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Last week I conducted a webinar for advisors focused on the key decision that will drive advisors’ long term success, sponsored by Northern Trust Investments.
That decision, quite simply, is choosing where to focus your efforts and resources.
The power of focus
Over the past twenty years, there’s been an explosion in research into what differentiates companies that succeed from those who fail, and what predicts which stock prices will outperform and which will lag.
As an example, the June issue of the Harvard Business Review featured an article titled “The Coherence Premium,” summarizing research on top performers across a variety of industries.
The single factor, more than any other, that differentiates winning companies is the extent to which they build unique capabilities in two or three areas that are critical in the customer value chain.
Companies have to be disciplined about picking a small number of high impact areas where they bring true competitive advantage … think Apple, Coke, Google and Walmart, all of which have brought incredible focus to a few dimensions of customer value.
And just as this research carries important lessons here for CEOs, there are also some important guidelines for advisors looking to build successful long-term businesses.
Competing time demands
It goes without saying that the CEOs of Apple and Google have lots of ways to spend their time – yet articles and books profiling them invariably comment on how they focus on a few strategically critical activities.
Similarly, as advisors you have lots of ways to spend your day.
Here are just some of the ways you could spend your day, divided among existing clients, new clients and practice management issues.
First comes serving existing clients – you could focus on portfolio construction and stock and manager selection, developing financial plans or providing clients with a broad range of advice on wealth issues.
Or you could make it your priority to ramp-up client communication and contact, organize client events and appreciation activity and build deeper one-on-one relationships with key clients.
Then comes attracting new clients.
You could focus on cultivating and nurturing referrals, building visibility and profile among one or more target client communities and explore strategic alliances and referral relationships with accountants and lawyers.
Alternatively, you could network to build a pipeline of prospective clients, or put time, energy and resources against broad community advertising and marketing.
Finally, under practice management, you could prioritize ongoing business planning and financial management, team communication and management, investing in continuing education or administrative functions such as paperwork, dealing with client service issues and compliance.
Choosing where to focus
It’s clearly impossible to excel at everything on this list.
As a result, just like Steve Jobs at Apple and Eric Schmidt at Google, you have to choose a few key areas on which to focus your efforts and resources – for the rest, you have to either eliminate them entirely or do only as much as is essential.
At the same time, you need to look hard at whether you can delegate or outsource low priority activities, the ones which aren’t going to be an area of focus.
Recently, a report from Boston-based Cerulli Associates highlighted the challenges for advisors in terms of allocating their time.
Here’s a summary of how advisors spent their time in 2009:
| Meeting with clients | 27% |
| Client acquisition | 16% |
| Client service problems | 11% |
| Research / due diligence | 9% |
| Trading / asset management | 9% |
| Office admin and management | 8% |
| Training and professional dev | 8% |
| Compliance | 7% |
| Other | 5% |
Three questions arise from this list:
- Are advisors spending enough on the highest return activities, in particular getting in front of existing and prospective clients?
- Are advisors doing things that could be delegated – for example, dealing with client service problems?
- Should most advisors be spending almost 20% of time building and monitoring portfolios?
The answer to these questions can be found in new research on drivers of success with both existing and prospective clients.
