning
    • Education funding
    • Special needs planning
    • Planned giving
  • teams of client-centric inside specialists
    • Financial planning
    • Sales desk — running insurance, annuity, and investment illustration
    • New business  — overseeing all of the paperwork involved

Baystate Financial took the mentor/protégé model for advisors and applied it to its ranks of specialists.  It has sufficient design capacity to add another 100 advisors and still have a 2:1 advisor to staff support ratio.

Baystate did not wait until it could afford to add the specialists.  Its Managing partner, Dave Porter, using his entrepreneurial spirit, invested in Baystate so that it could grow.

Getting from stage 4 to stage 5

As part of your transition plan, think about who will service your existing clientele.  Selling your practice may be an option that benefits you, but will it benefit your clients (your friends and family)?  Instead, consider finding protégés, teams, or firms that can continue to work with you and your clients.

At Baystate, mentors can select which protégés should become part of their client service team. Protégés can select mentors with whom they want to work. Investment people join forces with insurance people.

All financial products are designed as part of a coordinated financial plan.  The financial planning software aggregates all of a client’s financial products, whether placed or managed by Baystate, or not. The software also holds electronic copies of important legal, tax, and financial papers.

Is your practice working with 21st century tools?  Does it appeal to 21st century clients?  If not, then consider taking it to the next level, by yourself, within your existing firm, or by joining a firm that has already created such a model.