Touch wood, I’ve never been on a plane where the oxygen masks have dropped down in an emergency. However, I’ve heard enough pre-flight safety briefings to know that if that does ever happen, I should fit my own oxygen mask first.
This is great business advice too.
If you’re running a business with multiple advisers, or you aspire to do so, it’s good practice to try focusing on your own needs first.
What do I mean?
- Bog standard levels of fee production for one adviser is
around £200k p.a.
- Good production is more like £300k to £400k p.a.
- Excellent production is £500k to £600k p.a.
I know more than a few owner advisers who look after £1M p.a. of fee income. That’s very good going.
Now please don’t use these numbers to beat yourself up or to switch off at this point.
You can create and manage these fee levels too, but you’ve got to focus on yourself for a while first.
First things first
Try getting yourself to £600,000 or £1M of fee production, rather than trying to get several advisers running well. Yes, it’s a big scary number, but over a number of years you can build to this.
There are a few good reasons for this approach:
Let’s be honest, managing yourself is a walk in the park compared to managing other advisers. Most of them probably don’t even want to hit these high-performing levels. And as Gino Wickman, author of Traction: Get a Grip on Your Business, says, “You can’t pay, motivate, force or beg someone to want it.”
The right kind of support
Once you set yourself this lofty target, you have to start asking yourself, “What support would I need to have in place to allow me to be that productive?”
To do these sorts of numbers you won’t end up doing anything except seeing clients and overseeing the strategy development for each of them.
So you’ll need a fantastic paraplanner or shadow Financial Planner, or both, who will be in all meetings with you, taking notes and handing out the work to the rest of the team afterwards. They will be the one project managing the execution of your amazing strategies, while you move on to the next fun, high-value task that only you can do.
You’ll also need a few great administrators to handle the levels of business and client management that goes with that. There’ll be no room for anyone other than top performers on your team, otherwise it won’t work.
To do these sorts of numbers you will need to be focusing on the highest-value clients. Up-and-coming junior advisers or paraplanners will be willing to work with you as your shadow, because the client work you get them involved in will be a few steps above what they could generate for themselves. That level of work is interesting and exciting at a technical level. It stretches people in a good way. Anyone with any smarts and ambition will jump at the chance to work alongside you.
Within two to three years your shadow adviser will be able to deal with the level of clients that you are. In fact, as they mature in skills, you can get them doing more of the talking to clients, as a coaching and mentoring exercise, while you are there in the room. When you do finally let them loose you have created a person who, with the right support around them, can also work to doing £600k or £1M of revenue p.a. You won’t then send them off to cut their teeth on clients with £100k to invest. What a waste of time.
This is the opposite of what most firms try to do. They are more likely to end up with three, four or ten advisers averaging £200k p.a and asking them to build their own book of business from scratch.
In these firms the owner/s are being distracted by continual management hassles with the other advisers. If a two- or three-owner firm did as I’ve outlined above they’d have a £2M turnover business that was fun, fulfilling and hugely profitable. Not only that, but if they did want to scale up, they’d have the formula for success for those coming through, and also have created their own successors who’ve been taught right.
You could take that firm to £5M if you were motivated to do so.
The Ambition Trap
In their efforts to build and grow a larger enterprise many business owners have spent a lot of time trying to recruit, train, encourage and develop other advisers. However, they make two assumptions:
- They believe that because they came up the hard way everyone else should too. This means:
a.) Any new recruits either have to bring a ready-made client base with them
b.) They have to spend years proving they can catch and kill their own clients.
- They believe that having more advisers is the best way to grow revenues and create the larger business they are seeking.
What if neither of these things were true?
When you hit your £600k or £1M target, why not just package up a bunch of revenue (for example, the bottom £400k) and hire a farming-type adviser to look after it. All they have to do is love the existing clients. There are plenty of good advisers out there who would do that happily for £100k p.a., which keeps your Direct Expenses at around 25%.
That type of adviser doesn’t need to arrive with any clients, and doesn’t need to be able to find their own.
By fitting your own oxygen mask first you can create the business you’ve always dreamed of, but without the hassle and pain of trying to manage too many advisers.
Let me know how you go.