Matt Oechsli of The Oechsli Institute in the US looks at five common practice management mistakes that Financial Planning firms make and looks at ways to avoid costly mistakes.
Do you ever get the feeling that you're getting trapped in that proverbial black hole of practice management? You've got policies and procedures, but something is missing - to the extent that it's interfering with your growth. Gerry, an adviser attending one of our recent workshops in the US, summed it up quite well: "I've been in a coaching relationship for the past four years and I think I've got the practice management part of the business down, but I'm not growing. I feel like I've got a Ferrari in the garage that is never driven."
This wasn't the first time that I heard Gerry's Ferrari analogy. However, it seems to be occurring more frequently lately. What is going on? Do Financial Planners have such an abundance of affluent clients that now they are compelled to focus exclusively on practice management in order to service them? That has not been our experience.
Our affluent investor and financial adviser research has helped us formulate a model for running a successful financial services practice:
This model has helped guide some of the most successful teams in the US, and applies, I believe, with very few modifications to the UK. Many advisers find themselves out of balance with this model, spending too much time and energy on practice management at the expense of growth.
Practice management is about the fundamentals of running a professional business effectively and efficiently. It is an ongoing process as there are always adjustments that need to be made. However, practice management is never really an end-all-be-all, because a business without growth is a business that is slowly dying.
As I explained to Gerry, the solution is rather simple; develop and follow a comprehensive business plan. Effective business plans have a serious growth component.

Business growth rarely occurs by happenstance. To borrow Stephen Covey's phrase, it requires, "beginning with the end in mind." In this manner, practice management will serve three distinct purposes; 1) servicing existing clients, 2) strengthening the loyalty of existing clients, 3) acquiring more clients. In other words, it's the fabric that is woven throughout every aspect of your business.
When thinking about practice management, it is often helpful to invert. Popularized by Charlie Munger, Warren Buffett's longtime business partner, inversion takes a look at the wrong way to do something as a means to finding the right way. Hence, the following are five common practice management mistakes:
1. Failing to hold regular team meetings
Elite advisers typically meet with their teams on a weekly basis. These meetings are well-structured and inspect what is expected from each member of the group.
Most elite teams hold their meeting at the same
time each week. Monday is popular since it helps "frame" the rest of the week. Regardless of the time you select, consistency is the key. If it's done every single week at the same time, you eliminate the, "I have a client meeting to go to" or "I wasn't sure if we were meeting or not." The team meeting is happening and team members should not have anything else scheduled during that time.
The team leader may or may not be the person that should schedule and lead the team meetings. We've often seen this task delegated with superior results. A key support person with organisational skills and a knowledge of the inner workings of the practice will usually host a better meeting than the busy team leader who might be great at relationship management, but not so great at meeting planning. This is the essence of "letting go and gaining control."
Each team member should have responsibilities for the team meeting. For example, the team leader might be responsible for the pipeline report, an assistant might be responsible for upcoming meeting planning and client event updates, and so on. This avoids the "if I remember correctly, I think we said..." scenario. Each team member should have a detailed reporting on his or her assigned topic.
You might also consider a written agenda for everyone to follow. Some of the items listed on the agenda will be standard and included for every meeting while others will be determined based on the specific needs for that particular week. Even though it might sound redundant to include some of the same agenda items, forcing a discussion around these topics makes certain they're addressed. For instance, we all understand that handwritten thank you notes are important, but we often forget to write them. If one of your standard agenda items is "Thank you notes from last week," you're much less likely to forget.
2. Failing to prioritise tasks.
I have never doubted the importance of practice management (I wrote a book on the topic), but it must include prioritising tasks. This directly impacts what people do on a daily basis. As we all know, not every task is equal. If your assistant is faced with the choice between a service issue for a top client or working with one of your vendors, the service issue must take priority.
A worthwhile exercise is to take the major components of your practice (business development, operational efficiency, wealth management, and client loyalty) and outline all the tasks associated with each. This will provide the platform from which you can assign areas of responsibility and then prioritise the "fixed daily activities" within each component.
As the graph below illustrates, significant gaps exist between what advisers rate as "important" within practice management versus the "performance" of their support staff. This signals that priorities have not been communicated clearly between adviser and staff.

