The combined effect of the banking crisis, the RDR implementation and adviser charging is testing the cost and revenue patterns of many advice businesses. It is important to conduct an ongoing review of all aspects of the business from the productivity of its people through to the profitability of clients.
One of the greatest costs is the adviser team and the days of carrying unproductive advisers are over – it is legitimate for some new joiners and trainees but for experienced advisers, a minimum profitable contribution is essential.
This is not about automatically parting company with advisers who do not make the cut; it is about appropriate training and development and providing the best opportunity for advisers to do well – for themselves and the business.
As with all good staff development activities you should work with advisers to discuss where they are placed in the framework. (See chart below). Clearly, the positions on the right are those which mature advisers should move to. This is because they are either very good at client development, thereby needing back-up to look after those clients, or because they are excellent at ongoing client relations and retaining hard-won business which brings value to the firm over the long term. In many cases, there will be a natural progression in a clockwise direction starting in the bottom left quadrant and arriving in the bottom right. However, that is not always the case because people progress at different speeds and can also differ in their ability to acquire and retain clients.
The chart below summarises the generic options that apply in different cases. There is a mix of business support as well as personal development opportunities.
It is important not to make people into something they can never be. The “high flyer” will always be good at securing new clients and less interested in ongoing servicing, just as much as the “steady earner” will be excellent at long-term client relationships but poor at acquisition. Ideally, you should help people play to their strengths which, in many cases, will be complementary. That way, both the firm and the individuals benefit. Support the “high flyers” with well organised back-up as they go from one new opportunity to the next and recognise that “steady earners” will protect your recurring income and business value so convert them to a true servicing role.
The adviser types on the left are careers under development. Firms are often very good at providing support for new joiners but it is clear this should be tailored. It is also important that progress is reviewed frequently so difficult conversations for the “slow starters” that never speed up do not come as a surprise.
Nurturing talent, dealing with the successful and managing those who do not make the grade are essential skills and a structured framework will help to provide the objectivity which is essential in such a process.
David Shelton is the author of The Business of Advice book and website www.businessofadvice.co.uk