I recently participated in a Facebook group discussion regarding the issue of staffing. Someone asked how many staff members are ideal for a with $100 million of Assets under management.
Having $200,000,000 and just one administrative person, I naturally suggest my model.
I could tell by the response some doubted my claim. Can you run a high touch practice with just one administrative person and one financial advisor?
If you’d like to visit my office sometime, you will see that indeed Trena Powell is my only staff person. And I give her every Friday afternoon off.
Recently I did hire another financial advisor to allow me time to create Advisor Architect, but Trena and I could easily put on another 50 clients by ourselves.
All of this is doable by using well defined systems instead of hiring more people. Some examples:
Portfolio Management: I learned long ago that markets are not predictable. Hence, I do not need to to place buy and sell trades all day long. It’s a waste of my time and my client’s money. A money manager who trades in anticipation of market response brings only negative value to his clients. Structured portfolios with automatic rebalancing gets the approval of Eugene Fama. If it’s good enough for Uncle Gene, then it’s good enough for me. This job is made even simpler by using a turn key asset manager to do the work for me.
Financial Planning: Upon a new client engagement, Trena enters all client data into four software programs. I use that data to complete a preliminary plan before I conduct a design meeting with my client.
Client Reviews: Formal reviews are conducted once a year either in person or through Zoom. Infusionsoft generates an email notification 60 days before the targeted review date. It includes a link where the client can schedule the request time. Upon the review, Trena simply updates the values of last year’s plan into the software. She prints off the updated plan along with a portfolio summary.
Client Education: Done virtually with pre-recorded webinars.
Referral Request: Automated through our Robo-Referral system.
Prospective Client Meetings: Conducted in 15 minutes 50% of the time using a detailed interview process. The remaining 50% take no more than one hour.
Bookkeeping: Processed automatically through Quickbooks link to our bank and credit card accounts.
Marketing: Follows a nine step automation process with much of it fulfilled through an outside fulfillment company.
Podcasting: Recorded and then forwarded to sound editor who also posts it on Podbean.
New Application Processing: Handled by my office manager. Same with client requests for money, beneficiary changes, and required minimum distributions.
We document all workflow procedures in a manual, reviewed together every six months.
I will confess Trena is well qualified. Perhaps over qualified. But that was a requirement when I hired her, and it explains how I can give her every Friday afternoon off. She’s also well paid, but not nearly as much as it would cost me to hire a second person, let a long a third.
Like waste, excessive staffing diminishes a practice’s value and over-taxes the owner both physically and emotionally. For those who desire a business that allows one to reach a point of independence, staffing must be set at the optimal level, one that clearly produces more revenue and freedom. Set too low, the owner is over consumed with tasks well below his purpose. Set too high and the owner is forced to work harder and harder for a diminishing return.
I’m hesitant to suggest a staffing model where a certain number of clients or revenue determines the proper number of employees. There exist far too many variables. But in almost every case I’ve ever studied, more than one is rarely efficient until full utizliation of systems has been obtained. I know my practice has not yet reached that point, and I somehow doubt it ever will.
I do know this much: For a firm with one producer, it’s not four. Start with one, and do everything in your power to keep it there.
For more ideas on how systems can improve your profitability, consider attending my upcoming Renegade Advisor Intensive. Click here to learn more.