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“Coach’s Forum” is a place in which you can ask your questions, tell your stories or give your opinions on any aspect of practice management. For each column, George selects the most interesting and relevant comments from readers and offers his advice. Our objective is to build a community of people with a common interest in making their financial advisory practices as effective as possible.

Advisor says: I think i have a good handle on the long-term strategy for my practice. However, the challenge I’m having is prioritizing shorter-term objectives. Overall, the business is running well, so there’s nothing that jumps out at me as needing immediate, close attention. I would like to develop targets to give me some specific direction for, say, the next 12 months.

What issues should I focus on?

Coach says: What you’re really describing is the relationship between strategy and tactics. Let me summarize it in these ways:

Your strategy provides direction; your tactics are about implementation.

Strategy is what you want to achieve; tactics are how you are going to achieve it.

Strategy is future-oriented; tactics focus on the present.

Tactical plans usually are designed to achieve incremental improvement, whereas real strategic designs can and should change the path of your business radically.

I have always believed that the best way to determine focus for a financial advisory practice over the shorter term is first, to take stock of the longer-term dynamisms that brought you to your current state of affairs. From there, you can extrapolate trends and prepare yourself accordingly for the more immediate future.

Here are five major influences that, in my opinion, will continue to affect financial advisory practices in the years ahead, along with prescriptions for dealing with them in the near term:

1. Commoditization of advice (and advisors)

The global financial crisis of 2008-09 not only ravaged most investment portfolios, it also crushed the credibility of many financial advisors. The widespread effect among clients was, generally, to create an attitude of “You guys are all the same.” And when there’s little or no differentiation among products or providers, they become commodities.

There are two ways for commoditized products to rise above their competitors: offer a lower price or a higher level of service.

Trying to compete with a low-price strategy is a “race to the bottom” that only reinforces the commoditization effect. Instead, I urge advisors to raise their fees so they can afford the other way to compete, which is by providing a higher level of service.

Of course, higher fees work only if the service really is better than the competition’s and clients and prospects are aware of that fact. Your strategy, therefore, should be to provide an exceptional level of service to those clients who deserve and value it the most.

To accomplish that, I suggest you overweight your service delivery significantly in favour of your highest-margin clients. All clients deserve good service. However, defeating commoditization requires you to stand out from the crowd where it counts the most.

2. Margin squeeze

The discussion of commoditization is a natural segue into the issue of deteriorating profit margins. Rising business costs, together with declining fees, make investing in your business or maintaining your personal lifestyle a challenge.

Understanding the metrics of your business is fundamental to managing costs. Conduct a deep analysis of the services and resources you provide to assess whether the value your clients receive justifies the expense.

Begin by estimating your biggest cost item: your time. As a rough guide, simply divide your total annual revenue by the number of hours you work in a year.

Yes, sometimes you will work at $1,000 an hour; other times, at $10 an hour. However, having an average can put things in perspective. For example, if your average hourly rate is $500 and you spend two hours, twice a year, in review meetings with a client, your base cost is $2,000 for that client. Add in prep and staff time and some allowance for general overhead. You might find the cost of delivering that service is $2,500-$3,000. How does that compare with the revenue generated by that client?

(If you would like a copy of my firm’s client profitability calculator, drop us a note at

3. The new marketing paradigm

The traditional ways in which advisors marketed their business don’t work as well as they used to. Content marketing is the new paradigm to create a value impression in the marketplace that results in qualified prospects seeking you out rather than you casting your message out into the world and hoping it appeals to enough of the right people.

Make 2018 the year you adopt a well-designed digital marketing strategy. The core of this strategy should be your website. It presents the best opportunity for you to offer relevant information to demonstrate your understanding of your target market’s needs.

All other social media tools, the most important of which is your LinkedIn profile, should draw people back to your website. Have a professional business photo at the top, as well as an intriguing position description, such as “personal CFO to successful business owners” vs “financial advisor.”

Push the chronology of what you have done and your credentials well down the page. Your profile should give readers a compelling reason to take a deeper look – via your website.

More advice: outsource your social media activities. The return on investment will be high if your professional providers are competent.

4. Digital disintermediation

The accelerating rate of technological intervention will be a big disruptor in client/advisor relationships. In fact, technology is taking on many of the capabilities advisors previously promoted as part of their value proposition.

Turn the tech tsunami to your advantage by further integrating technology into everything you do. For example, use financial planning software to yield consistent recommendations that are based on proven logic. Add a risk-assessment tool that goes beyond your firm’s “know your client” requirement.

Then, assuming your financial planning software suggests an asset allocation, consider outsourcing portfolio design, monitoring and rebalancing, as well as client account reporting, to a tech-based system.

Try video-conferencing with clients in place of face-to-face meetings and utilize all the capabilities of your client relationship management system to communicate digitally.

5. Business continuity

For the most part, change in the financial services sector seldom is cataclysmic. However, at your practice’s level, disastrous events with far-reaching consequences can happen in a heartbeat.

(Although “business continuity” often refers to a practice’s ability to return to normal operation following an event such as a fire or flood, a personal disaster might force you to walk away from your business.)

This fact begs the question: “How prepared are you for an unexpected event that could force you to sell – hastily, unwillingly and desperately – the business you have worked for years to build?”

What are those personal events? I call them the “Big Ds” – death, disability, divorce, distress and disagreement. Any one of these events can trigger an unexpected sale of your business.

Given the aging advisor population, the most common events of concern are death and disability. To minimize the impact of either, find another advisor with whom you can strike an agreement to take over your business.

In the event of disability, the arrangement may be temporary if you anticipate that you will be able to return to work someday. In the event of a permanent disability or death, your agreement effectively will be for the sale of your business.

Most such continuity arrangements are reciprocal – meaning that just as your continuity partner agrees to manage your business, you will agree to manage theirs should he or she die or become disabled.

If you are able to address these five issues appropriately in the coming 12 months, you will put your business on solid footing for 2018 – and what comes next in the years that follow.

George Hartman is CEO of Market Logics Inc. in Toronto. Send questions and comments regarding this column to George’s practice-management videos can be viewed on