Anyone who offers advice on building a practice that generates more than $1 million in gross revenue gets my attention. So when Peter and Katherine Vessenes’s book, Building Your Multi-Million-Dollar Practice, landed on my desk along with its promise of “8 success strategies of top-producing advisors,” I jumped into it.

So few advisors achieve this kind of success. Why?

The advisor “life cycle” has four distinct stages, each acting as a filter that permits only the strong to pass to the next level.

The first 12 to 24 months of an advisor’s career is all about survival — scratching, scrambling and learning lessons. Typically, that takes an advisor to a revenue level of $100,000 and up to $10 million of assets under management. If the advisor continues to improve over the next three to five years, success will follow survival with revenue of $250,000 and $25 million in AUM. Those who get this stage right may thunder ahead to a sustainable level of $1 million-plus in revenue and $100 million or more in AUM.
Finally, there is a handful of practitioners who reach a level of significance in the business because they have learned that this is an infinite game and they have virtually unlimited capacity to generate millions of dollars of revenue on $1 billion or more of
AUM.

So what did I find when I delved into Building Your Multi-Million-Dollar Practice? A collection of familiar but nonetheless intuitively appealing “prosperity factors” that can form the basis for any successful practice.

Prosperity Factor No. 1 says top production levels are achieved only if an advisor is willing to take a team-based approach in which his or her only job is to meet with clients and close sales. Consequently, everything else has to be delegated, which means having a team of specialists to handle the details.

Prosperity Factor No. 2 mandates having a written business plan that is both strategic and tactical. Our experience with advisors is that 90% do not have a comprehensive document that states what they intend to accomplish and how.

Prosperity Factor No. 3 is about keeping track of the business’s cash and assets to ensure they are effectively employed. Again, the number of advisors with accurate and meaningful financial statements for their businesses is lamentable. An interesting tool in this chapter is the “money trail” — a document that follows the firm’s money through all its uses to measure payback.

Prosperity Factor No. 4 covers the very broad topic of marketing. A recurring theme is the importance of having a consistent stream of qualified prospects. Regrettably, like most “tell all” books, this one contains a hodgepodge of good ideas that are somewhat superficially covered because of space limitations. That said, there are several good
marketing concepts and templates that can be used as jumping-off points for deeper investigation into other publications dedicated to these topics.

Prosperity Factor No. 5 addresses operational requirements and, in some ways, is an extension of Factor No. 1, which has the advisor focus on client development, not infrastructure. Perhaps this repetition is to emphasize the very limited involvement advisors should have in the functional side of the business.

It seems that everyone today is quoting Jim Collins, author of the best-selling Good to
Great: Why some companies make the leap … and others don’t (HarperBusiness, New York). His notion of “having the right people in the right seats on the bus” is an insightful approach to human resource management. Prosperity Factor No. 6 — excellent employees — follows that line. The authors may have gone overboard in their raving endorsement of the Kolbe system as an employee selection tool, but the chapter also contains good information on performance evaluation and incentive plans.

I found the chapter on Prosperity Factor No. 7 — a defined sales system — one of the most useful. It emphasizes the importance of having a standardized approach to discovering and solving client problems that leads naturally to implementation of the appropriate products and services. I liked the sample meeting agenda and script.

Finally, Prosperity Factor No. 8 addresses the importance of compliance as well as ethics — something that is too seldom raised.

Adding it all up, Building Your Multi-Million-Dollar Practice isn’t unique or revolutionary, but it is worth a read. Your “prosperity factors” may be different from those of the authors, but if all the book does is cause you to stop and think about the components of success in your business, it will have served a very useful purpose.
IE