Colonial First State (CFS), in partnership with Core Data, identified five successful financial planning firms that are rapidly growing across all areas of their business. We sat down with them to unpack how they adapt to industry challenges, the lessons they’ve learnt, the drivers behind their success and how they support their clients and people.
Those conversations delivered the following six insights, each of which have unlocked significant growth.
1) Know what’s driving your financial performance
Having a deep understanding of your numbers and how the business is performing is critical to its future growth.
Many businesses don’t have a clear financial picture, and some can’t provide detailed information about what drives their revenue. Others have little knowledge of which clients are most profitable and where their future revenue will come from.
Fast-growing advice firm Capital Partners uses a productivity metric and focuses on revenue per full-time employee. The Perth-based practice sets targets on that basis.
David Andrew, founder and managing director, told us that the group is currently running at $300,000 of revenue per full-time employee.
“We know that we have to be scrambling to recruit, because if we don’t and we get to $340,000 of revenue per full-time employee, the risk of someone resigning increases dramatically and people will be working too hard,” he explained.
“At $260,000 of revenue per full-time employee, everyone can go home at four o’clock.”
Capital Partners has set a clear goal: to grow revenue per employee to $400,000. To achieve this, they are actively pursuing the right technology solution.
2) Develop a business plan and refine it for growth
Only one in five business owners has a formal business plan and only one in three regularly refine their growth strategy. Research suggests it is not for a lack of wanting, or a shortage of ideas – 98 per cent of the businesses surveyed believe they have opportunities for growth, and most have ideas of how to achieve it.
The trouble is finding the time to document the plans.
Yet the rapid and continued contraction of the industry has placed even greater focus on succession planning and the need for practices to build long-term strategies on how to attract, develop, and retain staff.
Award-winning advice firm MyWealth Solutions made the decision to have an ongoing recruitment process as part of its business plan. The group has taken a view that it is better to be overstaffed than understaffed because the right people will bring growth to the business.
3) Client segmentation – is it worth the time and effort?
Client segmentation is generally underdeveloped in the advice industry, with CoreData’s research suggesting that almost three in 10 practices do not segment their client base. While it can be helpful to understand your client segments, the strongest message we heard from advisers was that this process is pointless unless you intend to do something with the information.
Most of our five practices use at least two methods to segment their clients:
- Capital Partners segment based on the complexity of advice, as well as stage of life.
- Hunter Financial segments based on stage of life. However, the purpose of segmentation focuses on client communication preferences.
- MyWealth Solutions use three segments: stage of life, advice needs and advice complexity.
- Pride Advice segment based on their offering – Core and CorePlus – as well as additional discrete services or modules that can be added.
- Vestra Wealth segments by fees, but not as you would expect. They segment their clients firstly by the way their clients pay (for example, ongoing, fee-for-service or ad-hoc) and then a secondary segment focused on stage of life.
4) Consider what you do with client feedback
What your clients think and feel about your offering are two of the most important factors that validate decisions within your business, helping to focus your energy on sustainability and growth.
Pride Advice is a growing practice with offices in Sydney and Adelaide. The firm has developed a think tank with a core group of retired executives who meet with the CEOs.
“Getting views from people outside of our profession provides a different perspective, and the think tank also appreciate being involved,” said Philip Smith, principal adviser at Hunter Financial. “We don’t want clients to be taking their time to provide us information that we can use, and then not have the ability to actually use it.”
5) Embrace technology
All five advice firms we interviewed share a common attitude towards technology: they embrace it and invest in it willingly.
Each practice has used technology to streamline its business processes, to drive efficiencies in an effort to reduce the cost of providing advice.
All five are paperless – even where physical documents are necessary for client signatures, they are digitised as soon as possible. Digital tools are also used in client fact-finds to minimise data entry errors.
6) Don’t leave your team behind
We saved our most important tip for last – a good advice practice is always underpinned by a great team.
“Most firms focus on the customer, whereas we focus on the team,” said Capital Partners MD David Andrew. “A happy team will then look after the client,” he said.
“We have a cultural concept around ‘Creating Bigger Futures’ and when someone joins our company, I personally sit down with them and we discuss the concept of what a bigger future is and what it means and how it can be a benefit to them.
“It used to take us 10 years to grow someone to the point where they can be an adviser. We can now do it in about three and a half. We help everyone in our organisation construct a three-year vision in terms of where they want to be, who they want to be and what they want to have achieved. Then every 90 days, they have a plan of how they’re going to move towards their Vision. Then they have a weekly plan, where they look at their crucial results.”
Jackie Clark is the national education manager at Colonial First State
Jackie, get rid of Codina from your management and we might deal with you. Just in case you don’t know, he was responsible for the repugnant aspects of LIF/FASEA/Grandfathered rev ban…..