Does your Practice Manager add value?

Does your Practice Manager add value?

Recruit 2 Advice - Financial Planning Recruitment - Practice Manager

We take a quick look into the role of Licensee Practice Manager.

How the role evolved and the changing face of service delivery to this market sector.

The advent of the Practice Manager

I have enormous respect for the small army of Practice Development Managers, Relationship Managers and Financial Planning Coaches cris-crossing the country side visiting Financial Planning Businesses with their hearts and minds intent on adding real commercial value.

The idea of providing support in this manner appears to originally be born out of the need to assist Advisers primarily providing Life Insurance who were thrust into more broad advice offerings with the onset of the Superannuation Guarantee in 1992. This group of Life Insurance salespeople transitioned to Financial Advisers and required more systems and processes in place, an office, support staff and thus became more of a small “service” business and created the suburban Financial Planning Practice we know today.

(Incidentally, the broad management of SG was initially offered by the Government to the Accounting fraternity who declined, due to a lack of infrastructure and huge investment required to develop such. The Insurance Industry was second cab off the rank)

With these changes the need was recognised to provide more support at a small business coaching level. The basic skills in networking, business development and sales were well coached and most likely at a higher level than today. We could argue FOFA originating from RG146 should never have considered “Advice” outside of the Superannuation Guarantee, considering Accountants, Stock Brokers and Real Estate Agents have always provided “Advice”. There has been some movement in these sectors but not to the degree the Advice Industry has been forcefully regulated. My position is simply as a young industry it was always going to take some time for common sense and self-regulation to meet community standards, the current melee in the tech industry with the likes of Facebook is an example of the community and regulators trying to establish what meets acceptable standards. This is a big area to cover and one we won’t go further into in this article.

The Licensee Practice Manager

Commencing in 1998 I came across “Dealer Groups” working on this concept of Practice Management and fell in love with the idea of working with SME’s in the Financial planning Industry to provide coaching & guidance, shared knowledge and best practices. Being in small business, consulting to the Advice Industry and being a sports coach, it was a three-way marriage of passions that caught my enthusiasm immediately.

Evolving in the shadows of the Business Development Manager, the early instigators were fantastic pioneers in developing the philosophy; working with great Advisors to build a corporatised model into their business with improved efficiencies and capability to scale the business. This facilitated a big leap forward for the industry and Practices to grow with higher client service levels, the establishment of more multi Adviser practices, attraction of more skilled entrepreneurs into the industry and a new age of professionalism in the SME (IFA) Advice sector, amongst other improvements.

Tip: Practices with formalised business plans and policies are scaleable and statistically more profitable. We have a few tool to assist.  Practice Resources

Advisers were now offered more support to build their business from their Licensee (Dealer Group) through the support of the Practice Manager. Additionally, capital or cheap finance was also put on the table by the Licensee where the Adviser could display a good business model and capacity for growth. For the first ten years or so the Practice Managers or Coaches were left to build this capability on the belief bigger and better run practices would increase revenues and profits back to the Licensee. Although Dealer Groups were always a loss leader ultimately for product sales.

Initially the product BDM’s were run in separate teams and were for many years separate, although somewhere along the way the concept of coaching and product sales were blurred and an inherent flaw in the model came to light. From top down questions begged to be asked. Why spend resources on smaller practices or one-man bands not capable or willing to grow? Why support practices not supporting in-house products/platforms? How could the coaching model be used to influence sales?

The result of course was the bigger practices and those willing to grow and support in-house products received all the attention from the limited resources of the Practice Manager and team of coaches. Practice Management had become an exercise in influence. Support our products and we'll support you.

What is the role of the Practice Manager now?

I have huge respect for Practice Managers and maintain they have a genuine desire and intent to support Advisers through coaching best practices, providing time resources and counsel to assist building fantastic businesses.

The unfortunate truth is the model they operate under dictates who they spend their time with, how much time they spend with them, and the message they’re sent to deliver. They are simply a service that is not free, and the Licensee needs ROI. Not to mention compliance!!

Furthermore, they have a range of duties in general Licensee service delivery running PD days, training and product launches, off-site training for themselves, group strategy off-sites, conferences, plus often a high degree of internal reporting, administration, and “special projects”. The KPI’s are typically increased revenue and product sales from the existing panel, plus the recruitment of new Advisers to the Licensee.

