The Practice Doctor is IN

Al Depman, CLU, ChFC, CMFC, BH

Practice Management Consultant

The Essential Questions

Last week I had the privilege of spending the day with the top nine producers in a firm headquartered in Memphis, TN. We engaged in a workshop designed to provide the advisors a comprehensive view of their practice from four perspectives. The meeting was enhanced by the attendance of each producer’s support team––assistants and junior advisors, 25 people in all.

There was a variety of practice models on hand, from small detached offices to metro-area multi-line agencies, from insurance-based practices to investment wealth managers. Producer gross incomes in the room averaged $250,000, so a day out of the office was a real commitment for these folks. Nothing like a little friendly pressure from a room with a few million dollars in earning power!

We began with an overview of the five lifecycle stages of an advisor’s career. We’ll get into the details of these growth pains, challenges, and joys in my next column. The key question at the end of this session was:

“Are you progressing normally or are you stuck in one of these stages?”

The second practice perspective was to compare the advisor’s practice to the characteristics of a Prime Practice—a practice that is operating at peak efficiency and one that can be profitably transitioned when the time is right. These characteristics will be reviewed in a future column.

The third perspective we discussed was how the producers were developing their eight business systems. These systems are at the core of having a transferable practice, one that can be sold for maximum value. The team members in attendance were particularly interested in this area since they were the people to whom tasks are delegated. For more on the eight business systems, log onto practicetools.net.

The final practice perspective we discussed was financial. Here we took a look at peer practices from an income and expenses point of view, examining common business ratios, bonus structures for team members, and goal setting for the practice.

The day was a huge success based on the feedback and requests for additional consultation I received. The highlight for me was a discussion of the questions an advisor asks as his or her practice develops over time. Both the questions and possible answers evolve as the practice does. The genesis of these questions lies in the role of the accountability partner as the advisor migrates through the lifecycle stages:

• “Dependence” – the time of reliance on a parent organization for the development of core survival competencies;
• “Independence” – an ego-driven time when the advisor shrugs off the yoke of the parent organization and flexes his marketing muscles; and finally
• “Interdependence” – wherein the advisor sees that to truly grow she needs to reach out and embrace others both personally and professionally.

One of the core elements of a practice’s ability to grow and adapt is its accountability network. The advisor must find people to empower to ask the tough questions. These accountability partners can come from outside the financial services business, from inside the advisor’s financial world, or from a third party (coach, mentor, consultant). The level of accountability shifts over the years.

Accountability Question (Level 1):  Dependence

“What do I need to do?”

This question is for the new advisor in the early stages of her career. These survival years require the advisor to be dependent on a parent organization for learning the products, marketing techniques, and core competencies. Primary accountability is to the parent organization.

Accountability Question (Level 2):   Independence

“What’s in it for me?”

The second-level question then becomes somewhat self-serving. The advisor has survived and is now freed from the leash of tracking activity statistics and weekly sales manager meetings. The ego takes over, as it must, to establish an independent professional image and reputation, apart from the parent organization. Primary accountability is to one’s self. Many advisors, including some in the room in Memphis, get stuck here. They pay lip service to the bigger picture and never broaden their thinking to the next question:

Accountability Question (Level 3):  Interdependence Stage 1

“What’s in it for us?”

Interdependent thinking begins to emerge. The advisor, his team, and his clients are all in it together. This thinking is the necessary mindset to begin true succession planning.  As in Stephen Covey’s Seven Habits of Highly Effective People, the goal is to establish an interdependent win-win-win scenario for all, both today and tomorrow. Primary accountability is to the team. This evolves into a still deeper question that is the hallmark of a truly Prime practice:

Accountability Question (Level 4):  Interdependence stage 2

“What’s our role in service to our people – team and clients?”

This goes beyond “winning” and gets into exploring the real reason(s) the advisor has for being in not-just-the financial services business. As Bill Lyon, an advisor I work with, has written: “At our core, we recognize that money isn’t the only thing that matters. Often, its value pales in comparison to important relationships, health, faith, and life experiences. But most of us forget this from time to time. Don’t we?” This is the zone where the Financial Life Planning Institute’s value proposition shines so powerfully. Primary accountability is to the clients.

There is yet another question to ask. It takes us full circle into a new dependent stage of life. Let’s call it the “new dependence” where the advisor and team have achieved full interdependence and ask, in all humility, of God:

Accountability Question (Level 5):  New Dependence:

“What do we need to do to serve you?”

This is where your practice management consultant leaves off and higher level consultants take over! Primary accountability is to a higher power. There are a few Good Books to use as reference guides in achieving this level. 

Which question are you asking in the dawning days of the new year? Let me know your thoughts at al@mitchanthony.com.

The Doctor is OUT.

Al Depman, CLU, ChFC, CMFC, BH, a.k.a. “The Practice Doctor”, is MitchAnthony.com’s Business Practice Consultant. He is the creator of “The Practice Management Assessment” tool and materials and has authored numerous articles in professional publications on practice management, and author of the book, How to Build Your Financial Advisory Business and Sell It at a Profit, now available from McGraw Hill. Al combined his Liberal Arts studies with 10 years of management experience with McDonald’s Corporation to enter the financial services world 25 years ago. Since then, Al has evolved from an MDRT-level sales rep into a full-time consultant specializing in helping others engineer their business practices to the next level. Contact him at al@mitchanthony.com.

© 2012 Al Depman