Why Advisors Need To Nail Practice Management Initiatives Before Going Independent

A few weeks ago, I recorded a video about the mindset shifts that you need to be prepared for when leaving your firm, if you’re leaving a PD to go completely independent or RIA, and we got a lotta good feedback on that video. Today I wanna talk about the practice management initiatives and activities that you absolutely need to make sure you plan for or get done before you leave your firm. And this is regardless of whether you’re leaving your firm to go to another BD or you know, be duly registered duly registered or completely go independent RIA.

I think we’ve done a disservice in the industry by telling advisors like once you go independent, you know all your problems are solved.

The reality is, is if you haven’t focused on or solve for some of these things I’m gonna talk about today. You’re gonna face the same challenges that you you’re facing. Some of the same challenges that you’re facing where you’re currently at, no matter where you go.

The first thing and arguably the most important is institutionalizing money management. It’s astounding to me, how many advisors I speak to who have gotten into the habit of reinventing the wheel. Every time a new client comes on board or a new account is open.

In many cases, I’m having conversations with advisors and they’re talking about wanting to hit that that one billion, you know, asset under management mark and we’re talking about, you know, roadblocks and the number one roadblock always is scale. What starts to happen at some point as you’re continuing to grow your business is your profit margin starts to compress. As you continue to just throw human capital at the problem right? Like we’ve, we feel like we’re at capacity. We’re going to hire another person to, you know, do paperwork and be on our ops team and manage relationships. The challenge isn’t a human capital issue. The challenge is that behind the scenes, you haven’t actually scaled the way you’re delivering the service to clients.

And so institutionalizing money management managing all of your money, all of your AUM to, you know, six or seven models that absolutely has to get done and it’s critical. If you don’t do that before you leave, know that that is going to be one of the first things you do when you do transition somewhere else, it’s gonna free up a tremendous amount of time on your team. And you’re probably gonna realize at some point that you’re overstaffed. Which is usually a learning that comes out of of advisers transitioning to a new firm.

The second thing is institutionalized marketing. This is, this is a little bit of a tough one because the catch-22 is that you can’t properly do this within the BD. So you have to leave in order to do this but you really should be thinking about it before you leave. And by the way, when I say BD, in many cases I’m talking about the, the insurance BD world, but in some cases it’s just BD broadly. Institutionalized marketing, in other words. We have to start being you have to start being more strategic about the way in which you disseminate messages out to your ideal prospects and the channels that you use to do that. In many cases, I see advisors or hear advisors say to me, you know, we’re not seeing a tremendous amount of ROI on our marketing efforts. And we talk about what the marketing efforts are. And they’re basically posting, you know ghost written articles that their BD has approved for advisors to use. And they’re posting some, you know, ghost written tweets you know, a couple of times a week.

What, so the reality of what happens when you’re independent and free from the broker dealer is that you have the ability to leverage marketing platforms HubSpot and MailChimp, and other platforms like Snappy Kraken. Platforms where you’re actually able to analyze the data, see how many people are opening and clicking on the messages that you send out. Seeing which messages hit the best, looking at data demographically to see, you know, the people who actually are tuning in or engaging with your content or your messaging but what’s similar about those people. And how can we then take that smaller subset and further tailor a message to them to get them to move across the decision-making pipeline.

This may seem a little bit overwhelming but just know that when you leave your firm and have access to everything that exists within the FinTech marketing landscape you’re gonna have tools and an infrastructure that’s going to do all of that analyzing and, you know content dissemination for you.

What I want folks to think about before they leave, is really one thing. Well, two things Number one. What is it that we know psychographically about our ideal prospects?

In other words, more than just knowing what their age range is and what their occupation is, what do we know about where they get their information from? Which social and digital channels they spend their time on? How they make decisions? Whether they’re pessimists or optimists? Et cetera, et cetera. So having this it’s a profile essentially of who your target consumer is and knowing exactly where the best place to post ads or messages is you ideally should have all of that information before you leave to go to another firm or go independent. It’ll make it easier for you to align with the service or platform that’s going to help you ultimately deliver on your marketing strategy. So my recommendation is before you make a move make sure that you fully understand your prospects.

And I always tell advisors to ask themselves, like if you’re posting a ghost written article on LinkedIn but the demographic of client that you work with, doesn’t spend time on LinkedIn or the occupation that they’re in. They’re not really, you know promoting themselves on LinkedIn. Why are you posting on LinkedIn? And so having the answers to those questions really important because when you leave and start working perhaps with an outsource marketing company they’re going to ask you those same questions. The third thing I’ll say is institutionalizing compensation and development for team members.

This is a topic I talk a lot about. Advisors tend to reinvent the wheel every time they wanna hire somebody, we know all these statistics. They tend to hire somebody after the need arises instead of before. And so having a strategic vision around the next three years what your team members compensation could and should look like over the next three years based on how you’ve been compensating them thus far.

In other words, I want you to think about the roles that exist on your team not the people. And think about what’s the logical evolution of their compensation? Most times advisors gets to the end of the year and they say to themselves, okay I’m going to pay this person a 5,000 dollar bonus. And there’s no thinking around why they’re paying them that or how they came to that number. And so starting to think about the natural evolution of that compensation structure, salary plus bonus and how it might grow over the next three years and how that person’s role might evolve to align with that compensation growth. Having that plan before you leave is critically important. In most cases, advisors leave where they’re at. They take their practice and their team. They go somewhere else to another firm or another, another BD or RIA. And they’re still facing the same human capital issues. So to start to have those conversations with yourself and or a coach before you leave because likely what’s going to happen when you go out on your own. Is you’re gonna hire an outsource CFO. And they’re going to ask you those same questions.

Okay folks, I hope that was helpful. We are gonna be putting a lot more content out like this over the next couple of months. Do you have any questions or thoughts? Feel free to reach out otherwise I’ll see you. Actually we’ll be skipping next week. I hope everybody has a wonderful holiday season and we will see you in the new year. Take care.

Related: How Advisors Can Turn Conversations Into Clients