“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: I have just finished reading your latest book, Blunder, Wonder, Thunder: Powering Your Practice to New Heights, and am motivated to take my business to a level it has never been at before. An idea that struck home for me was your illustration of the growth curve of an advisor’s business and the need to “re-engineer” my practice every few years to launch it on a renewed growth trajectory. I have always intuitively understood that most businesses eventually reach a plateau, but I admit I didn’t anticipate it would happen to me. I think now, however, I am at that crossroads.

My practice has grown steadily for years, and I had assumed it would never stop. But I can see the telltale signs you describe that indicate the rate of growth is, in fact, slowing down, which is the first stage of levelling off and eventual decline if nothing is done to revitalize the business. But here’s my problem: if I am going to re-engineer my business to take it to the next level, I want to do something different. I am not really interested in simply doing more of the same or even just getting “bigger and better.”

Maybe I am getting tired or bored or both, but I still have a number of good years left to devote to my business. I need something new to re-energize me. What do you suggest?



Coach says: Let me start by congratulating you on being perceptive enough to realize you have to be proactive in ensuring the ongoing viability of your business. Because you already have a thriving practice, it is easy to be dazzled by the rewards that have accompanied your growth and not notice the insidious dangers lurking in the shadows. Let me see if I can describe what you are experiencing, as well as the potential risks, and then offer some suggestions.

As your practice has expanded, it inevitably has become more complex: the number of clients has increased, product offerings have broadened, service standards have risen, compliance has tightened and your support team has grown. This has led to escalating administrative demands on you, to the point that these demands now soak up more of your time than the crucial duties of business development and client relations. You find yourself playing manager more than practising your craft as an advisor — hence, the boredom and fatigue.

Because your business has been successful, you didn’t immediately know you had hit this “ceiling of complexity.” Nevertheless, one day, you experienced a vague awareness that your rate of expansion is slowing. Your business still appears from the outside to be extremely successful.

In fact, a number of less successful advi-sors, based on what they can see, want to be just like you. But, you are sensing that unless you act now, further growth will come only from market gains, additional needs among existing clients and casual referrals. You will no longer be in charge of the momentum of your practice.

Sound familiar?

The good news is that you came to this realization relatively early in the cycle. Too many advisors fail to recognize that there is a ruthless, Darwinian-like evolution that applies to their practices just as much as it applies to the growth and adaptation of organisms to their environments. Consequently, these advisors ride a good thing too long. By the time they realize that the key metrics of their businesses are trending downward, it may be too late to fully recover and move forward.

There is a straightforward solution for someone caught in this pattern. Conduct a thorough, detailed analysis of your practice, from top to bottom, by asking yourself: “If we didn’t exist today, how would we invent ourselves?” Dig deep enough in a disciplined manner into every aspect of your business and you will begin to see what presently works, what doesn’t, what you like, what you don’t, what you wish you had and what you want to go away. Be tough on yourself, your team and your current strategy. Accept the paradox that it is only by giving your practice new direction — just as it is nearing its peak and flourishing — that continued growth and development will be assured.

By taking stock of the situation now, you are more likely to have the time, resources and energy to see your new growth curve through its startup hiccups before it takes off on its own. During this transition period, you can use the “cash cow” revenue from existing clients to sustain your business while you re-engineer it for the subsequent period of growth.

Your next growth curve can be built upon any number of broad-based objectives. Here are a few:@page_break@> A Strategy Of Expansion

Most financial advisory practices evolve by default rather than by design. As a consequence, the founder frequently finds him- or herself in a place they didn’t expect to be in, doing things they’d rather not be doing. If you feel you are wearing too many hats in your practice — rainmaker, technical analyst, planner, portfolio manager, administrator — you might consider surrounding yourself with a team of specialists so that you can focus on what you do best and enjoy the most.

Your revenue will have to increase to support the new team members, so your strategy also will have to incorporate some revenue-growing tactics.



> A Strategy Of Contradiction

Not every advisor wants to build a huge practice. In fact, an increasing number of advisors are looking to slow down in their later years or, at the very least, simplify their businesses so that they can have a better work/life balance. Whatever the motivation, reducing the number of clients you serve by selling part of your book, concentrating on a narrower market or giving up some business-development activities, for example, may all fit into a strategy to roll back your business into a more manageable state.

However, while many advisors want a smaller practice, fewer are willing to accept the reduced revenue that results from a simple downsizing. Consequently, developing a plan to earn the same income in less time is one of the most sought-after strategies I encounter as a coach.



> Entry Into A New Market

Whether you currently run your practice as a generalist or as a specialist, there are always new markets to explore and develop. Of course, you should choose one (or two, maximum) that attract you. Having said that, with the leading edge of baby boomers entering retirement, I see three markets that are in need of qualified advisors:

> Retirement-Income Distribution. With increasing life expectancy, many people will be retired for as long as they were working (or longer). As your clients move from the accumulation stage into retirement, income distribution won’t be just about helping them make their money last; it will be about helping them enjoy the lifestyle they seek by building assured income-generating portfolios, mitigating taxes, investing to keep up with inflation and protection from violent market disruptions.

> Life Planning. Fewer people than ever are going from full-time work to full-time leisure in retirement. To enjoy the transition between work and full retirement, you can help your clients define their desired quality of life, the activities in which they will be involved, how they will pursue possible second (or third or fourth) careers, hobbies, health management, and so on, as well as how they will finance their activities and lifestyle needs.

> Succession Planning For Business Owners And Professionals. Just as the overall population is aging, so are many entrepreneurs who are counting on their businesses or professional practices to fund their retirement. Regrettably, most such clients are poorly prepared and unsure of how to maximize and monetize the value of the businesses they have created. Coaching and assisting in the implementation of an effective exit strategy will position you to manage the money that comes from the sale of those businesses.

> Other Strategies. These might include expanding your line of products. For example, an investment advisor might want to offer insurance products or estate planning, while an insurance advisor may want to add investment products to the product shelf. Partnering with a specialist in the other discipline is a good way to expand your combined offering to all clients.

Another popular alternative is a change in business models — for example, moving from commissions to a fee-based practice.

Every enterprise has a natural lifespan, at the end of which it will inevitably start to decline — unless it re-engineers itself to adapt to the business environment that has evolved around it. In the rapidly changing world of financial services, that lifespan can be as short as three to five years.

If you don’t regenerate your practice in some way during this time, you run the very real risk of having your business wither — to the point at which its value as the foundation of your own succession plan is very much diminished. IE



George Hartman is president and CEO of Market Logics Inc. in Toronto and a senior coach and facilitator with the Covenant Group. Send questions, comments and opinions on any aspect of practice management to george@marketlogics.ca.