Practice Made Perfect E-Book

Mark C. Tibergien

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 293

Veröffentlichungsjahr: 2010

Beschreibung

When financial advisers need guidance on running their business, they turn to Mark Tibergien, the most prominent, most respected authority and hands-on consultant on the science and practice of managing financial advisory firms. Together with Moss Adams colleague and principal Rebecca Pomering, they have combined their years of research and analysis to write the definitive book on the subject. The authors first identify how to assess the business and evaluate oneself as a manager. They then present strategic-thinking issues--such as practice models, business plans, and differentiators--in a Socratic style. This is followed by a detailed overview of critical topics, from financial management and human capital to IT and marketing--encompassing the management skills, approaches, and mindsets needed for success. With management tools, worksheets, and industry statistics, Practice Made Perfect is the authoritative book from the industry's expert.

Leseprobe

Table of Contents

Praise

Title Page

Copyright Page

Dedication

Preface

Acknowledgements

Introduction

1. THE FINANCIAL ADVISORY BUSINESS - The View from Here

Slower Rate of Growth

Clients Demanding More

Difficulty in Recruiting and Retaining People

Aversion to Management

Margin Squeeze

Time Squeeze

The Top Ten Challenges of Advisory Firms

The Practice Life Cycle

Where Are You in the Practice Life Cycle?

2. STRATEGIC BUSINESS PLANNING - Defining the Direction

What Is Strategic Planning?

The Strategic-Planning Process

3. KNOWING YOUR CLIENTS - The Value of Surveys

Hear No Evil

How to Elicit Constructive Responses

Proceed with Caution

Client Surveys and the Bottom Line

4. BUILDING LEVERAGE AND CAPACITY - The Challenge of Growth

The Entrepreneurial Crossroads

Cornerstones of the Professional Practice

Models That Work

Leveraging Your Affiliations

5.THE FULCRUM OF STRATEGY - Human Capital

The Problem You Can’t Do Without

Aligning Human Capital with Strategy

The Nature of the Work

Defining Performance Expectations

The Nature of the Worker

6.THE CARE AND PREENING OF STAFF - Professional Development

The Appraisal Process

Coaching and Development

The Workplace

Hiring Your Boss: Do You Need a CEO?

7.THE PAYOFF FOR THE FERM - Compensation Planning

Developing a Plan

The Components of Compensation

Establishing Base Compensation

Establishing an Incentive Compensation Plan

Owner’s Compensation

8.THE TOOLS THAT COUNT - Financial Management

Fundamentals of Accounting

Constructing a Financial Statement

Tying the Financials Together

9.INCOME, PROFIT, CASH FLOW - (and Other Dirty Words)

Analyzing the Income Statement

Analyzing the Balance Sheet

Analyzing the Statement of Cash Flow

Financial-Impact Analysis

Productivity Analysis

10.REFERRALS AND JOINT VENTURES - The Search for Solutions

Referral Agreements and Joint Ventures

Practice Acquisitions

Investments in New Initiatives

Afterword

Appendix

Index

About the Authors

About Bloomberg

PRAISE FOR

Practice Made Perfect

The Discipline of Business Management for Financial Advisers

by Mark C. Tibergien and Rebecca Pomering

“We hired Mark in 2000 to take us through a planning process for Accredited Investors, Inc. Since that time, our assets under management have quintupled, our infrastructure and management systems have been refined, our priorities have been modified, and we are working with bigger and happier clients. We paid thousands of dollars for his work and received a benefit far beyond that. Now Mark and Rebecca have put many of their ideas into this book. It’s a gift to the planning profession.”

ROSS LEVIN,CFP President, Accredited Investors, Inc. Author, The Wealth Management Index

“Practice Made Perfect is the ideal opportunity to spend quality time with the best financial-advisory business consultants in the country. You get tips, tools, and worksheets to ensure that you can manage your practice to become the business success you want it to be. This book will be your new best friend—guaranteed.”

