Management guru Jim Collins, the author of Good to Great: Why some companies make the leap … and others don’t, likes to ask audiences, “How many of you have a to-do list on your desk?” Many hands go up. He then asks, “How many of you have a ‘stop doing’ list?” No one ever raises a hand. He then adds: “Great companies make great use of the ‘stop doing’ list.”

In the complex world of running a professional practice, there are numerous activities that belong on advisors’ “stop doing” lists. The challenge is identifying which tasks require your personal time and effort, and then deciding what to do with the rest. There are two principles that are central to this process: optimization and leverage.

“Optimization” means working at the highest level of your capability. For most advisors, their highest level of capability is demonstrated when they work face-to-face with clients. Not coincidently, it is also the activity with the most economic value. We get paid handsomely to discover, plan and implement. The other activities — such as compliance, administration, management and even marketing — are essential and may, at the end of the day, make it possible for us to be paid. But they don’t have the same high value as helping clients secure their financial future.

Clearly, if we could spend all our time working with clients, we would create the greatest value. In the real world, however, that is seldom possible. Those other things get in the way and have to be dealt with. But how? That’s where the second key principle — leverage — comes into play.

“Leverage” means employing the time, talent, knowledge and resources of others and delegating to others — something many of us find difficult, for a number of reasons. We think we can do most things better than anyone else; we can do most things faster than teaching someone else (lower cost); we actually enjoy doing those things that keep us away from clients; and we don’t have enough high-value tasks to keep us busy anyway.

Delegation demands leaving our egos at the door; we have to give something up that we have done, perhaps well, for a long time. Intuitively, we know it is right; but, psychologically, it can be stressful. It’s analogous to getting a client to “buy low and sell high” — intellectually, it makes sense; emotionally, it does not.

But let’s assume we are willing to delegate some of our lower-value activities so we can focus on what we do best — helping clients. What’s the process?

1. Evaluate revenue-producing activities. Begin by listing all the revenue-producing activities (RPAs) in your practice and attempt to assign a dollar value to each one.

For example, if, on average, it takes you four hours from start to finish to complete a plan or sale to a new client and your average fee or commission is $2,000, that activity works out to be $500 an hour. If having annual reviews with your “A” clients takes approximately three hours total time and typically leads to an introduction or referral that results in a new client acquisition half the time, the value of an annual review is $333 an hour ($2,000/3 for the hourly rate, which is then divided by 2 for the frequency of new client acquisition).

This needs to be done for all of your RPAs, including seminars and client appreciation events.

2. Evaluate non-RPAS. Now list all the non-RPAs in your practice and assign a value to each. In this case, the value is the amount you would be willing to pay someone else to do those activities. For example, you might value a receptionist’s job at $15 an hour; an administrative assistant’s at $25 an hour; an office manager’s at $40 an hour; and so on.

3. Evaluate your activities. Next, identify all the RPAs and non-RPAs in which you personally are involved and determine the percentage of your workweek taken up by each activity. Now, calculate the value of your time by multiplying the percentage of time spent by the value of the task. You can do the arithmetic, but the accompanying table (above) illustrates an outcome similar to what you might find.

@page_break@4. Focus. The conclusion is obvious: focus on what you do best and delegate the rest. In a real sense, that might mean narrowing your personal efforts to your “A” clients and perhaps a handful of top “B” clients while letting others handle the remainder. It might mean stepping away from all administrative duties to concentrate on RPAs as fully as possible.

Be warned, however, that delegation to others often is not simple. Here are a few things that can go wrong:

> the wrong person is assigned to the task;

> expectations aren’t clearly defined;

> we interfere too much.

To avoid these pitfalls:

> match the assignment with the person. Ensure that the person assuming the responsibility has both the intellectual capability and the willingness to handle it.

> delegate responsibilities rather than tasks, and be specific about what constitutes satisfactory performance in the role.

> learn to let go. Once the assignment is understood and the transfer has taken place, get out of the way. Don’t stray so far that everyone feels abandoned, but don’t be afraid to let people learn from their mistakes. Your job will be to ensure no one gets hurt in the process.

Aside from delegating to other people, the financial services industry lends itself particularly well to delegating to technology. Think of all the applications for technology in our business: time management; contact management; database management; accounting and business management; automated marketing and communications; financial, investment and insurance planning; illustration and proposal preparation; and online learning.

A word of caution: don’t get hung up in the technology. Master the software that you need to use in your higher-value activities, assign someone else to learn the rest and, by all means, leave hardware issues to a technician.

Another strategy for deciding what to delegate to whom involves developing a structure for your practice that creates a hierarchy around the higher-value responsibilities. Draw an organizational chart, with each box representing an area of responsibility. At the top will be the CEO, who may have vice presidents in charge of marketing, administration, operations and finance reporting to him or her. Each of those positions may have subordinates reporting to them.

Once the chart is drawn to reflect the roles you feel are right for your business, put the name of the person responsible for each area in the appropriate box. When you start out in your practice, you’ll probably have your name in all the boxes; but, over time, you should be able to have others take on some or most of those functional responsibilities.

Note that at any stage in your business evolution, you can outsource a role. For example, your part-time bookkeeper might be your CFO in the beginning or your 14-year-old child might be your manager for technology.

The final piece of advice is to utilize all the resources that are available in this industry. Look to trade associations for education and data; suppliers for product knowledge, as well as sales and marketing support; and your sponsoring firm for technology and process training for you and your team. Develop associations with collateral professionals to leverage off each other, and find a mentor for guidance.

What’s the payoff? A major study in the life insurance industry a few years ago determined that the top 10% of all producers spend about 20% of their time in RPAs. However, the top 10% of that group — the top 1% of the industry — were found to spend more than 50% of their time in RPAs. That’s a difference of 21?2 times in RPA time.

The payoff differential, however, was far more dramatic: the revenue in the second group was eight times higher than that of the first!

The lesson is clear: failure to optimize the use of your special talents and gain leverage through others puts a cap on your business. Utilizing all the resources available turns a finite game into an infinite one. IE



George Hartman is a coach and consultant with The Covenant Group. He can be reached by e-mail at george@covenantgroup.com.