5 Fundamentals of a Future Ready Practice Management
Strategy: Creates focus to capitalize on market opportunities by defining a clear strategy and business model for the long term
Business Models
Strategic Planning: Leading Well in Times of Upheaval. Define Your Firm’s Strategy In A Changing Landscape
Lesson #1: Formulate a vision for the future to inform the present.
Lesson #2: Make big bets, without
betting the company.
Lesson #3: Think platforms, not products
Lesson #4: Master the tactics of “judo
and sumo.”
Lesson #5: Shape the organization
around your personal anchor.
Succession Planning - Value Traps: Overlooked Opportunities to Help Maximize Firm Value
“Taking Steps to Help Maximize the Value of Your Firm,” identifies eight specific value drivers you’ll want to consider:
1. Firm size: Your firm’s value is directly correlated to your size. As a firm grows, the ability to scale wealth management business—without being highly dependent on any one associate—increases
2. Revenue growth and structure: Potential buyers will want to know the firm’s rev. growth potential and hist. growth rate. They'll also seek to understand whether your revenue structure is fee- or commission-based and whether fee-based advisors charge for additional services
3. Organization: Your firm is often only as valuable as the price investors are willing to pay for your advice. That boils down to the quality of your internal talent “human capital.” Talent is critical to attracting and retaining new clients and revenue sources.
4. Leadership: Your firm’s ability to build and execute strategic vision—to grow revenue and operate effectively—rests on the business acumen of a strong management.
5. Capabilities: Having a deep and well-rounded set of competencies is essential to maximize firm potential.
6. Client experience: As your firm grows and matures, achieving scale may depend on your ability to develop a compelling organizational structure that increases value to customers and removes the client dependency on an
individual advisor.
7. Cost structure: External buyers will want to know the elements of your cost structure they can build on post-sale. Internal buyers will seek certainty about the cost structure's future direction to better predict cash flow.
8. Client demographics: The demographics of your clients provides insight on account growth or depreciation over time, indicating your firm’s
current stability and potentiality of future revenue.
High-Performing Firms: Significance and focus of outperformance versus peers. Definition: High-Performing Firms excel in the areas of growth, profitability,and productivity.
High-Performing Firms are better
positioned to help maximize firm
value
1. Better understand what can
drive firm valuation.
2. Demonstrate stronger growth
engines. H
3. More actively plan for succession.
4. Build stronger organizations.
5. Build deeper client relationships
Actions to Consider
Deepen your knowledge of drivers
of firm valuation
Invest the time to strategically
manage your firm. Commit to
long-range strategic planning that
includes five- to 10-year goals.
Further, use KPIs to help manage
the fundamentals of your business.
Commit to developing talent.
Identify the skills your team
needs to develop, and provide
a combination of additional
professional experiences and
training to help them reach their
potential.
Identify and create next generation
owners who have the requisite skills to contribute to the growth of your firm.
If you are planning to pursue an internal
succession, begin identifying and grooming next-generation owners at least five to seven years before your planned exit
Position your firm to capture
the intergenerational wealth
transfer
Engage the adult children
of your existing clients
Focus business development
activities on younger investors.
Merges & Aquisitions
Business Analytics
Talent: People are a firm's most valuable asset. Hire smart, adequately develop, and staff morale are tantamount to success.
Workforce Planning
Training & Development
Compensation
Technology & Operations: Enhance the client experience and drive operational efficiency with effective technology implimentation.
Strategy and Innovation:
Studies have identified strong correlations between technology implementation and advisor success metrics. "eAdvisors" (advisors who engage in tech greater than peers) had ~40% more AUM.
Operations and Workflow
By enhancing operational efficiencies and the client and employee experience, workflows are helping advisors drive growth and profitability.
User Experience
75% of Gen-Y investors expect technology as an integral part of investment management. Enriched UX incorporating online dashboards, collaboration tools, data aggregation software, and other features grow business.
