“Coach’s Forum” is a place in which you can ask your questions, tell your stories or give your opinions on any aspect of practice management. For each column, George selects the most interesting and relevant comments from readers and offers his advice. Our objective is to build a community of people with a common interest in making their financial advisory practices as effective as possible.

Advisor says: Over the years your columns have touched upon a wide range of practice-management topics, from starting a practice to retiring from one – and everything in between. That has caused me to wonder about two things: how did you learn all this stuff; and, if you were running a practice today, what would it look like?

Coach says: First, thank you for your comments. In response to your first question, I have been fortunate throughout my career to work with and witness thousands of successful advisors – some of whom rose to industry “sainthood” and others who toiled away quietly – simply doing great work for their clients and building incredible businesses.

I also have observed, close up, advisors who fell far short of their ambitions and stayed in the business too long or left it too soon. Regardless, I have tried to learn something from all of these advisors while knowing, in fact, that in many instances, they taught me more than I taught them.

Someone introduced me once at a conference at which I was speaking as “a student of the business.” I had never really thought of myself that way, but I guess I am. I voraciously read everything I can about topics related to my work. I join webinars, attend conferences and am delighted to go on hour-long online searches when a blog, tweet or posted article leads me on a journey seeking new insights. Sometimes, the path leads me down a rabbit hole; other times, to a hidden treasure trove of knowledge.

From those experiences and the collective wisdom of so many, I have formed my own views, developed tools and created processes that I am happy to share with anyone who finds them of value.

Now, to your second question: “What would my practice look like?” Before answering, I must make the point that there is no “one way” to build a successful financial advisory business. We all bring our unique expertise, values and energy to whatever we do. These attributes influence our decisions and shape our outcomes. What works for me may not work for you. That said, here are some of the fundamental choices I would make:

– Vision. The starting point for any business owner is his or her vision of the future – what the advisor wants his or her world to look like at some point down the road. To get advisors to articulate that view, I used to ask, “What will your practice look like when it is as successful as you want it to be?”

I have since learned, courtesy of my good friend, Julie Littlechild, founder of AbsoluteEngagement.com, that the process of discovering and articulating your vision should begin at a higher level – that is, with your vision for your life. By thoughtfully considering what we want from life, we then can align our business to give us the best chance of achieving those higher ambitions.

In simple terms, my life vision begins with family. To meet my desires for my family, I need good health, strong values, wisdom, personal enjoyment and financial security. To achieve those aspirations, my business should allow me to work hard and play hard, have minimum stress, share my expertise with others and build personal wealth.

With those requirements in mind, I would want my practice to have the following primary characteristics:

– Services. Full-service wealth management for business owners and self-employed professionals. I love working with entrepreneurs; they typically are serious about their business, adventurous, open to advice and intellectually stimulating. In addition to financial planning and investment services, entrepreneurs need counselling on the strategic integration of their personal lives with their occupational endeavours, tax and estate planning, philanthropy, risk management and business continuity.

– Size. A practice of 200 to 250 clients generating gross revenue of $2 million-$3 million, with 85%-90% recurring on a fee basis. This would provide the practice with sufficient cash flow to deliver a high level of client service, maintain a professional presence, employ well-qualified support staff, keep pace with technology and reward those who contribute to our success. The business would not be so complex that it requires too much management time, thereby allowing me to focus most of my efforts on the things I do best and enjoy the most.

– Advisors. A team of three or four advisors with different, but overlapping expertise. This would permit us to offer clients an “ensemble of talent” to address advice needs totally and efficiently. The advisors’ demographics and experience would enable us to have an internal business continuity and succession plan in place.

– Support team. Four to six well-qualified “team players” who believe in our vision and cause. They would share our passion for excellence in everything we do, yet understand that we have to run a profitable business. Roles would include office management, a paraplanner, administration, customer relationship management (CRM)/data management and marketing. Portfolio management, technology support and accounting would be outsourced.

– Compensation model. Fees based on services provided; not on assets under management. As you have, no doubt, experienced, asset size does not always equate to the amount of work you have to do on behalf of individual clients. We would use a three-tiered pricing model that includes:

1. Relationship management. A monthly retainer for us to do the initial planning, stay on top of things and look out for the client’s best interests.

2. Services. Paid when additional work is required due to changing circumstances, new legislation, new economic conditions, etc.

3. Projects. Paid when there is much work to be done, often involving co-ordinating other professional advisors.

I like this approach because fees would relate directly to the work done for clients and our compensation would not be based on things beyond our control, such as economic downturns or major market declines.

Space does not permit me to comment extensively on all aspects of the business for which I would want to have a definition, in addition to the big “core” elements shown above. Here, however, are some points for further consideration:

– Products. Low- or near zero-cost investments, such as ETFs, along with life, disability, critical illness and long-term care insurance products.

– Business model. Target of 35% of revenue to overhead costs and 40% to advisor compensation. Thus, leaving 25% profit for staff bonuses and owner compensation (over and above compensation for my advisor duties).

– Technology. Financial and investment planning, client “onboarding,” CRM, data management and communications (including videoed client meetings).

– Marketing. A combination of “internal” (directed at current clients and centres of influence) and “external” (directed at our target market). Extensive use of directed “inbound” social media marketing vs traditional “outbound” promotion.

– Brand image. Highly professional, innovative, deliberate, client centric community supporter and a great place to work.

Knowing that I actually am unlikely to manage an advisory practice makes describing what it would look like easier for me. You, however, are doing so today, so your perspective is different. Ask yourself: “If my practice didn’t exist today, how would I invent it to achieve my life vision best?” Your answer can be your guide.

George Hartman is CEO of Market Logics Inc. in Toronto. Send questions and comments regarding this column to george@marketlogics.ca. George’s practice-management videos can be viewed on www.investmentexecutive.com.

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