When advisors assess their practices, looking for ways to accelerate growth, expand margins, or generally increase business success, there are several important questions to consider. These include:

• Am I spending enough time with clients and prospects?

• Do I have enough time for business development?

• Am I optimizing the time I am spending on investment management activities?

Based on the results of a recent industry survey conducted by Cerulli Associates, in partnership with the Investments & Wealth Institute and the Financial Planning Association, most advisors are not spending enough time on the areas that matter most to the overall health of their practices.

According to the study, advisors spend 21.2 percent—or more than one-fifth—of their time on administrative activities. Administrative tasks don’t give advisors a competitive advantage, and too much administration takes away from investment management and other areas that do give advisors their competitive advantage.

Investors engage advisors to help identify and manage their financial goals, create portfolios and set asset allocations, determine comfortable levels of risk, ensure portfolios don’t stray from them, and finally, select the right investment vehicles to make that happen. If day-to-day administrative duties take advisors away from what makes them indispensable to investors, then both parties are likely to wind up disappointed and frustrated. Investor outcomes can suffer if they don’t receive the level of service and customization needed to help them achieve their goals. Yet this study suggests that, on average, advisors allocate less than 20 percent of their time to spend with clients.

At the same time, advisors’ growth and profits can suffer if they are unable to spend adequate time building client relationships and growing their practices. This study also shows that advisors spend an average of just around 10 percent of their time on prospecting new clients. This is not a lot of time for cultivating new relationships, spending time developing centers of influence for referrals, generating proposals and meeting with prospects—and therefore, the longer-term investment in the growth of the business tends to suffer.   

As for professional development, the survey found it receives the least amount of attention, with all advisors spending, on average, only 6.1 percent of their time on improving their skillset and expertise. This can have lots of longer-term implications ranging from job satisfaction to falling behind on industry, regulatory, tax, and other important updates.

However, advisors have the power to optimize their practice efficiency. Just as they work with clients to shift portfolio allocations when necessary, they can work with their teams to implement solutions to shift practice time allocations.

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