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Good Practice Management and Sales: A Continued Tug-of-War

Almo Lubowski, CFPBy Almo Lubowski, CFP, South Africa

Nobody is under any illusion that a financial planning practice is in the business to be profitable and serve as a source of income for its owners and employees. However, it is unfortunate that many still overlook the need to engage in implementing some important practice management strategies for their businesses in favour of purely focusing on sales targets and production.

These practice management strategies are too easily and too often overlooked because they do not directly relate to generating revenue or acquiring clients, at least not initially. Yet, they are an absolute necessity in building a foundation for a practice that wants to grow and thrive in the long term.  Focusing too much on sales targets is a short term strategy that often takes focus away from long term sustainability of a practice.

So when talking about practice management strategies I thought of naming some examples:

  • Creating a compelling vision and strategy for the practice’s future
  • Defining a unique client value proposition
  • Embracing and harnessing compliance requirements into useful business processes
  • Ensuring clients’ take on processes are enhanced rather than shortened in favour of new business quickly
  • Developing more sustainable charging mechanisms for your practice
  • Developing and valuing staff

Those are just to mention a few, but I think you get the point of where I am going with this. Many recognise, when putting themselves in the shoes of a client, that these are necessary, but too many fall back into the sales production trap and find excuses to postpone formulating these strategies. But taking the time to do this has often proved to pay off in the long run for practices that have done this.

Unfortunately many practices have been forced to have a look at their businesses due to regulatory changes that have gripped the world of financial services in recent years. An example of this was the Retail Distribution Review in the UK, or more commonly referred to as RDR. A similar regulatory change is on the cards for South Africa. Advice practices in the UK were forced to look at their client offerings and services in light of needing to justify charging a fee for these. Therefore an evaluation of their practices was necessary and their value propositions needed adjustment.

Some  independent research, which canvassed the opinions of more than 200 advisers, and conducted a year after the implementation of RDR in the UK, revealed that a year on, 37% of advisers reported that they were trading more profitably than the same time last year, compared to 23% who had actually seen a drop in profits. The survey was conducted by Opinium on behalf of Fidelity Worldwide Investment.

It must be borne in mind that the research was done merely a year after the implementation of an extensive regulatory change and the percentage of practices revealing trading more profitably was still a relatively small percentage. It is however still a positive sign as these businesses had to change their approach at a rapid pace and furthermore an even lower percentage said it had the opposite effect, which is also a good sign. However, one is left wondering what happened to the remaining 50%?

So, now imagine what is possible with more time and no regulatory stick hanging over your practice? I believe if financial planning practices take this approach and take time out for practice management issues they will find there will be much less need to focus on sales so much, provided the right practice management strategy is in place for their firms, as clients will come more easily and certainly also stay much longer.

Read Almo Lubowski's Blogs

1 comment to Good Practice Management and Sales: A Continued Tug-of-War

  • Kristin

    I found this to be informative as it helped me to realise what is required to make an acceptable profit and how to keep a business in top rankings. This highlights the importance of being prepared for change in the market environment as it will help a business in the short term and long term. The fact that management strategies are given are very helpful. I fully agree with what the writer is informing businesses of doing to increase the way the business is run and how this will provide an increase in sales.

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