It will become necessary at some point for you to re-engineer your practice as your business and the environment in which it operates evolve.
“As your practice grows, it becomes more complex,” says George Hartman, managing partner and co-founder of Elite Advisors Canada Inc. in Toronto. “You might find that you’re spending more time managing your business than building it.”
That is when it becomes necessary to step back and refocus your practice, says Joanne Ferguson, president of Advisor Pathways Inc. in Toronto. “You need to know your business and the players around you,” she says, “in order to take charge of its growth.”
The following are five steps you can take to re-engineer your practice to make it more competitive and more successful:
– Step 1: Start with the big picture
Hartman recommends that you ask yourself: “What do I want my world to be?”
Review your competitive landscape to determine your advantages and disadvantages relative to your competition. Establish whether you can match or exceed the capabilities of your competition, or decide not to compete at all in specific areas.
– Step 2: Review your product and services shelf
In a competitive environment, differentiation is critical to success. All firms have similar products, Ferguson says, so success comes down to ascertaining the areas in which you are unique, and what you can do differently from other advisors.
To establish what products and services you want to offer, Hartman says, you may decide to rationalize your product shelf and drop certain products.
Alternatively, says Tina Falbo Jakma, owner of Tina Jakma Financial in Thornhill, Ont., “you may want to broaden your value proposition by expanding what you do.”
For example, in Falbo Jakma’s efforts to re-engineer her practice, she is making greater use of centres of influence and is looking to buy a book of business to grow her practice. Falbo Jakma differentiates herself on service, she says, by being more proactive.
– Step 3: Evaluate your client base
“The further along we go in our careers,” Hartman says, “the more selective we become.”
You may develop certain specialties and preferences on which you focus to build your business. This move toward specialization leads to a question: “Who are my existing clients that fit or come close to fitting my ‘preferred client’ profile?”
In considering the answer to that question, you may need to consider the resources you will have to commit to serving your clients, Hartman says.
Falbo Jakma, for example, recently set a minimum asset level of $250,000 for new clients.
As your business grows, Ferguson says, you may find that you have clients of widely divergent asset levels. However, if you want to focus on a specific size or type of client, consider culling your client base by recommending another advisor to those clients who do not fit your preferred client profile.
– Step 4: Examine income and expenses
An analysis of your clients should determine client profitability and what action you should take regarding clients who are not profitable.
“You should make sure you cover your costs per client,” Falbo Jakma says.
You may either cut or increase costs, depending upon how you plan to grow your business, Hartman says. For example, you may decide to: hire an assistant to reduce your workload; make greater use of technology to improve on your efficiency; or increase your marketing efforts. These activities would increase costs.
Alternatively, measures that could reduce costs might include moving to less expensive office space.
Ferguson suggests reviewing your previous year’s revenue and expenses to make your business more cost-effective. If you hold events, for example, she recommends that you “measure and monitor” the returns of each event and cut those that provide the least returns.
– Step 5: Check your marketing strategy
“Your marketing activities should appeal to your preferred clients,” Hartman says, “or be appropriate to the clients you are trying to reach.”
For example, if you are aiming for high net-worth clients, you should not be holding large-scale seminars or offering free income tax advice. Instead, learn as much as you can about your clients and prospects so that you can customize your communications to them as individuals.
You must know your audience, Ferguson says, to determine what marketing activities would appeal to your target market.
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