Grow your Financial Planning practice

Many advice businesses, like business in general often find a natural ceiling to growth. Capacity is typically the number one inhibitor to growth.

Put simply the principal of the business is a limited resource, and demands on their time increase as the business grows. Clients, Operations, Marketing, It & Systems, Training & PD, the life of an SME business owner is complex.

So what are the options to increase capacity and allow for scale? We explore a few of the options for the 1-2 Principal advice business to develop a growth path, and grow your financial planning practice.

The question is often put should the business employ another Adviser to facilitate growth, or a support person to leverage the existing Adviser. Both options have merit:

Option one, employing another Adviser.

This creates immediate client relationship capacity and apparent straight through revenue and profit equation. Although the variables are ramp up to productivity with the lag of building a pipeline and converting clients. Plus the additional demands on operational, administrative and marketing capacity.

When you add salary, new Adviser marketing budget, on-boarding expenses and calculate an arbitrary operational overhead cost base per Adviser, you start to develop a clearer picture of the risk reward equation.

There’s also an often overlooked element in advice style. Does the new Adviser have experience and capabilities in the areas of advice the business currently provides, or will they be developing a different type of client, thereby placing additional demand on the businesses service capability. A good starting point here is for the business to have clarity on what a good client looks like, and who they are setup to service. We won’t explore this too far here, but suffice to say anyone in business long enough knows not all clients are good clients to have, think the 80/20 rule.

Taking the path of employing a new Adviser to grow the business can be a very successful path, if the ducks are lined up correctly, everyone’s on the same page and the numbers make sense. Read more here - 5 Tips for recruiting Financial Planners

Option two, employ a support person.

This is all about leveraging the Principal and other existing Advisers if more than one already exists. If the truism is correct, most small businesses commence due to the expertise and client relationship skills of the Principal. So it makes great sense to leverage the time of the Principal to maximum benefit, prior to training others into the business.

Take away daily admin, client enquiries, implementation, operations, and focus upwards of 75% of time purely on revenue raising activities, new clients and business development.

Leverage is powerful and can double or even triple the capacity of the Principal, if you get the right person into the business.

I can speak from experience on this one.

The role if positioned correctly should effectively encompass the duties of an EA, Ops Manager and administrative assistant rolled into one.

Many view administrative staff as a dead weight expense and just an addition to operational overheads. Although examining the productivity gains, the wage of a skilled admin/ops person can increase capacity by 1x or 2x, whereas a new Adviser will typically be around 1x at best.

Option two has definite benefits for operators who enjoy activity discipline and focusing purely on client development activities.

There is a third option around employment that warrants a mention.

Employing an Associate Adviser into the business is a play each way on options 1 and 2. An Associate can take on some lower level clients, manage daily correspondence, complete SOA’s, take actionable notes in client meetings, and commence building their client list.

This strategy provides some leverage, although not to the degree of the dedicated support person, and also the benefits of having another client contact point, relationship manager in the business.

Over and above these, the biggest benefit I see from this strategy is developing Advisers in the mould of the Principal. Within 2-3 years the business has another full Adviser well versed in client styles/strategy and the operations of the business. Organic and effective although limited in scale to 1-2x senior Advisers to 1x Associate.

These are viable growth strategies to increase capacity and bust through the ceiling, to grow your financial planning practice. For those interested in more reading on the impact of wages in advice business, this article explores the wages profit equation - read article

Shared Corporate Facilities

The other path for Principals to take can achieve the same outcomes as above, and that involves merging into a larger practice. This is a fairly well-worn path for the accounting fraternity with some immediate benefits in shared corporate services:

• Operational Management and administrative team
• Client services support
• IT & Client management Systems
• Dedicated marketing support team
• Enhanced corporate / client meeting facilities
• Leverage the expertise of the new partners

All designed to free up and leverage the time of the advice specialists.

There is an array of businesses offering these facilities for Advisers, some additional benefits can include:

• Freeing up capital and personal cash flow – JV style arrangements

and

• Acquiring additional clients – internal or finance support for external books

If you’d like to know more about shared corporate facilities, learn more here - Ready for more advice time and LESS admin?

Looking to grow with Referral partners? You may also be interested in these articles:

Why the Accounting Fraternity Needs You

5 Tips for working with Accountants

Accountant Licensee

Good luck to everyone on the journey to building your business.

Please contact us if you have any questions or would like to discuss any aspect of your business. We have been supporting the Financial Planning industry for over 20 years, providing growth tips and assistance, recruiting and providing HR support services.