Pursuing Digital Advice Solutions: Advisor
decisions are strategic and technical, impacting many facets of their business. Most advisors surveyed are interested in blending both human and digital elements into one client solution. This combination of high-tech and high-touch is key to a successful offering. The following four steps are a roadmap to consider when integrating digital advice solutions.
Step 1: Lay the Foundation: competitive wealth management firm of the future will have figured out how to combine hightechwith high-touch service to deliver an optimal
offer, at the right price point to the right client
segment, while meeting the firm's profitability goals."
Specify goals: As with any significant project, defining your objectives clearly is paramount to success.
Experience-Oriented
Provide a modern experience for tech
savvy investors
Meet or exceed the changing expectations
of clients in our target market
Upgrade our client experience by
incorporating the latest technology
Enhance the tools that our advisors use
to better serve clients
Growth-Oriented
Diversify our client base by attracting
younger clients or less affluent clients
Attract clients who don’t meet our
minimums, but are well positioned to
accumulate wealth
Create a new stream of revenue/line of
business for a new group of target clients
Incorporate the latest technology to
attract advisors to our firm
Efficiency-Oriented
Serve smaller accounts more efficiently
and profitably
Reduce the manual work performed by
staff on operational tasks, like client
reporting, rebalancing, and billing
Reduce the time spent with clients at inperson
meetings or on the phone
Simplify the investment /
planning approach
Enable clients to have more online access
to their accounts and be more hands-on
Identify Targets: Who is digital advice solutions targeting? New client type, or improving service for existing clients?
Younger, with investable assets below your required
minimum, but could be served profitably with an online
solution that has self-service options.
High-earning professionals with the potential to
accumulate significant assets over time.
Tech-savvy and enjoy using online applications to
manage their financial lives and track their goals any
time, any place.
Have straightforward financial planning and investing
needs, as well as minimal client service needs.
Wealthy, but have a portion of their assets or planning
needs that could be managed with an online solution.
Adult children of clients who are poised to inherit wealth.
Geographically dispersed clients who are comfortable with
online interactions.
Do-it-yourself investors that may prefer limited interactions
with an advisor.
Step 2: Design the Offering
Outline Products & Services: Design the offering to consider both the investment and wealth management provided
What do our target clients need?
What are we willing and prepared
to offer to digital advice clients?
How will our offering be better or
differentiated from that of the competition
How will we segment our clients and price
our services to offer a range of solutions
that meet different client needs?
Define Engagement Model: Considering investment and wealth management, outline delivery and UX.
• Interaction in-person versus online?
• How and when to communicate with digital advice clients?
• Will clients interact with a call center or an advisor?
Engaging website
Online acct. opening
Annual meeting to review goals and needs
– conducted in-person or virtually
depending on client preference
Access to call center / service team
Mid-year virtual check-in via email,
phone or online platform
Monthly eNewsletter with market
commentary and personal finance articles
Online vault and interactive dashboard
Offering Naming
Identify Important Features
Step 3: Determine How to Deliver
3a. Select the Right Tech Solution: A succinct view of the experience to create, and the critical features and functions required can help set your firm up for success.
3b. Evaluate Resources Think through the entire offering to identify talent impacts – from hiring new resources to finding
associates with a different skill sets.
3c. Review Policies & Procedures: How will your operations, regulatory responsibilities, and risk management strategy
be impacted by your digital advice offering?
Develop a Fee Structure: A clearly articulated Value Proposition is critical in showcasing what clients will receive for the fees they pay - and the specific value that your firm provides above and beyond that of the technology solution.
Step 4: Create the Go-to-Market Plan: A compelling message to share with current and potential clients on the benefits of your digital offering will bolster interest.
Create your messaging platform
Develop a marketing and business development plan
Define transition plan
Document your implementation plan
Establish success metrics
Technology Solutions
Leading firms take part in a smart, agile approach using technology, to optimize production & efficiency, deepen client engagement, and improve client communication.
Architecture and Integration
A typical firm uses six types of software, which simply emphasizes API integration to improve the flow of information among numerous applications, such as CRMs and financial planning systems.