I can already hear the protests: “But helping clients select beneficiaries is a critical part of the planning process” or “Financial planning data has to be accurate or the advice will be compromised.” Agreed. And I will stipulate that most of the activities listed above must happen for the business to run and for the clients to get their money and mail, and not slip and fall when they come to the lobby. But the point of this article is to identify how advisors can produce more advice per work week. Not one of the items in the list must be done by an advisor. Forms, addresses, redemptions and database updates can be done by paraplanners and receptionists. Investment selection can (and probably should) be made by investment professionals whose sole focus is thinking about investments and watching their Bloomberg terminals. Several of the tasks are functions of running a business and have nothing to do with clients at all: paying bills, managing payroll and negotiating leases with vendors can be done by an accounts payable or finance expert (who is probably better at getting government forms filed on time anyway).
Leverage Ensemble To The Rescue
Advisors who maximize their advice and therefore their power have learned to rely on an organizational structure called a leveraged ensemble. (According to the 2017 Investment News Staffing and Compensation Study, advisors in super ensembles generated the greatest amount of revenue per professional.) Ensemble means that a whole team of people serves the clients. Of course there is a lead advisor to be the trusted point of contact and to deliver advice. In addition there is an investment team, operational staff, support and service advisors, human resources and accounts payable and finance departments, as well as technology and legal support to help the business run well. And the leveraged part of the term means that as more and more non-advice tasks are removed from lead advisors, they get to spend more and more of their time delivering advice to clients. Remembering back to the power formula, more advice divided by the hours in a work week means more power. And that makes a leveraged ensemble a financial advisor’s super power! Philip Palaveev’s Ensemble Practice group guided the Staffing and Compensation Study. Many of the observations in the study are also examined and explained in his excellent book, The Ensemble Practice (Bloomberg Books, 2012). In the book, Palaveev describes how an ensemble wealth management practice works, and provides many of the steps needed to create a team-based wealth management firm. From my experience, there is a pretty big gap between knowing what to do and actually doing it. For advisors and wealth managers interested in boosting their power and ability to help more people more effectively, they can read the book and studies. Then spend years experimenting and hundreds of thousands of dollars to put the systems, infrastructure and technology in place to transform their business. Or, they can find a firm that has already done the hard work of building an ensemble. Since power is a function of work divided by time, there might be a serious case to be made for joining an ensemble and saving the years needed to build it from scratch. Your super power might already be waiting for you in an existing leveraged ensemble!
John Knowlton is managing director of corporate development for Credent Wealth Management, a $750 Million hybrid RIA with locations in Michigan, Indiana and Texas.