Most financial advisors dream about creating a business that they can grow old with or a business that they can perfect and eventually sell. Yet, unfortunately, most advisors merely create a job and not an actual business.
Consequently, the prospect of selling a job to another advisor is difficult and having a business you’re tolling away in is frustrating.
Chuck Blakeman illustrates the stages of creating your ideal business environment in his book, Making Money is Killing Your Business. The seventh stage of a business Blakeman describes is succession. Succession is more than selling a company; it can also mean to provide an annuity stream from your business. This is when you have the money and the time to enjoy your life.
The Bureau of Labor Statistics compiled the average pay for a range of professions. In 2010, the median pay for a financial advisor was $64,750 or $31.13 an hour. Most advisors I speak with want to be significantly above this amount, well north of the $100,000 range.
In order to be in a place to have a succession and make the money you desire, you need to transition from thinking you have a practice to thinking you own a business. Most advisors have set out on their role as a business owner by looking at their business simply as a PRACTICE. What I mean is that they are doing investment management, financial planning, or asset gathering simply because they enjoy creating a relationship with a client. In each of these three areas of the industry, the advisor is extremely good at what he does, but he has not gone beyond his strength to create a business.
Piecing it Together: Implementing a Process for Success
In Forget The TAMP – It’s Time For The TFPP, author Michael Kitces discusses what needs to be in place in order to move from a practice to a business. While I find the post helpful, I believe we need more than just the pieces; we need a process map to see how the pieces fit together.
Think about what you need when you’re just starting out. Then, think about the kind of experience you want to give to your ideal client.
The process map I have included below contains 18 macro steps. You may have more or less, but this is what I believe you need in order to provide holistic planning to your clients. Here all bullet points from the most recent process map that I have built for a client:
- Stable Advisor – “Yearning for more income and better lifestyle”
- Branding, marketing and lead generation
- Sales strategies
- Viable business model
- Business process management
- Practice management
- CRM – Database
- New accounts/applications
- Risk Management
- Legal – Estate Plan
- Tax Strategies
- Financial Plan – Retirement plan
- Investment Management
- Customer service
- Successor Advisor – “Do what I want to do in the business”
The start and finish of the list is from Blakeman’s book, Making Money is Killing Your Business. However, not all advisors may be in a stable position and may simply be in start-up mode, survival mode (just creating sales to cover costs) or subsistence mode (covering the cost of business and putting a roof over their head).
One of the benefits of having all the pieces and a process in place is that you are creating a business for yourself. You are in the position to create a transaction or are in the place where you have an annuity or an income that is being paid to you and that you are really doing what you want with your time.
Venturing beyond maintaining a practice and creating an actual business will allow you to be successful and to have the money and time to enjoy what you want to be doing. Your overall lifestyle will be in a place that you enjoy and your business focus will only be on the things you want to be doing within the business. Ultimately, this opportunity gives you the choice to continue owning your business and receive an annuity each month to sustain your lifestyle, or sell the business for the highest profit because you have the process in place that is most compelling for someone to come in and purchase the business.
Download AUM in a Box’s example of a process map below and start creating your own (simply submit your name and email and the download will be sent to your inbox). Confused about where to start with a process map? Contact us at AUM in a Box for a free consultation. We can help you get on the right track!