The Fact:
In 2001, advisors responded to a downturn in the market by cutting variable costs such as marketing and client communications.

The Implications:
Tactical cost cutting is a reactive process that takes place after a market downturn. Strategic cost cutting ideally takes place when times are good and focuses on reducing the underlying costs of managing client relationships and increasing profitability. To the extent that advisors can focus on decreasing costs without decreasing service level, practices will be in a position to withstand the industry pressures that are reducing overall profitability.

The Idea:
In a subtle way, advisors can decrease the cost of client relationships by standardizing key processes. Standardizing processes involves creating efficiencies in the way you communicate with clients, ultimately allowing you to deliver a more consistent level of service with reduced labour costs. Processes that are standardized are typically recurring (such as client meetings) and important to your practice (such as financial plan updates). In order to move forward, select a single process and then create a map of the client experience. For example, exactly what should happen when a new client joins your practice? What specific activities are involved, at what intervals and completed by whom? Identify any templates that can be created to further support efficiency. Once that process is complete, you can automate many routine processes using your contact management system.

The Next Step:
The Business Success Kit provides you with the tips, tools and templates that you’ll need to enhance practice productivity and profitability. It’s the most practical and comprehensive guidebook available for financial advisors. For more information, visit www.caifastore.com and click on the Business Success Kit.