By Lynn Vincent

One great thing about being an insurance and financial advisor is that you can do business almost anywhere you go—from an NFL tailgate party to a rooftop view-deck overlooking the Ohio River. But to be able to sell effectively from such colorful platforms, you have to get the nonselling side of your practice—such as personnel, technology and customer service—running smoothly. That’s why we asked seven top financial advisors (with a collective 150 years of experience) to share their best ideas for practice management.

Is your net working?
Carlo Marano and Gerry Mirra work hard to keep their net working—even if it means lugging a 50-pound ice chest across that treacherous tundra known as the Giants Stadium parking lot. Back in September, Mirra and Marano, who are business partners and financial advisors with Tri-State Financial, the Nationwide Provident affiliate in Tarrytown, N.Y., threw a tailgate party at an NFL clash between the New York Jets and the Kansas City Chiefs. But despite steaks so huge they might have been carved from dinosaurs, and plenty of ice-cold beer to wash them down, the party was all about business.

Example: One tailgate guest was the COO for a bond-trading company, a Mirra-Marano 401(k) client. The COO invited to the party an information technology (IT) vendor he worked with who he felt could help Mirra and Marano with some telephone-system issues. The IT guy, as it happened, needed a life and medical plan for his firm’s employees. Meanwhile, existing Mirra-Marano commercial clients struggled constantly with IT problems—which meant potential new business for the IT guy.

The Jets lost the game, but the Mirra-Marano networked like Montana to Rice.

Keeping top talent is key to managing a successful practice.

Though they now are affiliated with Tri-State and have access to a wide range of in-house expertise, Marano and Mirra ran their own small shop for years. That’s where they learned that networking isn’t just about sales; it’s also a practice management issue.

“To keep from generating a bill every time we had a technical question, we had to put together a very strong support staff of professionals with different areas of expertise,” Mirra said. “For example, we do a lot of pension work and would often need to call an attorney with expertise in that area. We would find people we thought were good, forge relationships with them and get to know them over the years.”

The two are still at it. “We have lunch with somebody virtually every day of the week,” said Marano. “About a third of the time, it’s with attorneys or CPAs. We refer clients back and forth and there’s always a question or two involving a client’s case. We buy tickets to ballgames, go golfing, and know the New York restaurant route pretty well. It’s how we maintain relationships with what we call our centers of influence.” Shop models In 1998, Greg Gagne improved his method of maintaining client relationships: He stopped making house calls. Forsaking the traditional approach through which advisors visit clients, particularly prospects, in their homes, Gagne, president of Exeter, Mass.-based Affinity Investment Group, set up satellite offices throughout his geographical target market.

“I used to spend so much time driving from appointment to appointment,” he said. “I’d have to schedule in 40 to 45 minutes between meetings just to try to get to the next one.”

Solution: Gagne set up relationships with five executive suites, three in New Hampshire and two in Massachusetts. The offices are spread throughout a geographic rectangle outside which he rarely roams, unless he’s serving a dual-residence client, such as a snowbird with a winter home in Florida. Gagne’s satellite system had enabled him to slash downtime spent consulting maps, clarifying directions, and driving all over New England. Now he groups appointments at whichever satellite office he plans to operate in for that day. The result: “Now I can run appointments hour on the hour at my convenience.” Gagne estimates he’s increased his availability for face-to-face meetings by 40 percent.

Networking isn’t just about sales; it’s also a practice management issue.

The strategy, he says, isn’t only about increased sales opportunities. It also increases his professionalism quotient, decreases interruptions and puts clients on his home turf. “When you’re in someone’s home, it can seem more informal and less professional. The meetings are also out of your control because you’re in their environment, instead of the other way around.”

Now that Gagne meets with clients in his comfort zone, he finds that they “mean business when they come in”—and there are no kids, pets or soap operas yammering in the background.

“Clients love it. When they come into a satellite office, I have all the resources at my fingertips, like a fax machine and computer services,” Gagne said. Also, there is a receptionist to greet clients, even serve them coffee if they want it. Some advisors might object to the expense of renting executive suite conference space, he said. But when Gagne factors in the loss of productivity and the cost of the time he spent driving, the fuel and the wear and tear on the vehicle, he said, “I can’t afford not to do it.”

