Four Life Stages of an Advice Business

Four Life Stages of an Advice Business

When I was much younger, I used to sail boats up in Gosford. They were called Sabots, small, snub-nosed craft which at first I sailed with another kid, then later on my own.

One of the first lessons I learned in sailing was around equipment. You see, these little boats ended more complicated than I realized.

Certain types of equipment were right for heavy weather, other types for light winds and a whole bunch in between.

If I’m honest I was a bit of a one-trick pony when it came to sailing, and it wasn’t a good trick. I soon gave up.

It wasn’t later the right equipment lesson dawned on me fully.

Businesses are the same. Different challenges demand different growth strategies. The issues comes when the owners of those businesses are like twelve-year-old me in the Sabot, wondering why what worked before doesn’t anymore.

I’ve found that the key to unlocking this problem – the wind selection of growing your business – lies in knowing what stage at.

The diagram below should explain it all, but let me go through it.

The life of an advice business generally goes through four stages. This isn’t exclusive to advice firms; it’s just that I’m talking about the model in terms of advisors.

The bottom level is startup.


These are the initial thralls of a new venture.

Often this is about survival. It may be tough to get clients, hard to build momentum and it’s usually about one or two people with a vision to create something.

At times it might seem like the business is never going to kick start but here’s the thing; consistent efforts directed in the right way means this kind of business kind of kicks in earlier than most people realize, though unfortunately sometimes later then many people’s persistence allows.

Where should the focus be in a startup?

It’s mostly about revenue. That’s what matters. Get enough revenue in to pay the bills. Like air when you’re exercising hard, you just need to get enough in so you can catch breath and move onto the second phase.

The second phase is stability.


This is where your business gets its’ head above water. There’s still not huge amounts of profit, but there’s enough that the pressure’s off and, in most cases, the clarity of thinking starts to develop once the financial pressure eases.

Here’s the important thing; at this phase the focus (if you want to progress up the pyramid) has to stop being about just revenue. It’s got to become about the profit.

That means the right kind of clients. The kind of clients who are going to buy into your offer, agree to engage the way you designed them to, and pay a fee at least30 percent higher than your cost to deliver.

If you get this right, this is the point at which you start looking back at some of the pricing decisions you made at the earlier phase and realizing you may have undercharged.

A word of warning here, although many mature businesses no longer consider themselves to be startups, the reality is, often they still behave as if they’re starting out. It’s still about the revenue.

The bottom line is this; if you continue to focus just on revenue and nothing more, it’s inevitable you’ll yourself with a capacity issue. I see this so often, so it’s a point worth making.

If you manage to get past stability, you’re at the next phase. This is what I call leading.


Leading is where you have stepped above most other advice firms. In many ways you’ve become an actual business. You’ve got systems & processes, a team underneath you and your focus has changed.

If you’re an advisor in this kind of business, you’re focused has likely become time. More specifically, maximizing the amount of time you have to coach your team, work on the business or do the stuff you love.

That means removing the dependence on you, being even more selective about the clients you want to take on board, hiring the right people and spending time building the infrastructure.

Advisers who nail this usually shift into a different mindset. It’s no longer just about the right kind of client. It’s about the personal time required to manage this situation?

Again, failing to make this switch, even if you’re still taking on board profitable clients, you’re going to get dragged back.

The final phase is rare, hallowed turf when it comes to advice firms, because so few get there. This is what I call leveraged.


What’s leveraged? Well it’s the point at which your business has become almost like a franchise, by another name.

Your systems and processes are so well developed that you could pick them up, drop them into another business (whether it’s acquired or started from scratch) and repeat the success you previously had with minor, maybe even no tweaks.

It’s the point at which, maybe you as an advisor are no longer actively involved in training staff. In actual fact, the quality of your staff at below a certain level is less important than the quality of their training.

This is the end game, because if you can create this you’ve got a business that represents the future of advice.

That’s it! If you know where you are, it should make it easier to work out what you should be doing.

If you don’t know where you are, then it’s entirely possible you could unknowingly be the barrier to your business making the step up.

Stewart Bell
Development
Twitter Email

Stewart Bell is founder and business coach at Audere Coaching & Consulting, a practice management firm specialising in business improvement and innovation for professional ... Click for full bio

Solving Your Biggest Client Issue May Be at Your Fingertips

Solving Your Biggest Client Issue May Be at Your Fingertips

Written by: Shileen Weber

When the American Funds’ Capital Group  asked 400 advisors last year to name the biggest issues they face in their businesses, it wasn’t the DOL, market uncertainty or the economy that sat in the center of the idea cloud of answers.

