People, Processes and Profit

In my work with financial planners I have many conversations about the three “P’s” – People, Processes and Profit. These are my top 3 challenges for most financial planning business owners.

(Note that financial planning issues do not make the top 3.)

It is these other critical areas that challenge the best of financial planners. This point is also borne out by the Future Ready IX 2022 report from Business Health.

People

Many of the conversations I have are about people issues in businesses. Often this revolves around role clarity, selection, undefined expectations and individual performance issues.

The Future Ready IX 2022 report also makes some key points:

One in three do not have position descriptions for most of their staff – role clarity could well be an issue in many of these businesses.

Almost half do not have agreed and documented performance objectives for most of their staff.

Have not conducted performance reviews or appraisals with their staff in the past six months (although without an accurate and up to date position description and a set of agreed performance goals, conducting reviews could be very difficult).

Plus add to this the difficulty in recruiting experienced support staff.

Processes

Given the landscape of people issues it is no surprise then that this leads into common issues around efficiency, process and systems to productively service financial planning clients needs and meet all compliance requirements.

Without the appropriate blend of skilled support, developing efficient business processes becomes a significant challenge for many businesses.

Do you have the staffing/support mix right in technical/compliance tasks vs administration/plan writing?

If the support function is not structured appropriately the outcome is financial planners become involved in too much administration and implementation for clients. This then becomes a drag on the capacity for growth for the business, and leads to poor profitability in most cases.

Profitability

Poor business profitability is one of the common problems for Principals. (worse still if Principals are not aware of depth of the problem in this area.)

There are many value drivers that contribute to profitability.

Those that have addressed the staff challenges identified are benefiting from higher profitability according to the Future Ready IX 2022 report. (up to 165% increase)

The report also identified that effective use of process & systems is increasing profitability in the order of 50% -60%.

In most businesses I have worked with we have reviewed pricing. This has in most cases been a major driver of increased profitability. The bottom line is that many financial planners are under pricing their services.

The reasons for this are:

Underestimate the time involved by both advisers and support staff to complete ongoing service and /or on board new clients.

Failure to properly account for all business costs

An adequate profit margin not included

Adviser lack of confidence in pricing their worth  

Trying to be all things to all people regardless of capacity to pay

It is my belief that with the appropriate mix of staff support (incl outsourcing) you will be surprised what impact this will have on your client management per adviser, and hence profitability and business value. 

If you would like some help in tackling these type of issues, or perhaps a general review of your business please give me a call.

Bob Blurton

Phone: 0488403139

Email: bblurton@yourgeneralmanager.com.au