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How Financial Advisors Can Learn from the Experiences of Other Industry Leaders

Jeremi Karnell
Feb 2, 2017

Lean and mean manufacturing methods have been in vogue for some time now, with just-in-time delivery of raw materials, zero inventory goals and reliance on smart supply chain processes. But manufacturing is not the only industry that has changed and evolved over the years. From healthcare to software development, from retail to marketing, businesses everywhere are adopting new ways of doing business and striving for maximum efficiency.

Financial Advisors can learn some valuable lessons from the experience of those other industries, and many forward-looking practice owners are already looking for ways to adapt those experiences to their own firms. Learning lessons from other industries has long been the hallmark of smart growth and adaptation, and there are plenty of lessons to be learned.

One of the main focuses of the lean and mean manufacturing method is its relentless pursuit of inefficiency and waste. When this type of manufacturing first hit the scene, no department was immune to close scrutiny, and it was not unusual for hundreds or even thousands of inefficiencies to be uncovered.

Some of these inefficiencies were small and seemingly inconsequential, while others were large and glaringly obvious from a distance. Even those small inefficiencies added up over time, thus the dedication to stamp them out once and for all.

If you have not done the same kind of efficiency analysis on your own practice, you could be missing out on a golden opportunity. You do not need to hire an efficiency expert or follow your brokers around with clipboards to find waste and inefficiency - knowing what to look for is a good first step.

Once you know what to look for, you can look for ways to optimize your practice and make it as efficient as possible. Services like Truelytics make it easy for practice owners to identify waste, adopt best practices and look for ways to make the most of what they already have. 

With that in mind, let's take a look at some of the areas of waste and inefficiency that could be plaguing your practice. We will take a look at how other industries have responded, and how you can take the lessons they have learned and apply them to your own business model.

Simple bookkeeping and data entry errors can introduce waste and inefficiency and put the future of your business at risk. With regulations so strict and penalties so severe, even an unintentional error could have dire consequences for your practice.

Other industries have reacted to this risk by using software designed specifically for their businesses. Instead of general use products like Microsoft Excel, manufacturers are increasingly relying on standalone and custom-built platforms for recordkeeping, data entry, and other back-office operations.

Financial industry professionals can do the same, adapting to different software packages that warn data entry operators when potential errors are detected. This simple step can sharply reduce inefficiency while making compliance easier.

Producing too much paperwork and relying too heavily on that paperwork is another danger for financial industry professionals, and another source of waste and inefficiency. From healthcare to retail to manufacturing, business leaders have reacted to the flood of paperwork with a variety of customer-facing portals and private networks. They have set up specialized VPN access for traveling employees and created databases customers can use to check their order status, make changes to future orders and learn about new products and services. 

Financial industry professionals can draw on those experiences and adapt them to their own practices. Whether you are working as an independent financial advisor or the owner of a wealth management practice, you can use specialized customer communication portals like WealthBox to keep your clients up to date. You can also give your clients access to portfolio management tools like eMoney Advisor, providing a self-service solution to problems that once would have required the intervention of a broker.

Human resources management is another area that used to create tons of waste and inefficiency. From scattershot hiring processes that failed to match highly qualified candidates with available positions to a lack of knowledge of current staff members and their capabilities, problems in HR contributed enormously to waste and inefficiency. 

That may be why companies across the board have been turning to technological tools to analyze their current workforces and find untapped sources of talent. These technological databases can review stacks of resumes and job applications, identify key sources of knowledge and talent and provide management with the information they need.

The management team can then use that information to identify promotion opportunities. Instead of conducting a time-consuming and expensive recruitment campaign, managers can simply scan the resumes of existing employees to find the people they need.

The average financial industry professional can learn from these lessons and adapt them, albeit on a much smaller scale. As the owner of a wealth management or financial advisory practice, you probably do not have hundreds of employees to keep track of. You may have dozens, however, and the same software solutions can help you identify their unused talents and take advantage of their untapped abilities. 

The handling of back-office operations is yet another potential source of waste and inefficiency. From accounting procedures to the ordering of office supplies, how the back office is handled can make a huge difference in the efficiency, and the profitability, of the average financial practice.

Whether you are working as an independent financial advisor or running a large wealth management firm, you can learn a lot from the lessons of your peers in other industries. The healthcare industry, in particular, has instituted a concerted effort to reduce paperwork and increase reliance on electronic medical records. While this effort is still underway and results are mixed so far, there is still a lot to learn from the experience thus far.

The owners of financial planning and wealth management practices can start to apply their lessons in simple ways, like reducing the numbers of types of office supplies being used. This may not seem like a big thing, but ordering office supplies takes time, and buying them takes money. Creating a standard order can increase efficiency while reducing costs.

The owners of financial practices can also address a lack of storage space, something that can create chaos in any office. Something as simple as a new bookcase or filing cabinet can solve those storage dilemmas and make the office more efficient.

From changes in day-to-day processes to reductions in paperwork and elimination of wasted effort, there are plenty of things financial industry professionals can do to increase the efficiency of their operations and ferret out the waste that has been costing them time and money. Learning from the experiences of industry leaders from healthcare, manufacturing, software development and others is a good place to start since many of the most valuable lessons are applicable across the board.

If you liked this article, check out Waste and Inefficiency in the Financial Planning Industry.

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