Building improvement into business plans
During the total-quality-management movement of the 1980s, Edward Deming, the father of continuous improvement, articulated the value of having processes that can be measured and that yield specific, predictable results.
During the total-quality-management movement of the 1980s, Edward Deming, the father of continuous improvement, articulated the value of having processes that can be measured and that yield specific, predictable results.
The high-powered manufacturing organizations for which he consulted benefited greatly from his rigorous continuous-improvement methodology. Relying heavily on statistics, Mr. Deming’s quality-management models and redesign of processes led to large reductions in defects and improved productivity.
That was great for manufacturing, but our industry, the financial services sector, is quite different. After all, we deal with unpredictable humans.
Still, few of us would argue that there isn’t vast room for improvement in our processes. Financial advisers appreciate the value of a well-run business, even if they don’t always get around to making that a reality in their own organizations.
Let’s look at a hypothetical but typical example.
Tim, an adviser, understands and appreciates the value of a tight ship and prides himself on being both an excellent financial planner and a competent businessman.
He took an entire quarter to focus on getting his practice shipshape, including creating job descriptions; reviewing staff performance; reviewing his employee handbook; documenting the five procedures used most frequently in his practice; categorizing clients; defining service components for each category; programming automated processes within his contact management system; organizing marketing efforts/activities on an annual event calendar; running weekly staff meetings to keep staff informed and motivated; writing a business plan — complete with vision, mission, strategy and goals; and creating a budget for next year.
Tim was on top of the world, thinking that he had created the organized practice of which he had always dreamed. But what happens when something goes wrong or when something changes?
In a small business, change is constant, and even a small change can have a big effect.
Looking again at Tim’s situation, in the first quarter of the following year: His right-hand staff person earned a Series 7 securities license and assumed more responsibility; a new adviser joined the firm; it be-came apparent that the firm’s client management software didn’t meet the organization’s needs; the firm’s broker-dealer offered a discount on new, improved financial planning software; and Tim attended a conference and became excited about changing the business into a true wealth management firm.
These changes affected staffing and capabilities, and will affect almost all the work that he performs to get his organization in top condition. In small offices where few individuals wear many hats, a logical approach is to systematize continuous improvement.
Here is an example of how to build in a systematic approach that can adapt to change.
Instead of focusing on all systems simultaneously, consider focusing improvement in specific areas or at regular intervals.
1. In the first quarter of each year, improve your human resources systems. Review your performance appraisal forms, update job descriptions and reread your employee handbook.
2. In the second quarter, review office procedures. Rethink client categorization; review ideal client profiles; re-establish minimums if they are appropriate; read your written-procedures manual, and if you don’t have one, start writing the procedures for two or three key processes.
3. In the third quarter, review your financial planning software. Examine the process you use to create plans; define which clients receive written documents; define how long those client documents should be; and consider if there are standard versions of your plan for different categories of clients.
4. The fourth quarter is an excellent time to step back. Assess whether you have a business planning process that you can apply annually; if you don’t, establish one. Evaluate your budgeting process, ensure that your continuity agreement, business insurance and disaster recovery plans are up-to-date. If you don’t have them, get to work writing them.
Standard processes are key to an efficient operation. If you create and implement these processes, but don’t review and update them, your efforts toward efficiency likely will be out-of-date within a few years.
Joni Youngwirth is the managing principal of practice management at Commonwealth Financial Network in Waltham, Mass. She can be reached at [email protected].
For archived columns, go to investmentnews.com/practicemanagement.
Learn more about reprints and licensing for this article.
