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It's Time for Your Practice Review

Doing a simple decision-model exercise could put you on the path to success.

By Bob Cogan, CLU, ChFC

Clients usually don’t want to do business during the holidays, so December is a great time for a review—your own. If you are like most financial advisors, you have spent a great deal of time this year reviewing client goals and portfolios and little time reviewing your own practice and goals. Don’t wait until January to set your goals for 2003. The time to start is now.

Begin by dusting off this past year’s goals. Sure, we all know that this year didn’t go according to plan. The market was terrible, and all the accounting and analyst scandals hurt. However, it is still a good idea to review your goals and accomplishments.

Here are some questions to help you review last year and plan for the next. It’s best to try to answer these questions when you have a solid 60 minutes or more of uninterrupted time to think and write. Your thoughts and actions around these questions could have a tremendous influence on your future profitability.

How has my business changed this year? What effects did this have on my profits? How did it affect my ability to serve my best clients?

Review the changes you have made this year in the products and services you offer. This last month of the year is a great time to contact your best clients personally and express your appreciation for the relationship. Ask how they feel about your contribution to their financial futures and what you can do to assist them next year.

The No. 1 reason clients leave us is not investment performance. It’s lack of contact. In today’s environment, this issue is magnified. And while clients generally appreciate cards and gifts, they are no substitute for phone calls and visits. I know this takes time, but at year-end, you may have the time, so use it wisely.

What percentage of my income is coming from the various aspects of my practice (investments, life, health)? What percentage of my time and resources am I committing to each of these areas?

The cost of doing business is going up, so you must be diligent in how you allocate your resources in each area you pursue. Evaluate the return you are getting—financially and in client good will—on the resources invested.

Who were my best clients this year? What characteristics did they have in common? Conversely, who caused me the most problems?

Take time to analyze the characteristics of your best clients. Some things to consider are the services they used over the last year, products they needed, career similarities (e.g. business owners, professionals, etc.) and interests. You will usually find some similarities, and these are the key to establishing a plan to get more clients just like them.

In addition, December is the month to commit to ridding yourself of problem clients, however you define them. I guarantee that no matter how much you earn from those clients, your life will be better without them. Most of us do not realize the amount of time and energy we spend on problem clients. Just take 10 percent of that energy and put it into your best clients or into prospecting, and the financial and psychic rewards will be great.

What changes have I resisted?

Change is always difficult, and we all resist it. But change is inevitable, and your ability to anticipate and respond is critical for success. You can view the changes you face as opportunities. The key is finding the opportunities that will have a positive impact on your business. Here’s an exercise to help you.

List the top five opportunities you have recently rejected. These opportunities (or changes) might be about technology, marketing, product offerings or office operations. Write each opportunity on the top of a separate piece of paper, and divide each page in thirds with vertical lines. On the left side, note what you perceive as the benefits of this opportunity. Key opportunities generally have multiple benefits to you and your clients. In the next column, list the reasons why you chose not to pursue this particular opportunity. In the third column, note the actions you could take today to realize the benefits listed in the first column.

This exercise, a variation of Ben Franklin’s decision model, will assist you in confronting and analyzing the key opportunities you face. Many advisors have discovered that this exercise allows them to act on at least one opportunity that they previously dismissed. Remember that the issue of cost exists only if there is not a reasonable return on your investment.

Addressing these four questions is not easy. It will take time and considerable thought. However, if you focus on them and are honest with yourself, you will have set the cornerstone for a great new year cand beyond.

Bob Cogan, CLU, ChFC, is president of Capital Analysts Inc, a national broker-dealer based in Radnor, Pa., and chairman emeritus of the Financial Planning Association’s Broker-Dealer Advisory Council. You may reach him at

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