Futurist Edge: Practice Management

Finding a growth model that's right for YOU

In a nutshell

You want to grow your practice, you see a market potential for your advisory services. Friends tell you its time for you to hire more advisors, create a large team, look at more branches, set up an extensive web presence and draw up a plan for a 10 fold growth in the next 10 years. When you listen to them, instead of getting excited, there is a feeling of unease that overcomes you. Are you being short-sighted in not wanting to create a team? Is there another way to grow? Do you have to become a manager and cease to be an advisor, if you want to pursue growth? Not really. There is no right or wrong way to grow. The most important thing is to understand what's the right way for YOU to grow.

3 growth models

There are 3 different growth models that you can consider:

1. The single advisor model: an independent owner who runs the practice on his terms and does not rely on anyone else to advise his clients

2. The partnership model: this model can either have like-minded advisors coming together to jointly grow their practice or it could also be professionals with different skill-sets coming together to offer clients a holistic proposition: eg, a financial planner partnering with a CA and a lawyer

3. The team model: a financial advisory firm where you are transform from being an advisor to a manager. The firm has several employees with well-defined functions, structure and roles and clients are provided a wide breadth of products and services, in a scalable proposition.

So which of these is right for you? A lot depends on who you are, what is your natural style of working and importantly, what makes you happy.

The single advisor model

Some advisors relish interacting with clients rather than managing teams. Some are natural leaders, others are excellent do-ers. Some find it easy to create processes, delegate and supervise, others find it very difficult to let go - they are just too very hands-on and like it that way. Apart from your personality, here are some advantages of remaining a single advisor firm:

1. Freedom and control over vision: as an independent owner, your vision for the business cannot be challenged, compromised or changed. Whereas, with a partner, it is like a marriage. You need to be able to listen to your partner who may have a completely different vision of where they would like the business to go. Is that acceptable to you? Are you willing to tweak or change the direction of your vision completely?

2. Productivity: As an independent owner, you do not need to consult with others to make a decision. So, there is no need for team meetings or discussions before decisions can be made. There is no need to negotiate which direction the business needs to go or matching up of each others standard of work. You do not have to wait on tasks from others and trust them to complete it. So all this allows for increased productivity.

3. Flexibility: With your own business, you have control over your working hours, creative approach and earnings potential.

A single advisor firm can continue to grow, if you get clinically efficient about the tasks you will handle and those which your back office will handle. Having a strong back office support is critical to fuel your growth aspirations in this model. Having the right technology is also critical - you need to constantly look at how you can boost your personal productivity, and leave the less client-facing functions to a combination of technology and back office team.

You need to get into the habit of reviewing your client base once a year to determine which are your more remunerative relationships and which aren't. One way to create room for growth is to do an annual exercise of weeding out the bottom 10% of client relationships, where your effort-reward equation just doesn't add up. Instead of showing such clients the door, you could always suggest a more auto-pilot kind of relationship where you reduce the need to meet them often, by putting their investments into suitable auto-pilot products.

The partnership model

Being an independent owner can be a lonely and tough experience as the burden of success and failure is solely on your shoulders. So taking on a partner and expanding your business may be an attractive option. So what are the benefits?

1. Strength of sharing: There is a psychological benefit of having a partner that is intangible. Knowing that someone else shares the risk if the business goes through a rough patch can help you to move the business and attack in new directions that otherwise you may hesitate to. Having partners also means additional cash flow for the business that you alone may not be able to bring in on your own.

2. Expanding expertise: One cannot be an expert in everything. So taking on a partner with a different skill set or knowledge allows you to cater to a wider variety of clients. This allows you to expand your earnings potential and allows you to share the workload.

3. A sounding board: Having a partner means that you may get to hear insights and directions that you would have not considered on your own. This allows you to expand your vision and your decision making beyond a narrow approach. Having another person to discuss may prevent you any pitfalls in the business due to poor decisions.

While taking on a partner may sound attractive, there are many issues. According to one international study, 62% of businesses fail due to problems among its co-founders or partners. In the next article, we will look further into the do's and don'ts of building a partnership. However, if you are considering a partner approach, ask yourself these questions: Do you thrive while working with others? Do you find yourself challenged and find your work is more productive when working with others? Or do you feel stifled and stressed when working with other people and find that your best output is when you are on your own? The answer to these questions will help you decide if flying solo or not is the way to go.

The team approach

Before building a team, you need to ask yourself how are your managerial skills. Do you micromanage and find it difficult to let go? Do you constantly hover and cannot trust the other person to complete a task? If the answer is yes, then using a team-based approach to expand your business may end up being more counter productive in the long run. If you feel you have the necessary managerial skills and mindsets, then what are the advantages of using a team-based approach?

1. Keeping your vision: Even though you have a team, it is still your business which means you are the decision maker and it is your vision for the company. So by using a team-based approach, you get to harness the power of using many minds to complete some of the tasks while getting to stay true to your ideas and keeping control over the business.

2. Chasing leads: While building your client base, much time and energy is spent on hunting leads which may not necessarily yield any deals. By having a team to chase leads, it allows you to be free to focus on signing the clients and building a relationship with them.

3. Paperwork and maintenance: It is not enough to expand your client base but to keep the clients, you need to be able to maintain the relationship. This requires regular follow up through emails and phones calls and having a team to do those tasks eases your burden.

So the all-important question while building a team is if you can delegate. The other critical issue is whether your natural style is to "run the business from your head" or are you the variety who likes laying down processes and procedures for every activity and confirming to a discipline of this process. In a subsequent article, we will explore this aspect further.

The bottom line

There is no right or wrong way to grow. There are some models that are more scalable than others, but then, what is the point of choosing a model that is more scalable, but which makes you uncomfortable and unhappy. Suffice to say, each model offers growth potential - you just need to do an honest self-evaluation to determine which one is likely to work best for you.

Content is created by Wealth Forum and must not be construed as an opinion by DSP Blackrock MF.

Share this article