Systems Engineering

One reason it’s difficult to be in charge of operations at an advisory firm is that the chief operating officer, or director of operations, typically has to live with one foot in two different worlds.

On one side, they need to walk with the firm owner, who often is an entrepreneurial spirit who focuses on sales and client experience. On the other, the COO must be fully invested in operational workflows and how staff members can accommodate the organization’s growth goals.

In a healthy organization, these two sides — strategic and tactical — have to work hand in hand and support each other. Strategic planning focuses on what can be done to bring clients into the firm and to create an ongoing positive experience. Tactical work covers the internal procedures necessary to support the client experience.

For most advisory firms, the client experience gets more attention. It’s the outside of the house —the roof, the front door, the window trim, the paint.

But, a good client experience has to be supported by an exceptional operational experience. The exterior of the house is only as good as the plumbing and wiring inside the walls and the foundation it all rests on. That foundation is called the OX, for operational experience.

As silly as it sounds, when I think about the relationship between a good client experience (CX)  and a strong OX, the story of the three little pigs comes to mind.

Building a Strong Firm

For our purposes, the big bad wolf represents all the things that can go wrong for a business — tax law updates, new regulations, challenging employees — anything that can throw you off track and out of normal operating procedure.

The houses the pigs made show the varying ways in which advisors pay attention to their OX and how that attention (or lack thereof) affects the business.

  • A Firm Made of Straw: If an advisor has no written processes and doesn’t take good care of their employees, they have basically a straw house. The smallest change or problem leads to lost time, lost money, and hurt feelings.
  • A Firm Made of Sticks: These firms may have a nice exterior client experience. But if a client begins to huff and puff about a down market, and the operational support isn’t there to boost the client experience, then that wood may begin to erode. Soon, the entire structure falls.
  • A Firm Made of Brick: This symbolizes the advisor who’s taken time to stack one good process on top of another to support their staff first, like a craftsman laying bricks, so they can go out and support clients.

The advisor who prioritizes OX has a practice that is sturdy. They’ve invested the time and built the foundation to think correctly about what they can withstand, and the business operates accordingly.

Tech Solutions?

Many advisory firm owners believe new technology can solve their OX problems. However, adding a new tech solution is like adding new paint to the outside of the house — it probably won’t impact the materials used to build it.

Of course, there are times when tech helps your team. Before you add new technology, though, follow these steps:

  • Document every client interaction, from first contact to ongoing support.
  • Match each step in the client interaction flowchart to an operations task; if there is no corresponding OX task for a CX moment, you’ve identified a weak link.
  • Once you’ve established each step along the process, then you can begin to add new tech, like a CRM that makes staff more efficient by reducing duplicate data entry tasks.

When we deal with OX issues, we tell advisors to remember a simple contrast. If you give a great employee decent technology and no process, they’re likely to fail. But if you give decent tech and a proven process to mediocre employees, they’ll likely get better at their jobs and usually succeed.

The bottom line is you can spend all day on the client experience and (re)designing it. Yet, if you don’t take the time first to dig into the details of your operations to analyze the strengths of your team’s inner workings, such efforts are useless. By giving OX the attention it deserves, you can make smart tech decisions and grow your operational support to be even stronger.

Jarrod Upton, MBA, MS, CFP® is Chief Operations and Senior Consultant at Herbers & Company, an independent growth consultancy for financial advisory firms. He can be reached at jarrod.upton@herbersco.com.