3. Getting lost in process overload.
When policies and procedures begin to take on a life of their own (excessive paperwork; duplicate procedures and so on), two questions need to be answered:
1. Is this particular procedure necessary for delivering the services you promised in an efficient and effective manner? 2. Is this particular procedure interfering with growth?
I've witnessed planners send out three pieces of follow-up communication after a client review when one would suffice. Advisers can get caught- up with low-priority internal procedures at the expense of having meaningful personal contact with their affluent clients.
We find it helpful to have a procedure audit once each year. You ask each team member to come prepared to this meeting with one task/procedure that needs to be streamlined.
4. Developing avoidance patterns.
We are all creatures of habit. That said, we tend to gravitate towards consistently engaging in activities that are in our comfort zone. Herein lies the irony; very few planners enjoy the operational aspects of their business, while most planners enjoy the adrenaline rush associated with acquiring a new affluent client. Yet for some reason, as distasteful as paperwork might seem, advisers often bury themselves in it. Planners do not have to go outside their comfort zone to handle operational issues. Whereas marketing activities often force planners outside their comfort zone. Consequently, advisers who get involved with tasks that should be delegated, unwittingly develop avoidance patterns.
A good exercise for Financial Planners in determining whether or not this is an issue is to make a list of "big money" activities and "small money" activities that they engage in. For instance, meeting with affluent clients, socialising in affluent circles and lunching with a professional alliance partner are examples of big money activities that can't be delegated. Whereas compiling all the notes for a client review meeting, solving an administrative problem, or handling basic paperwork are things that can usually be delegated, thus we consider them small money activities. Yes, you guessed it, the idea is to delegate all small money activities.
Not only will this help you break free from avoidance patterns, but you will also be refining the roles of your support team. You'll be empowering them, which will force them to become more efficient in their daily routine. Elite Financial Planners in the US generally spend 70 per cent of their time with affluent clients and prospects, potential clients within their affluent clients' spheres-of-influence, and professional alliance partners. The remaining 30 percent of their time is spent leading their practice.

5. Lack of leadership
Elite Financial Planners are leaders. They take a leadership role within their practice, with their clients, spheres-of-influence, referral alliance partners and prospects. Leadership within the practice involves having a vision for the practice, creating a business plan, establishing an annual metrics scorecard (annual goals), defining areas of responsibility, delegating effectively, communicating clearly and consistently inspecting what is expected. In other words, leadership is hands-on work. With only 17 per cent of advisers reporting that their support personnel can articulate their "value proposition," either many advisers don't have a clear value proposition or haven't communicated it very well to their staff. All of which highlights a lack of leadership.
Another key ingredient of elite adviser leadership is that they take time to inspect what they expect. In other words, they hold everyone, including themselves, accountable to perform up to expectations. This requires having clear expectations for every role and corresponding area of responsibility. They also must be understood by all parties and routinely monitored. Only 29 per cent of support personnel report having regular performance reviews with their adviser. Once again, this is an indicator of ineffective leadership – that figure should be 100 per cent!
Now let's get back to Gerry. Since he was self- aware to the extent he recognised his problem in a macro context, he was a relatively quick study. He realised that affluent client acquisition and new assets had to become a priority and that it had to become a major component of his business plan.
Once he revised his long-range business plan, he simply reverse engineered the numbers and developed the annual metrics scorecard I've shared with you. This provided the platform from which he was able to determine what was important, redefine roles, eliminate time-wasters, and commit to holding weekly team meetings. Gerry also began creating team meeting agendas that involved every team member in the company, allowing him to hold everyone accountable for their actions.
Change is uncomfortable. Like many advisers strengthening their leadership, Gerry was expanding his comfort zone. By connecting everything to his annual metrics scorecard and long range business plan, Gerry had created what we refer to as his "critical path." This was the foundation upon which all practice management would take place. Take it one step at a time and you can do the same.