Operational Cost Savings for Small Financial-Advice Firms

January 27th, 2020 · 4 min read

For many professionals, opening a business is the culmination of decades of work and study. Some of those who succeed in such businesses come fully prepared from the outset, others a bit less so.

Some business owners in the “bit less so” category perform the core functions of their business superlatively, and thrive as a result. But unlike their better prepared peers, they stumble into operational cost savings piecemeal, learning by trial and error as they go.

On the Lookout for Operational Cost Savings

And that’s good enough for many thriving business owners. For the rest of us though, saving money on mission-critical tasks while maintaining quality is a definite priority, mainly for two reasons.

  1. Very small firms face challenges in becoming more efficient related to their lack of scale compared to many of their competitors.

  2. The need for operational efficiencies is even more acute for financial advisors, who shoulder the extra burdens of fast-morphing technology, the need for B2C marketing, competitive benefits, and cybersecurity requirements.

This article is for all independent financial professionals — newbies or veterans, organized or not, RIA or brokerage-based — looking for money-saving insight on providing healthcare benefits, seeing to your firm’s marketing needs, and making sure your clients’ private information is secure.

Everything that follows assumes you will perform appropriate cost-benefit analyses to determine if these recommendations for decreasing expenses make sense in your situation.

Healthcare Coverage for Your Advisory Firm

A picture of a medical device on top of a calculator

Healthcare coverage is usually the first thing people think about when the topic of employee benefits comes up. But what about coverage for a one-person business? If that’s your need as a sole practitioner, you’ll know such coverage is in fact hard to find. Thankfully, there are options out there for today’s solo entrepreneurs and small teams.

To obtain group health insurance, an advisor must first register his business with the appropriate state’s corporation division, and then do one of these things.

  • Contact insurance providers directly

  • Hire an insurance broker

  • If you’re a one-person operation, go to healthcare.gov for individual and family coverage.

  • If you have at least one full-time employee who isn’t you or a close relative, go to https://www.healthcare.gov and look into the Small Business Health Options Program, or SHOP, to see if your business qualifies.

  • Partner with an association or purchasing alliance (Chalice Network is one).

  • Join a PEO, or professional employer organization.

Some of these options are costly, some provide solutions exclusively for certain business arrangements, and some provide only minimal coverage and/or have high deductibles. And of course the more time you spend investigating health coverage, the less time you have for your marketing efforts and overall business-development planning.

Marketing Alternatives for Your Advisory Firm

A graphic depicting a person sending emails

Are you crystal-clear on plans for your firm’s growth, or do you need help in the form of a chief marketing officer? A CMO can work directly with your team, bringing your marketing in line with your target audience. Even if you have the vision down cold, you still might need someone to undertake the time-consuming talks of turning that vision into reality.

Depending on a number of factors — firm size and location are just two — you might consider one of the following options.

  • Hire a full-time CMO

  • Hire a fractional CMO (typically a consultant who works for several firms at once)

  • Subscribe to a marketing automation serviceSnappy Kraken is an example

  • Hire a consulting firm to pinpoint your marketing needs, and possibly help with fulfillment

  • Hire a creative agency

Cyber Security for Your Advisory Firm

A graphic depicting cybersecurity

According to the most recent “Allianz Risk Barometer,” Cybersecurity ranks as the number-one issue businesses are facing on a global scale. Cyber hackers often target small businesses because they are most prone to their encroachments.

Worse, hackers who target small financial firms can gain access to swathes of sensitive personal information on clients. That can add up to a multi-dimensional nightmare, hurting a firm’s reputation, triggering lawsuits, and inviting and the zealous scrutiny of regulators. Yet firms may have no idea they’ve been hacked by criminals who are content to lie low for extended periods, waiting for the perfect opportunity to strike.

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Among the top cyber threats to financial-advice firms are:

  • Malware (software designed to disrupt, damage, or gain unauthorized access to a computer system).

  • Web-based attacks (software written to probe a computer and automatically exploit security vulnerabilities).

  • Injection attacks (malicious code injected into a vulnerable server) .

  • Phishing emails and counterfeit websites (sent to trick recipients into sharing passwords and other valuable information).

  • Distributed denial-of-service attacks, or DDoS attacks (where Trojan-infected server systems are deployed against another system, usually with the aim of shutting it down).

Having cybersecurity, as well as cyber insurance (which can protect you financially after an attack), is a good way to avoid disaster. The average cost of a cyberattack now exceeds $1 million, according to a recent Global Application and Network Security Report.

Website Solutions for Your Advisory Firm

Man On a Calculator Near a Laptop

Having a plain vanilla website is one thing. Having a website that’s optimized for search-engine optimization, or SEO, is quite another. The gulf between websites that function merely as brochureware and those primed to be a focal point for your customer service and marketing is why so many small-business owners feel faint when they get quotes for customized websites.

A fully functional, customized website can provide advisors with:

  • A digital-marketing centerpoint.

  • A secure, cloud-based document transfer/storage system.

  • An appointment calendar that sends out automated reminders.

  • An educational resource for your clients.

  • And, really, anything else you can think of — provided you pay a developer and UX designer to map out and implement the specific, additional aspects of your website you have in mind.

Besides going for a bespoke website, advisors can use third-party solutions at much lower costs. These start with pre-designed layouts to which business owners can add a number of features as they require them.

Either way, it remains with the entrepreneur to take care of system updates, yearly domain-subscription costs, and, last but not least, cybersecurity.

The Perfect Business Solutions for the Independent Advisor

These days, businesses either adapt or die in the ever-changing digital frontier we all live in. Fortunately, there are people out there who have taken pains to get a constructive overview of the needs and wants of independent financial firms, especially when the aim is to decrease expenses.