Advisers struggle to maintain service amid cutbacks

Financial advisers who have cut back on the work hours of their support staff to economize are reordering their service priorities to make sure clients aren't neglected.

Financial advisers who have cut back on the work hours of their support staff to economize are reordering their service priorities to make sure clients aren’t neglected.

At the top of to-do lists are returning client phone calls and e-mails, while marketing and non-client-related correspondence have fallen to the bottom, said practice-management experts who are urging advisers to think through their processes and rewrite job descriptions before reordering work flow.

“We’re telling advisers to clearly define every step in the service process and make sure it’s all covered and that the reduction in staff [hours] isn’t affecting that process,” said Sal Zambito, a San Diego-based senior vice president of business consulting for LPL Financial of Boston.

“We look at every step and see if it can be delegated, automated or eliminated. We’ve seen it work,” Mr. Zambito said.

“When an adviser gets to a point where they need to eliminate hours, we work with them to make sure their business is set up properly, so it won’t have an impact on service.”

NEGATIVE EFFECT

Mr. Zambito warns advisers not to proceed with any change that would adversely affect client service.

“The last thing you want is phones not answered or a client’s concern not to be addressed,” he said.

Service delivery is becoming an issue at the roughly 15% of advisory firms that have reduced the hours worked by staff members, said Stephanie Bogan, president of Redlands, Calif.-based Quantuvis Consulting Inc.

Compounding the problem is the non- standardization of service delivery at most advisory firms, said Scott Slater, a managing director of business consulting at The Charles Schwab Corp. of San Francisco.

For instance, advisers frequently have no consistent process to prepare for annual client reviews, making the process more time-consuming, he said.

“Advisers need to identify their three or four major time-consuming tasks, one of which, we know, is preparing for the annual client meeting,” Mr. Slater said. “Then they need to walk through the process and analyze it; next, determine the best work flow and determine if there are [any] steps that can be cut that aren’t adding value. Most firms haven’t done that.”

Recently, Rick Kahler, an adviser and owner of The Kahler Financial Group in Rapid City, S.D., cut the workweek of two of the firm’s four full-time employees to about 25 hours. The cutbacks, made after reviewing the firm’s processes, have strained operations.

“We all know the workload hasn’t gone down, so it’s meant that I’ve worked more. I’m doing more in the trenches,” Mr. Kahler said.

For example, he now takes his own notes at meetings, updates his website and creates his own podcasts — tasks he used to delegate. In addition, the firm’s operations manager now puts in 60-hour weeks.

Despite the strain, Mr. Kahler doesn’t think the quality of customer service at the firm, which manages $100 million in assets, has suffered.

At Roseland, N.J.-based Access Wealth Planning LLC, which manages $175 million in assets, the firm’s seven staff members will be working four days a week until yearend, said owner Bruce Milove.

The decision to cut hours was made to avoid layoffs, and while he doesn’t think that customer service standards have slipped, he conceded that the reductions have made the office less efficient.

For instance, instead of letting an assistant handle client e-mails and letters, Mr. Milove is handling correspondence himself.

“In this market, where clients are hurting, you have to provide stronger service to maintain clients,” he said. “You never want to give them an excuse to leave you.”

When making cuts, advisers must be careful that no critical job is forgotten, said Joni Youngwirth, managing principal of practice management at Commonwealth Financial Network in Waltham, Mass.

“Certain positions, such as marketing, are less critical to day-to-day operations,” she said. “Some advisers have taken marketing tasks and divided them among the staff.”

Matt Oechsli, president of the Oechsli Institute in Greensboro, N.C., urges advisers to take a cautious approach to layoffs and reducing employee work hours.

“The financial services industry as a whole is not well-run,” he said. “When things are going well, they spend money with arrogant disdain, and when things don’t go as well, they’re finger-pointing about who is to blame, and cut back without any strategy.”

Ironically, cutbacks may not provide the savings advisers anticipate, said Brian Hamburger, founder and managing partner of MarketCounsel LLC in Englewood, N.J., which works with 800 advisory firms.

He said that a 10% reduction in staff hours doesn’t translate into 10% savings, because employee benefits still must be paid, resulting in net savings of only about 3%, he said.

It would be better for advisers to lay off a few workers rather than ask all employees to work fewer hours, Mr. Hamburger said.

“Firms often make this mistake, because they don’t want to make difficult decisions,” he said.

E-mail Lisa Shidler at [email protected].