In your role as a financial advisor, what’s your passion: working with clients, or handling the daily responsibilities that come with running a business? Although some advisors say they enjoy their business management duties, most would rather not cut into time with clients to address a human resources issue, answer questions from marketing support personnel or confront a technology glitch.
And as a firm grows, the advisor/owner’s business management responsibilities only increase, diverting more of his or her time away from meeting with clients. For example, someone has to:
-
Create the annual business plan and review progress on it throughout the year
-
Monitor the profit and loss statement
-
Benchmark financials against similar-sized practices and assess the competitiveness of the firm’s fee structure
-
Ensure that job descriptions and the employee handbook are up to date
-
Pursue training opportunities for staff and advisors
-
Set up a process for employee performance reviews and ensure that they’re completed
-
Document and update core operational processes
-
Stay abreast of changes in technology and conduct due diligence on developments applicable to the firm
-
Oversee the firm’s regulatory compliance efforts
-
Document and monitor the firm’s client classification criteria and service matrix
-
Create, update and implement the firm’s marketing calendar
-
Assess client satisfaction
-
Track the consistency and effectiveness of business development activity among producers
-
Ensure that the firm is protected from risks, including disaster recovery and succession planning
-
Maintain the office space and relationships with vendors
-
Conduct meaningful staff meetings for employees
-
Nurture a positive culture that supports the vision of the firm
Although this certainly isn’t a comprehensive list, these are the types of tasks that prompt firms to get serious about creating dedicated management positions. What’s clear is that, even in the best, most efficient organizations, advisors have an ongoing responsibility to continuously improve and drive change within the firm—and that change is happening at an ever-increasing pace.
A Growing Need. Of course, a firm with one advisor and one support person is in a much different position than an ensemble with 10 or 20 advisors and 20 or 30 staff members. In smaller firms, these business management tasks may not be as formal, and the advisor personally handles most or all of them as the need arises. As multiadvisor firms and ensembles become more common, however, we expect to see a greater emphasis on management positions in financial advisory businesses. It won’t be an overnight shift—solo organizations still make up about half of the industry—but even some larger single-advisor firms are starting to see the value of hiring a dedicated business manager.