Be prepared for inevitable change down the road by building flexibility and depth into your organization today.
As advisors, we focus on helping our clients build and protect their wealth. Setting targets for retention and new business development is key for growth, but at the same time we should not lose sight of the need for risk management. Our value is derived from personal relationships with clients, and it takes time and energy to prepare either for a planned retirement or an unanticipated employee departure.
An annual strategy and goal-setting meeting should focus on how to maximize firm value. As shareholders and advisors, we establish a shared vision--an example is continuing to expand at a controlled rate of growth while providing the highest level of service to our clients. Equally important is offering job satisfaction, a reasonable work-life balance, and career development opportunities for staff. Overlay a risk assessment and this becomes the perfect opportunity to perform a gap analysis.
Where do you have key-person dependencies, and which of your staff members are seeking new opportunities for development?
Who does what?
To make the exercise more real, pull up your team pictures and bios from your website and imagine a work environment without each of your staff members. What are your key processes? Identify all major tasks performed across the firm and note which advisor is fully able to perform in that role. Prepare a gap analysis to identify any key-person dependencies, then prioritize the list of tasks and address them in order of risk to the firm. This exercise is tough to perform during the workday; it merits some dedicated focus outside the office without routine distractions.
A simple grid such as the one below will enable you to identify and document any likely single points of failure. It may also enable you to rebalance work assignments, providing career growth opportunities to staff and building more breadth and depth across your advisory team. Establishing some level of redundancy should be the goal for the most critical responsibilities--having a deep bench enables you to take a much-needed vacation, or to be out of the office in case of illness or other unplanned emergency. List each of your key services and underlying processes, and rank high, medium, and low for the role of each employee associated with that workflow.
Lead from the front
Direction and support from the leadership team is crucial for success. Some staff members may take offense at the notion that they should not be solely in charge of any single client relationship, activity, or operation, and their lack of cooperation might undermine your efforts. Define project success and establish metrics for your team members. Setting clear, measurable goals and attaching bonus payments or other rewards will motivate your associates. Over the long haul, building a strong team with thorough cross-training and well-documented processes can only benefit your organization.
Once all tasks are identified and you have determined who in your organization is competent to perform them, prioritization is key. Critical risks take priority. If your greatest risk lies in trading, for example, then the solution may be in better documentation of procedures and job shadowing. On the other hand, encouraging your team members to build deeper relationships with your client base takes intentional exposure over a number of years. That too, could be accelerated by preparing a team sheet describing bios and roles, and encouraging your clients to contact operations directly for cashiering requests, for example.
Risk mitigation can take many forms. Eliminating certain processes might be one solution; hiring an intern to assist with documentation of procedures might be another. Risk monitoring is another great tool--our performance management systems and CRM tools have management reporting capabilities that enable us to view key metrics on a real-time basis. A periodic review of items such as overdue tasks, upcoming client meetings, or inbound asset transfers shows a clear picture of where bottlenecks or single person dependency may exist. Another, more radical solution for some tasks is outsourcing--see A Better Bookkeeping Solution for Advisory Firms for more detail on how we eliminated key dependency on a single employee for all internal finance functions and saved money in the process.