The pace of change has increased over the past few years, prompted particularly by the RDR and rising competition. Owners have been forced to scrutinise their businesses and, in some cases, re-organise and change how they work in order to make a profit and meet regulatory requirements.
Is there an optimum size of business that can maximise productivity to achieve the streamlining needed? Clearly there is no single answer, as the advice market is populated by a wide variety of firms in terms of scale, specialisation and structure. The trend is towards consolidation and start-ups tend to be based around groups of advisers as opposed to one-person operations.
So where does the rugby ball firm fit into this? It is true this concept is more prevalent in a particular part of the market but the principles can be applied to all firms.
The rugby ball firm is designed to maximise the productivity of the advisers, with the various jobs within the business set up to support that single objective. The diagram below summarises the concept.
The success of this model depends upon two key factors:
- The effectiveness of IT in supporting the advice and investment process and, importantly, the management of routine tasks.
- The job content of the technical support team.
The technical team and its operation are critical. The team must undertake the typical paraplanning role, providing analysis and report preparation for the advisers. It must also be responsible for the compliance processes that form part of this activity and, finally, undertake some of the client servicing activities. This makes the role highly productive in three key areas: adviser support, client management and compliance.
The word “team” is essential because all of this must be undertaken consistently, which requires the advisers and administrators to adopt a similar streamlined approached. This combination of skills is not easy to find but there are many people entering the advice market through the professional development route that are very technical and have the range of skills necessary to undertake this role. In addition, these roles will be easier to recruit than advisers, given their cost and scarcity, and carry less risk.
The efficient use of back office software and other applications that save time, provide audit trails and systematise the business is also critical. This must deal with as many routine tasks as possible and provide the backbone for the key business processes. This economises on administrative jobs and supports their productivity, meaning all the jobs throughout the business are contributors to maximising the amount of time advisers spend with clients and on business development.
So how can principals achieve this apparent utopia? The starting point is to recognise that most businesses improve by evolving how they operate as opposed to overnight transformation. Adopting the principles that support the rugby ball model can set direction.
Review the job descriptions of the advisers, technical team and administrators. The adviser job description must be highly focused on clients and business development – and little else. This means the technical team will pick up several tasks advisers were undertaking that reduced their client time. They must major upon the areas already mentioned: adviser support, client management and compliance. Better service delivery supported by this team will lead to more business. Finally, re-write the administration roles so they directly support the technical team. That will give you an inter-linked set of jobs with adviser productivity as their focal point.
Reviewing the job roles is only the start, as this is likely to open up issues around processes and the need for consistency within and between the three teams of people. This structure is typically found in businesses that have a relatively small number of high value clients who are well serviced. Where the volume of client contact is greater the need for administrators can increase, which often necessitates a careful review of the client bank and how the different groups are serviced.
The outcome of moving towards the rugby ball model is increased productivity, more interesting jobs, enhanced client service and a more profitable business. Start with the job roles, deal with the processes and make sure you have a clear definition of client proposition and service to guide exactly what people do and how effectively they do it.
David Shelton is a consultant at Stoke Bishop Associates