In many instances they simply become conduits and relationship managers for Advisers questions, complaints, suggestions, assistance to navigate the Licensee for answers, and throw in some counselling and a few long lunches. They don’t thereafter have much time for many of the efforts they signed up for to work with Advice Practices. The theory is not the reality.

Anecdotally we know the current system is flawed and Practice Manager satisfaction levels are low.

Advisers are regularly reminded best practice is to spend 70% of their time with clients or alliance partners, I would suggest in any industry this is a good measure for “revenue raising” activities. Key Performance Indicators

With this in mind I would like to meet any Practice Manager in the Industry who spends 70% of their time with Advisers or working on their businesses.

It appears to me what was a great idea has unfortunately been diluted by the needs of the Licensee over the needs of Advisers. Not all Advisers need a high degree of support and many are skilled resourceful business people in their own right. Although the vast majority went into business as high performing Advisers with limited business and operational management experience. Put simply it can take many many years to learn how to run a successful business, let alone work out what you don’t already know and where to start.

The blame doesn’t lie at the feet of Licensees. The core service offering is Licensing and Compliance, PI Insurance, PD & Training, Technology support, APL product monitoring, and revenue/commission processing. The offers of paraplanning/admin support, conferences, finance, buy/sell support are more PR exercises or nice to haves, the promise of growth and practice development support are just that, promises. All care no responsibility.

The Practice Manager often ends up between a rock and  a hard space.

What should Financial Planners expect from their Licensee?

Advisers should look to their Licensee for basic services, good compliance and governance. The Licensee model does not predicate the ability to provide “high touch” business development, practice management and growth services with hands on and in-situ delivery.

All SME business people need support and resources in fundamental areas before they reach a maturity of business to in-house these capabilities. IT&T, Financing & Accounting, PR, Brand & Marketing, Alliance Partner (Referrals) Development, HR & Recruitment, Strategy Development (Growth & Exit), the list goes on. Now add a Financial Advice capability with accompanying services and you have a Financial Planning business.

Having directly assisted and worked with dozens of Advisers commencing or developing their business over the past twenty years I’m familiar with the range of questions and challenges they face. Without going into detail these typically fall into the standard SME basket with only a few advice specific. My answer almost always reverts to the same outcome achieved through different means, how to leverage time and skills to spend 70% of your time on revenue raising activities, and where and how to spend time “on” the business.

Grow your Financial Planning practice article on employment considerations and leverage.

Back to the Future

In summary:

The journey of developing the Practice Manager and Coaching capability within Licensees was always going to be restricted by commercial realities, some brought about by industry changes. Perhaps the role should be revised now to Relationship Manager with all references to Management, Development and Coaching removed. These can be genuine value adds.

A Practice Manager will typically have a panel of between 25-40 Practices depending on size and geographic region. This number of relationships alone dictates they don't have enough time in the month or quarter to spend a large amount of time working on each business.

These limiting parameters allow for a few quick fixes. Moving forward if we do remove "Development/Coaching", then that would lead us back in time to the “Agency Manager” prior to SG and remove some of the expectations and mis-conceptions of what the role can actually deliver. Unless of course we reverse the tide of Compliance, Best Interest, 5000 Product APL’s, and FOFA in the main and Licensees (dealer Groups) can be loss leaders again for product.

Not likely, and thus the Practice Manager simply does not have the time and resources to deliver genuine coaching and practice management support services at a high level. Agency Managers used to take a split/commission of their panel’s revenue. Back to the future? User Pays...

I’m not suggesting this is a simple equation or I have  the answers, although anecdotally we know the current system is flawed and Practice Manager satisfaction levels are low.

Your feedback

We welcome your comments and ideas, particularly in three key areas:

  1. Licensees who believe they can and do deliver high touch SME Business coaching
  2. Licensee Practice Managers / Coaches that are delivering at or above 70% of their time. We’ll take 50% 
  3. Advisers who have had a great experience with a Practice Manager or Coach

You may also enjoy some related articles:

Total Disruption of Cyclical - We take a look into the past cycles to consider the future.

Grow your Financial Planning Practice – Employment considerations and how to break through the capacity ceiling with practical ideas, models and opportunities for growth.

About the Author: Dugald Braithwaite

20 years’ experience Consulting to the Wealth Management and Financial Planning Licensee and Practice (IFA) sectors. A keen sportsman and coach in cricket, rugby union (ARU Level 2) and currently Bowls Australia accredited coach – yes marbles for adults. Represented NSW sub-district Rugby Union and Balmain Tigers Rugby League Club.


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