Getting staff
Sid Friedman decided long ago that he can’t afford bad-apple new hires. That’s because one once stole $200,000 from him. “This young man worked with my controller. He had all the outside trappings—dressed nicely, came in early and stayed late. Just one problem, though: He stole 200 grand from me. Gambled it away in a casino in Atlantic City.”

Now Friedman doesn’t hire staff; he “steals” them, a method he says reduces staffing troubles, while adding a dash of poetic justice. “I go out and find the best backroom technician or the best receptionist or the best customer service specialist working somewhere else, and pay them more than they’re getting.” But that doesn’t mean, Friedman says, placing a help-wanted ad, using a personnel service, or even an online job service. You’ll only find yourself sloshing through a duck pond in search of an eagle.

“It’s not about seeing a lot of people, it’s about seeing a lot of the right people,” Friedman said. To do that, you must ask around. “Everyone I talk to, I ask, who do you know that does the particular job I’m looking to hire for? I talk to everyone I come in contact with and tell them what I’m looking for.”

Keeping staff
Once you find the best and the brightest, said Daniel Grealish, you should hold on to them. Grealish, president of Henderson Brothers, Inc., in Pittsburgh, believes keeping top talent is key to managing a successful practice. “We probably pay more attention to retention than to anything else.”

Henderson Brothers posts $12 million in annual revenue, with a book of business consisting of 10 percent personal lines, 25 percent benefits, including life and health, and the remainder middle-market commercial property and casualty lines. It’s a 90-person operation. Grealish keeps it that way with a topnotch benefits plan. The capstone: Full health insurance for workers and their families—with no employee contribution. In addition, Henderson Brothers offers its staff life insurance, long-term disability coverage, and a 401(k) plan with 2 percent to 4 percent in employer-matched contributions.

Another cost of doing business is spending money on technology.

Grealish also pays attention to creature comforts in the workplace. The firm built an in-house fitness center and also transformed the roof of its six-story Golden Triangle office building into a view deck that overlooks the confluence of the Allegheny and Monongahela rivers. “You can see rowers on the river, and in the background, skyscrapers in the city. It’s a nice place to have lunch or sit out the rush hour after work.”

Such environmental perks, along with the firm’s stellar benefits package, serve to keep employees loyal to his firm, Grealish said. “We keep whomever we want to keep. Our people do not look elsewhere for employment.”

Grealish hasn’t quantified the fiscal savings he has gained by keeping employee turnover low. For him, staff constancy shows up in client satisfaction. “At the end of the day, our customers are used to dealing with certain staff. Consistency and loyalty in staff breed consistency and loyalty in our customer base.”

Using staff
Patrick Leone, Ph.D., agrees that keeping great staff is critical. He also points out that deploying staff properly is essential to efficient practice management. Leone is director of practice development at Woodbury Financial Services, a Woodbury, Minn.-based subsidiary of Hartford. He notes that many advisors have a part-time assistant, or perhaps a couple of full-time, back-office staffers. But the responsibilities of such employees often are not clearly defined.

“They’re always saying something like, ‘You know, we ran that annual review program last year, but this year we got too busy,’ or ‘We did that educational seminar, but we never got around to doing it again.’ What’s really going on behind the scenes is that everyone is doing everything, but no one is really responsible for anything.”

Leone created for Woodbury advisors a practice development plan that recommends dividing office staff into two categories: “proactive” and “reactive.” The proactive staff interacts with clients on a sales basis, completing such tasks as sending out sales letters, running life insurance illustrations and calling clients to schedule meetings or education seminars. The reactive staff completes administrative tasks such as answering phones, sorting mail and handling customer service calls that require troubleshooting. In addition, an administrative employee meets daily for a half-hour with the producer to review email, voice mail, meeting and calendar issues. “This reduces the time the producer spends on administration, from four to five hours a day to a half-hour a day,” Leone said.

Customer reviews
The proactive/reactive staffing model also helps Woodbury reps fully integrate another part of Leone’s practice development plan: the annual customer review. Regular, systematized client follow-up, Leone said, is critical to effective practice management.

“I’ve talked to more than 400 advisors about this issue, and have found that what most reps mean when they say ‘customer review’ is simply reviewing the client’s policies,” Leone said. But Woodbury’s approach includes much more: assessing significant changes in the client’s financial situation (which includes helping the client “find” money to invest); checking the client’s progress toward big-picture goals; educating the client about key market or product changes; and summarizing concerns and agreeing on next steps.