DEENA B. KATZ, CFP President, Evensky, Brown & Katz Author, Deena Katz on Practice Management andDeena Katz’s Tools and Templates for Your Practice

“Mark Tibergien and Rebecca Pomering have served up a real treat in Practice Made Perfect. I’ve known them both for quite a while, as consultants to our firm and as two of the most respected commentators on our profession’s business management. I thought I had heard it all. Not so. Mark and Rebecca bring many new and important insights. Everybody in this business needs to read this book.”

TIM KOCHIS, JD, MBA, CFP CEO, Kochis Fitz Wealth Management Author, Managing Concentrated Stock Wealth

ALSO AVAILABLE FROM BLOOMBERG PRESS

Virtual Office Tools for a High-Margin Practice:How Client-Centered Financial AdvisersCan Cut Paperwork, Overhead, and Wasted Hoursby David J. Drucker and Joel P. Bruckenstein

Deena Katz on Practice Management:For Financial Advisers, Planners, and Wealth Managersby Deena B. Katz

Deena Katz’s Tools and Templates for Your Practice:For Financial Advisers, Planners, and Wealth Managersby Deena B. Katz

Building a High-End Financial Services Practice:Proven Techniques for Planners,Wealth Managers, and Other Advisersby Cliff Oberlin and Jill Powers

In Search of the Perfect Model:The Distinctive Business Strategiesof Leading Financial Plannersby Mary Rowland

A complete list of our titles is available at www.bloomberg.com/books

ATTENTION CORPORATIONS

THIS BOOK IS AVAILABLE for bulk purchase at special discounts. Special editions or chapter reprints can also be customized to specifications. For information, please e-mail Bloomberg Press, [email protected], Attention: Director of Special Markets or phone [phone].

© 2005 by Moss Adams LLP. All rights reserved. Protected under the Berne Convention. No part of this book may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher except in the case of brief quotations embodied in critical articles and reviews. For information, please write: Permissions Department, Bloomberg Press, 100 Business Park Drive, P.O. Box 888, Princeton, NJ 08542-0888 U.S.A. or send an e-mail to [email protected].

BLOOMBERG, BLOOMBERG NEWS, BLOOMBERG FINANCIAL MARKETS, OPEN BLOOMBERG, THE BLOOMBERG FORUM, COMPANY CONNECTION, COMPANY CONNEX, BLOOMBERG PRESS, BLOOMBERG PROFESSIONAL LIBRARY, BLOOMBERG PERSONAL BOOKSHELF, and BLOOMBERG SMALL BUSINESS are trademarks and service marks of Bloomberg L.P. All rights reserved.

This publication contains the authors’ opinions and is designed to provide accurate and authoritative information. It is sold with the understanding that the authors, publisher, and Bloomberg L.P. are not engaged in rendering legal, accounting, investment-planning, or other professional advice. The reader should seek the services of a qualified professional for such advice; the authors, publisher, and Bloomberg L.P. cannot be held responsible for any loss incurred as a result of specific investments or planning decisions made by the reader.

Library of Congress Cataloging-in-Publication Data

Tibergien, Mark C.

p. cm.

Includes index.

ISBN 1-57660-172-2 (alk. paper)

1. Financial planners. 2. Management. 3. Executive ability. I. Pomering, Rebecca. II. Title.

HG179.5.T53 2005

332.024’0068—dc22

2004027809

Acquired by Jared Kieling Edited by Mary Ann McGuigan

To Arlene Tibergienand Grant Pomering,for their indulgence

Preface

SO MANY OWNERS of financial-advisory practices complain that they don’t have the time to do what they enjoy most—work with clients. If you’ve picked up this book, you’re probably one of them. What keeps planners in such a vise? The answer is simple: the failure to manage a practice well. But how can you take control of your business ? How can you help it grow, make it flourish? The answers lie in your approach to management and leadership. This book is designed to help you understand what strategic thinking feels like. It’s not about pat answers; it’s about acquiring the skills to solve problems.

