Consider the following dilemma a reader brought to me recently:
“I want to build a full-blown financial advising business, but lack proper staffing. How can I manage the expense—especially in the early stages of building my practice?”
Solving this problem may seem difficult at first, but the following suggestions may help make the task less onerous. If you are just beginning to develop a financial advising practice, you probably lack experience, procedures, and what is most important, money. With all of these shortcomings, your solution is probably to “manage the business by yourself.” Even if you have money from an ongoing insurance and/or investment practice, you don’t have the experience or you don’t know the protocol required for a successful financial advising practice.
It is an almost ideal situation that these two elements are required because personal development provides you with the opportunity to learn the procedures firsthand. In the process of learning the procedures, you will personalize your practice so that your business stands apart from all others. While the process is standard operating procedure in financial advising, you should conduct business with your clients as personally as possible.
After you have worked through the analysis and development of a few clients’ plans, you will be better equipped to eventually train a staff member on how to do it “your way.” If you pay close attention to this personalization and record the most efficient and effective procedures, your practice will develop quickly and precisely.
Also, pay attention to the fundamentals although they tend to be tedious. These include developing insurance summaries, listing key items from all legal documents, verifying accuracy in brokerage, mutual funds and annuity confirmations, and understanding any special situations, i.e., support of parents, needs of indigent children, business agreements, or retirement plan options. If you do not fully understand these fundamentals, chances are you will not be able to teach your staff effectively.
When your cash flow enables you to hire an assistant, do it. The rule here is: When you can hire someone for less than your hourly wage, you’re ready to add overhead. The extra help will free up your valuable time to create more financial plans. That is the procedure, and progress snowballs from here.
Many years ago, when my practice was starting to blossom, my full-time assistant, Jeanne, was overwhelmed and inundated with work. She simply could not do any more and was actually struggling to complete the increasing workload. I overheard her talking with someone else’s assistant, who said to her, “What are you going to do? You are driving yourself nuts, you are making an unusual number of mistakes, you are taking work home, you can’t keep it up, and Haas keeps bringing in new clients.”
I presented my staffing problem to my Board of Advisors (see the article, titled “Make More Money-Form a Board of Advisors” in the October 2000 issue of Advisor Today).
Their advice was to hire another staff assistant to help Jeanne. But the cost was not something I wanted to think about. I prudently followed their advice and made more money because that person cost me less than my hourly wage. Actually, my average hourly income increased greatly and more quickly than I had expected.
Only one year later, I described the current level of activity and production to my Board and they again advised me to hire another employee. I was really scared this time. We needed more space, more equipment and additional payroll. Did I want to work that hard? Did I want that overhead?
Before long, my growing staff was doing more financial plan preparation as well as managing the office and scheduling appointments. Then I got a bit nervous. With my staff doing all the work, I began to doubt the importance of my involvement. Of course, that wasn’t the case, but I actually had these thoughts and silly concerns.
With proper staffing, your role as a boss is to bring in the business. I had the highest number of client contacts. At that point, I had three full-time, well-trained staff members, and I was free to create even more business. A good staff is the essence of a successful growing practice.
When to hire
So when do you hire staff? As soon as your cash flow will allow. Make sure the cost is less than your hourly income. Whom do you hire? That depends on the nature of your work and the workload itself. Filing, for example, is not making good use of an entrepreneur’s time. Also, have someone on your staff do the financial plan analysis. Of course, you must review, understand and validate this work. And assign the preliminary or “grunt” work to a lower-level staff member. At the beginning you may have to do this type of work, but you may not have to for long.
Hire a person with skills you need and can afford. Look for someone with the capacity to learn, a sound work ethic, as well as a drive to learn and the willingness to advance.
While becoming a boss may sound appealing, remember that it carries certain responsibilities. And do not ever forget this: If you do not make payroll, you are out of business!
Donald Ray Haas, CLU, ChFC, CFP, MSFS, has been an insurance agent and financial consultant for 45 years. Haas is the author of Financial Planning For The Baby Boomer Client (National Underwriter). He can be reached at 248-213-0101 or at Donaldhaas@aol.com.