February 21st, 2020 · 6 min read
Operational efficiency — like your service model, marketing strategy, and investment-management approach — is a cornerstone of your success as an independent financial advisor. And, like so much in our lives these days, all those things are in the throes of rapid change.
This change is a by-product of society’s inexorable march from analog to digital information systems. The instruments of this ground-shaking innovation — from software platforms to cloud computing and machine learning — are constantly evolving, while the ubiquity of connectivity means much of this technology is:
● Already in your clients’ hands, if inert ● Fully baked into their service expectations
So how ready are you? Not just for the concept of market changes, but for the reality of it, and in personal as well as professional terms. If you decide you have some work to do on that front, don’t worry. The effort you expend now to get in shape for maximizing your firm’s operational efficiencies will pay off as the intrinsic value of your business grows.
We know the goal of boosting operational efficiency is to lower costs without compromising on service standards and regulatory dictates. With that in mind, we’ll look at some cutting-edge best practices indie advisors might want to consider for sharpening business efficiencies.
Ready to swallow the pill? Advisors are notorious for viewing sheer output as a viable metric for effectiveness. And they’re wrong. Productivity measures output; efficiency measures input. But doing more of something counterproductive doesn’t equal an effective result.
Let’s look a little deeper.
In one Chalice survey, 67% of participating advisors chose “increasing revenue and profits” as their number-one business priority. Other options included “standing out from the competition,” “buying, selling or merging their businesses,” “exceeding client expectations,” “managing operations that don’t contribute (directly) to revenue,” and more. Growing revenue and profits comes down to increasing the efficiency of each of these components. In other words, although advisors may know clearly what they want for their businesses overall, many aren’t getting granular enough about the role of — and the “fix” for — each business component.
Mergers and acquisitions are at all-time-highs in terms of deal volume and deal value, and have been for a while. Firms are pairing up, and as a result getting stronger, more resilient and better able to adapt. Using the same service providers, contractors or staffers — say, for functions like HR and marketing — these pairings can make substantial headway in trimming overhead.
The M&A boom means there are firms out there right now looking to partner with other firms of all shapes and sizes. Chances are, some of these seekers would be a match for your firm and your plans for its future.
Workplace friction can arise from time to time in the happiest firms. But as owner, you can keep such strife at bay by establishing a strong and cohesive company culture, with emphasis on open and cheerful communication. Hire the right people, and if they aren’t playing nicely together, don’t hesitate to address it.
While interpersonal and interdepartmental spats may be inevitable, you can (and, really, you must-must) set the tone for honest, no-ego communication, especially around strategic goals. Giving your team something to work towards together can be an effective way to forge ties between employees. Always encourage that by bringing your team together often to brainstorm — and sometimes to let off steam. Never underestimate the value, in terms both of team building and strategic insight, of asking your employees’ opinions of pressing work issues.
Today, humans don’t need to do the same level of mind-numbing, monotonous back-office work they did 30 years ago. We have new technology that does that for us. To unleash tech’s labor-saving potential, the firm’s leadership should approach the learning curve associated with implementing these tools with determination, tempered by an open and curious mind.
The ideal result? That tech, properly leveraged, lets staff spend more time addressing clients’ needs. In fact, by smart tech means the whole firm anticipates their needs, an outcome that promotes greater operational efficiencies across the board.
“Automated business process discovery” (aka “process mining”) is software-powered functionality that tracks end-to-end processes and everything needed to accomplish those tasks across all aspects of your business. By using cutting-edge data-mining techniques and management systems, process-mining software allows you to track your business in ways that can expose crucial processing errors, and assist in troubleshooting these problems. It all comes down to “machine learning” that takes raw data and mines it for valuable business information in the form of discernible trends and patterns.
Process mining is an operational-efficiency tool that has been used by large and small companies to make the most of their operations. Or as online-education provider Coursera puts it, “Process mining is the missing link between model-based process analysis and data-oriented analysis techniques.” And, rightfully enough, it’s a widely recommended solution for businesses the world over.
Financial-advice firms that want the benefits of process mining and don’t already subscribe to a software system that automates core procedures usually outsource process mining to data specialists.
See this article for more on process mining and related service providers.
A new trend has emerged across the business spectrum, one that’s changing how they operate from the ground up: membership organizations. The idea behind them is pretty simple: by decreasing your overhead costs, you can more maximize your bottom line.
So far there’s only a small handful of them in the financial-advice arena, but outfits like the sponsor of this post, Chalice Network, is definitely making waves by negotiating with business-to-business product and service providers to get their members discounted access to mission-critical functionalities, from back-office services to employee benefits.
It pays these membership organizations to provide intuitive interfaces for accessing partners to help advisors make the most of their practices. With low monthly payments, advisors can decrease their annual expenses on supplies, technology, insurance, marketing, healthcare, payroll, and much more.