It was client issues.

At a time when regulatory concerns and market turbulence would seem to be at all-time highs, the advisors who answered the survey were most concerned about servicing their clients as well as ways to find new ones and grow their businesses.

It’s one of the ironies of the business, that the things most people find so hard to manage – creating financial plans, managing assets and staying ahead of events – are what advisors find to be the easiest parts of the business. Marketing - the business of selling themselves – can be the area advisors find the hardest elements to master.

In this age of instant communication, it can be even more intimidating to market your practice, especially to younger clients for whom many traditional methods like newsletters, postcards and phone calls don’t work anymore. For them, email is the preferred way to get information, and, if it’s important, they are more likely to respond to texts, not phone calls.

But, it doesn’t have to be that hard. The digital age gives you access to ideas and content of all kinds you can use to touch your clients in a way that positions you as a valuable resource. The key is to keep it simple, stick to some basics and create consistent outreach that clients and potential clients are interested in and will appreciate you sharing with them.

Here is a common-sense approach you can take that will not require you to hire an expensive agency or take valuable time away from managing your clients’ assets and running your business.

Content is King


Create a content calendar for the year: Think about reasons to touch a client 13 times during the year – that can be once a month and on their birthday. (The common rule of sales is that it takes at least 7-13 touches to make a connection.) The number is limited and keeps you from inundating the clients who likely already feel inundated with content. You can take the seasonal approach – tax planning in the fall, January for account review content, college financing in the spring – and supplement it with topical events during the year. Creating a calendar will help you stick to a plan. Here’s one resource for a content calendar.

Review what content is already available to you:  Basically, this means finding the resources you already have and determining what pieces will be most valuable to your clients. Start first by checking out content your broker-dealer already generates that you can personalize. Many firms have economists who write regularly about the market. That’s content you can pass along to keep clients up-to-date they would not have access to anywhere else. In addition to your broker-dealer, mutual funds, your clearing firm, and money managers are all excellent sources of informative and even analytical content.

Personalize the content you use: Add your name, the client’s name or some way to avoid making it feel like canned content that you are using just to check the outreach box. See what capabilities your email program may have to help you.

Related: What's an Investor to Do When History Doesn't Repeat Itself?

The birthday strategy: One advisor used clients’ birthdays in a new way. Instead of the card or lunch date, the advisor asked the client’s spouse for a list of friends he could invite to a birthday lunch and made it a memorable event that was also a soft approach to getting referrals.

Become a curator of good content: What your review will show you is that you don’t have to generate the content yourself. You can point clients to pieces you find insightful. You are likely already doing this every day just to keep yourself informed. The next step is to compile it and send out the very best pieces to your clients, again, with a note with your own thoughts about why you found it valuable.

Find out what is working and do more of it: Use your client interactions, in-person and online, to find out what types of content clients liked and any they didn’t. You can use tracking on your emails to see how many were opened as a measurement tool, but the personal interactions tend to provide more insight than raw data.

Be disciplined about your execution: Get help from an office assistant or schedule the time each month to do the content development and outreach. As any good strategy, if you make it a habit, it won’t seem so hard.

Most importantly, be yourself and be personal: You may want to regularly get personal by talking about your family and hobbies. The ultimate is if you can provide content that is personal to your clients, not just about their investments – they get that from their statements, apps and online portals. Think alma maters, hobbies, children and parents.

Of course, as a disclaimer, you have to make sure all content and communications are complying with regulations and the rules of your own broker-dealer.

The process of creating a plan will get you thinking about your clients in a new way. That exercise alone can re-energize your business and get you seeing marketing opportunities in places you may never have seen them before.

Shileen Weber is Senior Vice President of Marketing and Communications at GWG Holdings. She was previously Director of Online Strategy and Client Experience at RBC Wealth Management, where they placed first in two JD Power and Associates U.S. Full Service Investor Satisfaction Study (2011 and 2013).
GWG Holdings, Inc.
Investing in Life
Twitter Email

GWG Holdings, Inc. (Nasdaq:GWGH) the parent company of GWG Life, is a financial services company committed to transforming the life insurance industry through disruptive and i ... Click for full bio