Financial advisers often tell us their biggest practice-management challenges revolve around

• not making enough money for the effort

• not having enough time to manage and generate revenue

• not attracting enough of the right type of clients

• not being able to find and keep good people on staff

• not being able to manage growth effectively

These are the symptoms of a practice functioning in crisis. One of the great ironies of the advisory business is that many of its practitioners—even those who do an excellent job of planning for their clients—do not take the time to strategize, analyze, and plan for their own personal and business success. They get their strokes from dealing with clients, not from the tedium of practice management.

Effective management is a function of your ability to make decisions, your aptitude for evaluating data, and your commitment to your business model. Good managers have learned how to leverage their organizations so that the business sustains itself rather than depending solely on them. Our goal with this book is to vest leaders of financial-planning practices, investment-management firms, wealth-management firms, and other advisory firms with the techniques that make business managers most effective.

Acknowledgments

OUR WORK AS CONSULTANTS and accountants to the financial-services industry has been very fulfilling, so it is with great pleasure that we share our relevant practice-management experiences in this book. But there are many people behind the scenes who provided us with valuable content and coaching, compelling ideas and insights, and essential support.

We thank the members of the Moss Adams LLP Securities & Insurance Niche consulting team, especially Cathy Gibson, Ron Dohr, Philip Palaveev, Steve Clement, Stephanie Rodriguez, and Bethany Carlson, who eagerly challenged and refined our thinking throughout this process. Our thanks also go to Brenda Berger, Jennifer Long, and Lise Vadeboncoeur for keeping us organized and on schedule to meet our commitments.

We would also like to acknowledge the years of wisdom that Bob Bunting, the ex- chairman of Moss Adams, has shared with us to make us more effective management consultants. He has generously given his ideas and support to make us better practitioners, and we have incorporated many of his lessons into this book.

Our spouses, Arlene Tibergien and Grant Pomering, deserve a very special thank-you. The job of consulting with the financial-advisory profession takes us away from home more than is reasonable. When you love your work as much as we do, that’s not a hardship. But the sacrifices Arlene and Grant have made have allowed us to pursue our passion, and they’ve done it with great support.

We also thank our consulting clients, as well as members of the Alpha Group and Zero Alpha Group, who have been willing to open up to us and who have continued to remind us that success in business is not purely a function of money and how you manage it but also the drive and desire to make a profound difference to the people you serve.

Finally, our thanks go to all the practice-management authors whose work has paved the way for ours and to all of the other consultants who have dedicated their careers to providing advisers with tools to be better at what they do. We’re especially grateful to Julie Littlechild of Toronto’s Advisor Impact, who has enlightened us with her expertise in helping advisers bridge the gap between serving clients well and serving them profitably. Throughout the book, we recognize certain individuals for contributions they’ve made to the profession, and we’ve attempted to weave in their perspectives as we addressed the issues we deemed critical to the book. Of course, no one book or any single author can provide all the solutions practitioners need, but we hope that what we offer here will help you knit together the fabric of a truly outstanding financial-advisory business.

MARK TIBERGIEN AND REBECCA POMERING

Introduction

WHETHER YOU OPERATE as a solo practitioner or own an ensemble firm, whether your business is commission based or fee only, whether you’re a total wealth manager, a money manager, or an adviser who focuses on planning rather than implementation, this book will be relevant to your practice. The principles of sound management apply to financial-advisory firms of all stripes, and the tools provided here can work under any circumstances.

To understand the principles, consider how you would structure a management team if you could build your optimal model and you were not constrained by limited resources—whether they be time, money, management, or energy. Recognizing that your resources are finite, we will focus on the critical management disciplines you need to master regardless of the size or profile of your business.

