building and managing a successful financial planning practice grahame evans managing director –...
TRANSCRIPT
Building and Managing
A Successful Financial
Planning PracticeGrahame Evans
Managing Director – Professional Investment Services
Director – Standard Financial Planner
Standard Financial Planner
5 Critical Success Factors Turning Your Value proposition into
a Value Add proposition Value of Existing Clients and
Segmentation Centres of Influence – Key Issues How do I charge? 7 Key Ingredients to Beat
Competition
Presentation Outcomes
“Even if you are on the right track, you will get run over if you just sit there!”
Will Rogers
5 Critical Success Factors
1. Know what you want to achieve (Any road will take you there if you don’t know where you are going!)
٭ Simple, short, succinct, realistic plan to achieve your goals.
٭ Start with “big picture” and the “reverse engineer”
(BHAG Software)
Your Plan on a Page
What – What financial and non financial goals do I want to achieve?
Why – What is my purpose or reasoning for achieving these goals?
When – What milestones and dates will I place on these achievements?
How – What actions will I take to achieve these goals?
How will I know if I am Successful – what measurements will I use to see if I am a “bum” or a “hero”
2. Unless you stand for something, you stand for nothing
٭ Have a point of differentiation٭ Be good at it, be very good at it!٭ Let everyone know what it is٭ Continuous improvement
5 Critical Success Factors
3. Measure everything you do! (What gets measured gets done)
٭ Suspects, prospects, meetings,closing – What do I have to do to achieve my financial goals?
٭ Prospecting methods – What is successful?
٭ Client types – who do you most relate to?٭ Buy a system to collect data.
5 Critical Success Factors
4. Surround yourself with successful people
٭ Successful people do what unsuccessful people don’t!
٭ Optimism is a force multiplier ( so is pessimism)
٭ Ask questions, continue to learn, listen intently٭ Board of advice as you get bigger٭ Little thinkers, Big stinkers!
5 Critical Success Factors
5. Hire staff as soon as practical
٭ You need to “see the people”; that’s where you, make the $$$.
٭ Paperwork, compliance, assistance٭ Involve, reward and communicate٭ Servicing, gate keeping٭ The investment will pay back many
times over
5 Critical Success Factors
" Rules for Picking People:”
Look for intelligence and judgement, and most critically,a capacity to anticipate,
to see around corners. Also look for loyalty, integrity, a high energy drive, a balanced ego, and the
drive to get things done.
We recruit for attitude and train for skill.
“Court your own clients before you start courting somebody else’s clients.”
Evert Gummesson, Total Relationship Marketing, Butterworth Heinemann, 1999, p. 26
Distribution of Profits and Losses
-40
-20
0
20
40
60
80
100
Return on Sales(%)
62%
-38%
Old Clients
Intermediate
Profitability and Age of Clients
20% New Clients
1. Old Clients (over 3 years old) 2. Intermediate Clients (1 to 3 years old) 3. New Clients (under 1 year)h
Source: Mills Research
Longstanding Clients More Profitable
Distribution of Profits and Losses
-40
-20
0
20
40
60
80
100
120
140
Profits
Losses
+112%
-12%
Top 20%
Bottom 80%
Distribution of Profits and Losses
The Top 20% subsidises the Bottom 80%
What advisers do or are!
• Translate• Trusted• Analyse• Recommend options• Keep watch• Provide “comfort”
What advisers aren’t!
• Fund managers• Research houses• Stock selectors• Every day transactors
like banks
Commodity or Value
Buying investments Commodity
Selecting investments on past performance
Commodity
Personalising a strategy ValueCommunicating effectively “The plan”
Value
Establishing trust/sleep at night
Value
Keeping Watch ValuePortfolio construction Commodi
ty
How Do Customers Assess Value?
• Technical – Is the advice I am getting the best for me?
• Economic – What is the financial benefit to me?
• Service – Am I being treated correctly?
• Social – Do I feel good about the benefits received?
Adapted from James C. Anderson Kellogg University
This might sound simplistic but …
( Value – Price ) > ( Value – Price ) y aay
y = your propositiona = next best alternative
Your mission – to make Value y as large as possible
Adapted from “ Understand What Customers Value” Harvard Business Review Nov 1998
The Value Add Equation
Customization + Integration+Consistency
=
Premium Pricing + Client Advocacy
High
High
Low
Narrow(Niche)
Price
Market
Value AddedDifferentiatio
n
Niche Market
Value Added Differentiatio
n
Broad Market
Low Price
Broad Market
Low Price
Niche Market
Broad
The Four Basic Competitive Strategies
Specialised Services
Segmentation Evaluation
Size
Growth
Competitive Intensity
Gross Margins
Fit with Capabilities
Market Conditions
LegendVery Favourable
Very Unfavourable
Segmentation is Essential
How to turn your Value Proposition into a Value Add Proposition
What are you deeply Passionate about
What you can be the best in the
world at
What drives your economicengine
“A simple concept flowing from a deep understanding about the intersection of the three circles”
The three Circles of the Hedgehog Concept
@Good to Great – Jim Collins
“Top advisers track not only the revenues they generate but also the business value they deliver and the reaction of their customer”
Mckinsy Quartery 2003, Number 3
Charging Structure
A component of your value proposition
– Have a set basis!– Promote/ Promulgate– Provide a “menu” of services of
the value you provide– Stick to it! Don’t get greedy– Try to give something back?!?!
Key Aspects of Successful Joint Ventures with COI’s
Professional respect for the parties involved
Alignment of interests for the JV Partners• Client well being• Revenue• Equity • Servicing
Regular formal and informal communication between the parties
Agreed targets for financial planning revenues
Inclusion in KPI’s of agreed actions for accountants regarding referral to JV partner
Regular training (at least once a month) for staff of the Accountants Practice on financial planning matters.
Agreed divorce provisions from outset
7 Key Ingredients to stay ahead of your competition.
“Business is like a man rowing upstream. He has no choice; he must go ahead or he will go back!”
- Lewis E. Pierson
1. Communicate, communicate, communicate with your clients! (Especially in the tough times)
٭ Clients don’t leave you because of bad service…
…they leave you because of a feeling of indifference i.e. you don’t care.
7 Key Ingredients
2. Make a commitment to regularly update your knowledge on markets, products, strategies to help your clients.
٭ New Issues to discuss with clients٭ New marketing ideas
7 Key Ingredients
3. Do the unexpected with your clients? (and your centre of influence)
٭ Referral rewards٭ Invitations٭ Film nights
7 Key Ingredients
4. Network – every hour, every minute, every second of the day!
٭ Who don’t you know?٭ What do you know about
people?
7 Key Ingredients
5. Develop or use a sales track?
٭ Keeps you on track٭ Makes sure you cover all the
important issues٭ Creates a professional
appearance, attitude
7 Key Ingredients
6. Dress “One – up”
٭ It is better to be overdressed than underdressed
٭ Always look professional
7 Key Ingredients
7. Importantly – 2 Ears! 1 Mouth!Clients love to talk about themselves?
٭ Worst Investment?٭ Best Investment?٭ Money was no object, I would….
7 Key Ingredients
Questions….