Key to Advisor Success: Having the Discipline to Finish

In my eyes my 86-year-old grandmother is perfect. She is always what I call “put together”: clothes, jewelry, hair, makeup. Even when she was deep in recovery from cancer she looked like she just stepped out of a senior edition of Vogue. One day, I asked for her secret. Her response? “Sweet Miss Angie, I don’t ever strive for perfection. Each day you have an opportunity to be disciplined. My goal is simply to be finished each day. When I’m done, I’m dead.” 

In my work, I’ve come to realize that many advisory firm owners do not share my grandmother’s wisdom. No, I’m not talking about their fashion sense–that would take a lot more space than a blog. I’m talking about the difference between what my grandmother calls being “finished,” and being “done.” And because many owner advisors don’t understand this distinction, their firms are not nearly as successful as they could be.

What most firm owners don’t understand is that an advisory business is a work in progress. It can always be better: bigger, more efficient, more profitable, offer better client service, be more fun to work in. So while owners may be “finished” working on some aspect of their business for now—say, a new client onboarding process—they are never “done” with it. Tomorrow, or next week, or next month, or next year, they or an employee or an article will have better idea for handling new clients, and they’ll get to work making it better. 

Why is this important? Because more firm owners than not think they should be striving to just be “done”—check it off the list. And in their zeal to get it done, they use up their limited resources—mental, financial, manpower. Then they give up in frustration resulting in lower profit margins. At which point, they usually have some new program, or technology, or service that doesn’t work, or doesn’t work very well. That in turn means it’s going to create future falling margins, unhappy partners and/or employees and clients (the worst case), resulting in low morale, bad feelings, frustration and lost business. 

This very frustration has been echoed by the advisory firms I have been chatting with (and where I am currently writing this blog) at the MarketCounsel Summit in Miami, an annual advisory firm conference put on by the folks at New Jersey-based MarketCounsel. Throughout the conference one thing about the industry became clear and Mark Tibergien, my fellow columnist in Investment Advisor for the past 11 years, said it best: “Pricing compression in our industry is not real. Margin compression is.”  

The advisory industry is going through major changes and we are seeing profit margins fall. But, from my point of view, it doesn’t have to be this way if the advisory community can come to view their firms as “finished” for today but never “done.”

Here are the steps I recommend my firm-owner client owners take to keep their new ideas in perspective, saving profit margins and increasing overall morale in an industry going through dramatic change.

1) Do a cost/benefit analysis 
Every new project or initiative—marketing plan, advisor training program, tech platform, etc.—is going to have two parameters: how much it costs to create/ implement, and what your firm gets out of it. Most of you know that there’s usually a connection between how much money and effort you put into it and what you get out of it. But what many firm owners don’t realize is that the closer you get to being “done,” the much greater the costs will be. So what you have to decide is how much is it worth to you to make a long-term investment in what you are doing.

Keep in mind that “good enough” means you’re finished for now, but not necessary done forever. 

2) Monitor your progress and your costs
As a rule of thumb, figure that half the assumptions in your original cost/benefit analysis will be wrong. You just don’t know which half, at the start. So you need to carefully monitor every new project to find out where you were wrong. Sometimes those finishing touches will cost way more than expected: so you have to decide if they are worth it. Other times the benefits you’d hoped for will come sooner than your planned, and you’ll have to decide to stop there or create excess capacity while you’re at it.

Be careful not to let the thought “I’m done with it!” enter back into the equation.

3) Monitor the results 
Regardless of what you decided at the above points, don’t become so “done” with a project that you stop working on it. You may be “finished” with it for the time being, but that doesn’t mean you should stop learning from it. Carefully monitor how things are working out—and don’t rely on only your perceptions. Instead, get as much feedback as you can from the people who are working with it, and if clients are experiencing it, get their feedback, too.

Rarely does something new work so well that it doesn’t need to be tweaked a bit.