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How Waste and Inefficiency Could Be Holding Your Practice Back and Costing You Money

Terry Mullen
Feb 20, 2017

If you work in a financial industry, you already know how hard running an advisory firm can be. From maintaining the confidence of your clients when the market takes a downturn to keeping up with the continuous flow of changing laws and regulations, you have a lot on your plate.

While all of these outside influences may seem overwhelming, the biggest danger to your practice may be far easier to overcome. These days more than ever, it has never been easier, or more important, to work smarter instead of harder. Like it or not, we live in an instant gratification world, and that makes efficiency and intelligently designed systems more important than ever.

The Value of Technology

The good news is that there are plenty of high-tech tools practice owners can use to identify inefficiencies and build more efficient businesses. Financial technology offers powerful tools, but many practice owners are not taking full advantage of them. Taking advantage of smart and easy-to-use practice optimization tools like Truelytics, compliance aids like RegEd, and customer communication portals like WealthBox can make financial planning and wealth management practices more efficient, and ultimately more profitable.

The owners of financial planning and wealth management practices can also learn a lot about efficiency by watching their fellow business owners. Financial practices are not the only businesses that have had to change and evolve over the years, and those in the financial industry can learn a lot from sectors as diverse as heavy manufacturing to healthcare. Adopting the best practices of leaders in those sectors can help financial professionals fine-tune their own businesses and increase efficiency.

Identifying Waste and Inefficiency

Identifying waste and eliminating redundancies in day-to-day operations is a good place to start, and a good way to work smarter instead of harder. Every financial planning and wealth management firm is a unique entity. No two firms will have the same areas of waste. Even so, there are common lessons to be learned, starting with the need for constant improvement.

No matter how lean and mean your operation may be, there is always room for it to get better. The manufacturing industry has recognized this for some time. Indeed, today's factory floor bears but a passing resemblance to the factories of just a decade ago. With greater reliance on computerization, robotics and a smaller, highly educated and better-paid workforce, modern factories are constantly chipping away at inefficiency and making manufacturing more profitable.

Financial advisory clients may not be ready to work with robotic brokers, but the owners of those practices can still learn a lot from changes in other industries. The areas of overhead may be different, but the lessons are much the same. Waste is a true profit killer, and identifying wasted time, effort and resources should be a constant focus of financial industry professionals.

Always Be Improving

Another lesson financial industry professionals can learn from manufacturing is a focus on continuous improvement and the creation of value. The continuous improvement method was pioneered by automaker Toyota, and it has already helped the iconic carmaker improve its operations. Instead of resting on past successes and a reputation for quality, the automaker continuously strives for improvements in its operation and the efficiency of its manufacturing processes.

The owners of financial advisory and wealth management firms would do well to embrace this focus on continuous improvement and efficiency of operations. At first glance, the world of manufacturing may not seem to have much in common with financial advisory, but the parallels are pronounced.

Focusing on Value Creation

The focus on value creation is at the heart of any successful continuous improvement program. When looking at day-to-day operations, the owner of a financial planning and wealth management firm should look closely at what the firm's employees do and assess its ultimate value to individual clients and the firm as a whole.

Practice owners do not have to embark on costly time studies to make their businesses more efficient. They know their practices better than anyone, and they have a much better handle on day-to-day operations and client services than anyone.

So many daily activities clearly enhance value for clients, from how prospective clients are shepherded through the sales pipeline, to how prospects are made aware of services, to how new clients are on-boarded, to how relationships with existing clients are sustained.

Identifying Waste

Identifying areas of value is an integral part of the continuous improvement process. But identifying areas of waste can be even more valuable, and an even better way to improve the efficiency of the operation.

Whether a business is an automobile manufacturer, a retail chain, an Internet company or a financial advisory firm, the benefit of cleaning up waste and increasing efficiency is much the same. The process of identifying and eliminating waste is also much the same, and it all begins with a hard look at current operations.

There are countless areas of waste, including inefficient operations, outdated paperwork, insufficient training and poor communication. Identifying these potential areas of waste and overcoming them is key to the continuous improvement process and the health and success of the firm.

If you feel like you are working harder than ever and not getting ahead, it may be time to assess your operations and look for ways to work smarter instead. The financial industry will always be a challenging place, and the influx of complex rules and government regulations will never let up. If you want to run a profitable financial advisory or wealth management firm in the current environment, you need to make your operations as lean and efficient as possible.

Whether you have been in business for years or are just transitioning to a private practice, you can learn a lot from other successful business owners. Whether those business owners work in manufacturing, healthcare or technology, the need for speed and efficiency remains the same. Learning from their experiences and drawing valuable lessons from their successes can help you reduce waste, improve efficiency and boost profits.

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