What advisors are doing to run a profitable and efficient business? A trio of advisors provided a variety of answers to that million-dollar question during a Saturday morning session at the GRPAA Finnovation Conference at the Hotel Del Coronado in San Diego.
The panel of advisors, featuring Jim Marshall of Spectrum Investment Advisors in Mequon, Wis., Steve Scott of RSG Advisory in Chicago, and Todd Timmerman of RPA Financial in Charlotte, N.C., touched on topics including fee suppression, wealth management, the importance of creating and following a business plan, plan reviews, smart, strategic hiring and more ideas for growing a practice.
But the whole session could also be summarized by Timmerman’s guiding principle: “Get it right; get it tight; blow it out.”
Timmerman shared how he has lived up to that boiled-down statement in building his business by creating an effective business plan, putting effort into optimizing it, and then following processes to “wow” clients and keep them happy.
Scott echoed the importance of not only having a business plan, but actually putting it to action—something he admits he hasn’t always done. “We’d write a business plan and then stick it in a drawer and ignore it,” Scott said, adding that they have created some strict processes so they now can actually follow the plan. “We now do quarterly updates on key metrics.”
One secret to Marshall’s success in adding new clients is his office building and how it is utilized. Situated at a prominent location with high visibility, the facility he built eight years ago —during the recession—features a coffee shop (and recently a second one) with baristas serving lattes, mochas and more to attendees of frequent speakers—sometimes approaching 200. Fred Reish has spoken there, and Marshall said a 94-year-old survivor of the USS Indianapolis—one of only 11 still alive—was another recent highlight.
The events no doubt help his advisory business to add new clients.
Another feature of his building is a variety of murals on the walls to help “tell stories” of not only the business and its people but other things he sees as important as well, such as a 33-foot mural depicting milestones of Warren Buffett’s life and pictures of employees or their relatives that have served in the military.
“People absolutely love what we have on the walls,” Marshall said. “We love to tell our story.”
Marshall said another winning idea has been recruiting retirees who come back to the workforce to conduct one-on-one meetings with clients. He notes clients like meeting with older people when talking about retirement plans, and says retirees are ideal because travelling over 32 states doing one-on-ones with the firm’s 145 401k plan clients is a “burnout job,” but un-retirees “love it. It gives them something to do.” He also notes, somewhat tongue-in-cheek, that it’s best to wait until a person has been retired for at least a year before coaxing them back into the workforce. “Let them retire for a year because they’ll be a lot cheaper.”
Timmerman told the audience he prefers hiring Millennials, but strives to find the cream of the crop. And he doesn’t want the pushy salesman-type. “I don’t think I need to hire salespeople,” he said. “I need to hire really good consultants who can explain what we do.”
A few other nuggets from the session:
- Don’t do “parking lot preparation” for plan reviews: “I hate parking lot preparation. We have a process for plan reviews,” Timmerman said, adding that following the process makes it easy to conduct effective plan reviews every time.
- Offer clients a discount for agreeing to a video conference for a plan review instead of an in-person meeting: Timmerman said he can do multiple plan reviews in a day via video conferencing, and he will cut a client’s fee by thousands of dollars if they agree to it.
- Be strategic in looking for new clients: “We were just trying to sell more plans. Now we’re trying to sell the right plans,” Scott said, adding that they are often willing to commit the time working to sell small plans because of the opportunity down the road (that they will turn into big plans). Scott also said their small plans in the $1-$20 million range he finds to be the most profitable.
- Hire employees with passion: Marshall said they test applicants for passion about their work with something called the culture index to make sure they are a good fit for the business. People only there for the paycheck are not the people who are motivated to grow the business.
- Wealth management can be a hedge against fee compression: Marshall said 80% of his firm’s revenue is from 401ks and 20% from wealth management, but they’re headed toward a 70/30 split. “Fee compression not such a big issue on wealth management side,” Marshall said.
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