Strategy: the framework for a firm, which informs all business decisions. As we discuss business strategy, we will walk you through the thought processes that can help you create a context for your management decisions. In our research and consultation with hundreds of financial-advisory firms throughout the United States, Canada, and Australia, we’ve learned that each business has a different set of parameters and perspectives to consider because each firm is unique. But whatever the structure, the work of sales and marketing, financial management, operations, human capital, and information technology is always better performed when the firm’s strategy is understood. So at a minimum, practitioners must have a clear idea of what business they’re in and how they define success. Management decisions become easier to make when you know what you want to achieve as a business.

Financial management: managing the bottom line. The information we present on financial management addresses critical issues such as benchmarking, budgeting, and management analysis. Financial advisers tend to give short shrift to the financial management of their practices, perhaps because they believe that simply having more clients will solve all their problems. The dynamics of a financial-advisory firm, however, require more active management and a solid understanding of what to monitor and act on to translate revenues into profits, cash flow, and transferable value.

Human capital: achieving effectiveness. In exploring human capital, we consider the concepts of recruiting, retaining, and rewarding staff at all levels. You can’t be a true entrepreneur without leveraging off other people. Such leverage is part of the difference between managing a book of business and managing the business itself. The selection techniques, leadership concepts, and reward systems we offer here can help you reinforce your business strategy.

Sales and marketing: managing the top line. Volumes have already been written on sales and marketing, and there isn’t much we can add to what has been published on this subject by such gurus as Nick Murray, Steve Moeller, Bill Bachrach, and John Bowen, but we’ll tie in management concepts that allow you to apply their great ideas to your particular business.

Operations: managing risk, processes, and protocols. Within a financial-advisory firm, managing operations is often the most complex part of the practice; it’s also one of the most important. Doing the job effectively hinges on how well you tie together the tools and processes that have already been introduced by industry vendors, broker-dealers, custodians, and other advisers. Again, considerable literature by such masters as Deena Katz, Bob Veres, Jeffrey Rattiner, Mary Rowland, and Katherine Vessenes is already available on varied topics as processes, protocols, client service, compliance, and outsourcing. Our review of the strategy, financial-management, and human-capital issues affecting your business will contribute to your understanding of business operations, but this insight should be merged with your own knowledge and with the information that’s been provided by other experts in the field.

Information technology: processing information and communication. Like sales and marketing, information technology has been extensively explored in the trade literature, mostly because hardware and software have become instrumental in helping advisers manage client relationships effectively and make more appropriate decisions on planning and implementation. Virtual-Office Tools for a High-Margin Practice (Bloomberg Press, 2002) by David Drucker and Joel Bruckenstein is an excellent reference in this area, and Andy Gluck has written countless articles that can help you to apply technology more effectively in your practice. The big challenge is in knowing how to frame your technology choices, how to integrate new technology into your practice, and how to evaluate your return on this investment.

Our goal in discussing these management disciplines is to awaken your management skills and to give you a framework for committing to a strategy and for translating a vision into action. To accomplish that, we focus on the three critical disciplines of business management—human-capital management, strategic planning, and financial management. How you approach the management challenges related to operations, compliance, sales and marketing, and information technology will, of course, be influenced by the strategic decisions you make.

Some of the larger firms in the industry can afford to employ full-time management to attend to these critical aspects of running an advisory business, but for many advisory practices, that option is not financially viable. Owners who cannot afford a separate professional management team must master the essence of these disciplines themselves. But whether the work is done by experts or by the owners, the successful financial-advisory firms are the ones that have become effective in managing each of these disciplines. The management techniques at such firms are part art and part science, and leadership is even more challenging because it requires practice owners to create a vision and inspire others in the business to follow them into the fray.

The best way to break into that league of successful firms is to evaluate your business the way a physician evaluates someone who’s sick:

• Examine the patient

• Diagnose the source of the pain

• Prescribe some solutions

• Recommend behavioral change for long-term health

That done, you’re ready to proceed. Worksheet 1 in the appendix can serve as a valuable tool as you assess the condition of your firm in several key areas of practice management and determine where to begin the work of transforming the practice you have into the one you’ve always believed it could be.

1. THE FINANCIAL ADVISORY BUSINESS

The View from Here