Waste and inefficiency are real profit killers, and real dangers, for the owners of financial planning and wealth management firms. Many other industries, from automotive manufacturing to retail operations, have seen the dangers of waste and inefficiency up close. Some have improved the efficiency of their operations and survived, while others have resisted change and ultimately gone out of business.
Which side of the efficiency your financial planning or wealth management firm comes out on is entirely up to you. As the owner of a financial practice, you need to constantly seek out new and better ways to do business, identifying waste and inefficiency, rooting it out and improving the operation of your firm.
One of the biggest challenges of identifying waste and inefficiency is that these things can take so many different forms. You may not recognize waste and inefficiency at first glance, but on further inspection opportunities for improvement and increased efficiency will become apparent. Here are a few common areas of waste and inefficiency for financial planning firms, and some things individual practice owners can do to address them.
The overproduction of documents is a real danger in financial planning and wealth management practices, and it can be a real efficiency killer. Many back-office personnel are still making dozens of extra copies of reports, client agreements and other documents, keeping them on hand just in case. While that may seem like a good idea, it adds costs to the practice operation, drains resources from more important tasks and increases overhead. It is far better to produce those documents at need, rather than having them laying all over the office.
One reason back-office staff overproduce documents is because the computer system is so slow. If they have to wait five minutes for a single client agreement to print, they may keep a stack in reserve to avoid that waiting time.
In this case, the overproduction of documents is not a problem in itself - it is merely the symptom of a much larger issue. Putting off needed upgrades to the computer network may save money in the short term, but it will cost far more in wasted time and decreased efficiency. Putting the computers on a regular upgrade cycle and sticking to it can actually save the practice money.
Lack of security is a serious danger for financial planning and wealth management practices, and the risk goes far beyond mere efficiency. Failing to upgrade the security of the office computers could be devastating to your practice, and the sooner you get going the better.
Security and efficiency may not seem to be related, but in fact they are inextricably intertwined. Those security upgrades may take many forms, from training employees on safe email practices to installing software to protect the network and prevent unauthorized access.
As the owner of a successful financial planning practice, you like to think you can do everything yourself, but that is not necessarily the case. There are many times where reaching out for a helping hand can save you money, help you identify waste and improve the efficiency of your day-to-day operations.
Financial technology is a case in point. Unknown just a decade ago, FinTech has taken off in a big way, helping the owners of financial planning and wealth management practices optimize their operations with services like Truelytics, communicate more effectively with customers through services like WealthBox and manage their portfolios more efficiently using services like eMoney Advisor. There are many examples of how technology is changing the world of finance, and how the smart use of FinTech can improve efficiency, root out waste and boost profits.
A surprising number of financial planning and wealth management firms are still relying on antiquated software and failing to take advantage of new purpose-built solutions. Relying on software that was not designed with the financial industry in mind is a big danger, but it is also one of the easiest to avoid.
If your firm is still using Microsoft Excel to create reports and analyze data, you are not operating at peak efficiency. Transitioning from those outdated platforms to purpose-built software can reduce waiting time, improve speed and efficiency and provide your clients with far better service.
It may not seem that something as simple as the layout of the office would be important, but it can have a profound impact. If the workspace is not designed for peak efficiency, your employees may spend more time looking for the files they need than serving the needs of their clients.
Standardizing rules for storage and filing of documents can improve the efficiency of your practice operation and help you ferret out waste. Establishing a single filing area and redesigning the file structure for online document storage can also be a big help as well.
It is easy for the owners of financial planning and wealth management practices to fall into the excessive processing trap. The government regulations and compliance procedures firms have to deal with often mean multiple employees must work with the same set of documents, reducing efficiency and creating opportunities for waste.
There is not a lot practice owners can do about government regulations, and they must comply with all applicable rules. Those practice owners can, however, look for and eliminate any unnecessary over-processing.
From entering the same data in multiple databases to using different software packages on the same set of documents, there are countless examples of waste and inefficiency that serves no useful purpose. By reviewing the current back-office operations and looking for more efficient ways to do things, practice owners can eliminate waste and ultimately boost the profitability of their firms.
No matter how efficiently you think your business is running, there is always room for improvement. Continuing to review your operations and relentlessly ferreting out waste can help your thriving practice be even more successful, and now is the perfect time to get started.
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