While many advisors attempt some sort of annual review program, they often do so by sending out invitation letters and waiting for customers to call. Leone suggested a more proactive approach: Begin with a letter, but follow up with a phone call. At Woodbury, that added step increased client response rate from about 7 percent to as high as 100 percent, depending on how vested the client was with the firm.

Effective practice management demands that you get off the treadmill and take time to think.

Directing traffic
Annual customer reviews are one side of the practice management puzzle-piece that Chuck Kavitsky calls “traffic.” Traffic, he said, “is the process by which you are going to touch your potential customers and your customers on the books, how often and by what method.”

Traffic is thinking about yourself as a store: Who are you and why should people be interested in coming to your store? Kavitsky explained the concept by equating it to newspaper ads. Take the electronics chain Best Buy, for example. The chain doesn’t run ads just at Christmas, or when 50-inch plasma TVs go on sale, or when Bill Gates coughs up another rebate. Instead, Best Buy runs ads regularly, systematically, as do hundreds of other merchants who are competing to create interest, to create a constant stream of traffic for their stores.

Advisors, Kavitsky said, must abandon the advertising strategy that says, well, I haven’t had many inquiries in the last couple of weeks, so I’d better run an ad. Instead, they should “become committed to some form of advertising on a systematic and organized basis, with ads that have a regular look so that you can establish brand,” added Kavitsky. “Part of the cost of doing business is letting people know you’re in business.”

Tech check
Another cost of doing business is spending money on technology. And although that seems elementary, there are still plenty of advisors who aren’t making the grade.

Henderson Brothers’ Dan Grealish said his firm acquires one or two struggling agencies each year. Nearly every acquired agency has one thing in common: It has failed to keep pace with available technology upgrades that would have improved customer service and reduced labor costs.

Some agencies underused existing systems, Grealish said, tapping into only 20 percent or 30 percent of their system’s capacity. Others failed to upgrade their systems or were simply content to operate in the digital Dark Ages. One firm Henderson Brothers recently acquired used its computers only for bookkeeping. Claims processing was a completely manual affair: The customer called in the claim, and the agency rep recorded the information by hand. The agency then faxed the claim to the insurer, which faxed back an acknowledgment that ultimately landed in a paper file somewhere.

This type of inefficiency costs money. “Advisors will tell you that suppliers are not giving us additional commissions, that margins are shrinking, that they have to do more with less,” Grealish pointed out. “If you are working with an archaic system, your people are spending more time processing information than providing heroic service for your customers.”

Grealish’s advice: Just spend the money. Henderson Brothers did, even hiring a young Carnegie Mellon graduate to overhaul the firm’s technology infrastructure. The result was an in-progress, desktop system upgrade (including an insane amount of RAM), complete networking and software upgrades, and a slick, new Web presence. Also in the works: totally wireless access that will let producers dial into company systems even when they’re nowhere near a phone or cable jack.

It’s expensive, but, as Grealish said, “people are looking to us for our information. The more information we have at our fingertips, the more we can pass on to them, and the more valuable we become.”

Counting the cost
For Kavitsky, value is something that must be constantly measured in order to manage a practice effectively. His personal goal—and his goal for the advisors he coaches—is to devise ways of measuring the relative value of every single activity in which the company or its employees are engaged.

Example: How long do employees spend on the phone? What do they say? What is the result of their time on the phone? “If you cannot measure something you are spending money on, you probably shouldn’t spend money doing it,” Kavitsky said.

Sounds great, you may be thinking, but who has time for such minutiae? That’s a question Kavitsky hears often. He usually responds with questions of his own:

• How much money do you spend weekly to stay in business?
• How many telephone calls are coming into, and going out of, your office each week?
• How many calls result in sales?

“The answer to such questions is often ‘I don’t know,’” Kavitsky said. “Then the advisor gets disturbed and realizes he doesn’t have time not to have time. Sometimes life is very similar to being on a treadmill,” he added. “The thought is, if I stop to think, I’m going to land flat on my face. Effective practice management demands that you get off the treadmill, take time to think, and look carefully at the process of running a business.”

Lynn Vincent is a frequent contributor to Advisor Today.

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