As a profession, we have evolved into a community of great financial planners. But does that mean we are great business owners?

Over the years firms will have focused on fee charging, getting their service proposition nailed and gaining qualifications. Essentially, they’ve done what I would call the standard housekeeping, that is, everything they need to do to run a financial planning service.

But now what’s happening is people are realising they have got proper businesses. As the demands of their clients and the demands of their team increase, owner managers are finding it difficult to cope. What’s more, there isn’t the business infrastructure in place to adequately support them in their role.

There is a realisation that they need decent processes and to have the right people around them, and also to do more to attract the right people through the professionalism of their business.

You may be in a firm where it’s immediately clear your business has got it nailed from a client perspective: there’s a good client brochure, your website is up to date, and your advisers have got chartered or certified status. 

But some firms have missed the most important thing, and that’s the focus on overall quality. You need to see the whole picture of what it takes to run a financial planning business, rather than just running a financial planning firm.  

But there are drivers for change. To put it simply, some business owners are just plain exhausted. So instead of focusing on their business, they focus on something else, for example, their exit plan. Yet when they come to do this they realise that in actual fact they’re not going anywhere, because their business wouldn’t function without them.

On top of that, their business may not be worth what they think it is once a potential buyer has looked under the bonnet and understood that the business only works because the person of the selling up. The owner is at the heart of everything.

Within some businesses, there may also be younger planners coming up through the ranks and challenging management about the way the business is being run. The younger generation want to do it right from the start, not exist in the microclimate that some owner managers have built around them.

Being open to change

As a planner, you can walk out of the most amazing client meeting where you’ve said all the right things and made the client’s dreams and aspirations become a reality. But sadly, that same set of skills doesn’t always exist when it comes to running a business.

Sometimes managers fight change, firm in the belief they know what they’re doing. That might be in the sense of being resistant where people suggest different or improved ways of doing things, but that ‘fighting change’ mentality is also present for some firms in refusing to accept that the world is changing too.

Change can be driven by regulations and policy reform, but it can also emerge in different ways, such as the shift in emphasis on behavioural finance, or engaging with social media. It’s a very different model.

What you’ve done historically has worked really well, but there’s a new set of skills needed to take your business to the next level.

So what do you need to consider in order to best adapt your business for the future?

It’s worth starting by taking a step out of your day-to-day role. You can’t fix the gaps in your business or redesign things while sitting in front of clients. By taking a step out, this will allow you to see your business for what it really is, and with fresh eyes.

You may also want to look at opening up the roles within your firm. Obviously you’ll have advisers and paraplanners, but take some time to think about whether you need additional resources such as key administrators, operations directors or practice managers.

For example, with some firms I work with I act as an external party to run their quarterly board meetings. This kind of perspective is invaluable, and may not be something you can get from your existing team. It’s ok to look in the mirror and say to yourself: I don’t have these skills.

You and your team may be geniuses at financial planning, but the sheer nature of the work you do means you might have not had as much time as you’d like to spend on improving the business. Now, some firms are finding their businesses have become too big for them, and go far beyond a one-man or one-woman show.

The shift to quality

When we talk about quality here, this can also be defined as continual improvement.

As a profession we are driven by personal continual improvement, but the emphasis needs to change to seeing your business as a thing in its own right, alongside your own personal development. To put it another way, if your business was a person, would it come across as being neglected?

If the answer is yes, then the next step is to look at how you can continually improve the business ‘machine’. This comes through benchmarks, and the need for operational procedures and strategies.

We’re at a stage now with adviser qualifications where it’s almost over-engineered from an academic perspective. It’s a bit like putting the interiors into a house when the roof is about to fall off.

Financial planners who run great firms tend to make money. This money has allowed time and effort to be put into improving the client proposition, which is great. But to take my house analogy a bit further, there are hairline cracks that have appeared in their business that up until now have been ignored.

Yet where business owners are becoming tired, or where revenue is still too heavily dependent on that one person, those cracks in the business can become craters. It’s at that point it’s time to rebuild.

For the firms that get this right, there are small but critical tweaks they are making to their business that have ultimately put them on the path to running a proper business. And crucially, a business that is not reliant on one person.

In our next articles, we will spend more time on how to achieve this kind of change in your business.

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