Industry Insight from Fred Barstein
Three Pillars of a Practice Management System

Success is not an accident or the result of luck.  An advisor can make a few good sales or even land that big proverbial fish that pays an enormous amount of money, but no one would categorize that as a successful business.  The really good retirement advisors have a business plan and create a platform upon which to execute.  The last two years have proven how crucial it is to have a solid business plan and how important it is to faithfully execute it, even when it may seem tedious.  The successful model for winning as a retirement advisor is based on a three legged practice management stool which includes business development, due diligence, and benchmarking tools and services, as well as training and networking with peers.

Generating new business is the life blood of any organization.  No matter how big or successful the advisor, we have never spoken to one that is not interested in getting new clients.  While some advisors have very sophisticated models, which are essential as they move up market, everyone needs to have a plan.  These methods can include cold calling, networking with local professionals, seminars, or participating in non-profit boards to meet decision makers.  But whatever the method, advisors need to have a written plan outlining the true costs associated while tracking and monitoring these costs every month.  As Sam Walton said, "you cannot manage what you cannot measure".

The second leg of the practice management stool includes tools and services.  Not too long ago, only large market consultants had access to investment and record keeper databases which they maintained themselves.  Now there are multiple sources to access this information which are growing everyday it seems and enabling advisors to easily and quickly generate client ready reports.  No product or service is right for every advisor, but a thorough due diligence of all of them makes sense.  Costs are an issue, but more important is the time that the advisor and their staff have to spend learning and integrating the tools into their practice.  It is important to choose wisely but also keep an eye on what is new or what the competition is using, otherwise advisors risk becoming irrelevant and outdated.

Finally there is training, which has been a black hole for retirement advisors.  There are some organizations that have tried to create programs and designations, but they have two major flaws:  they do not focus on practical aspects of building, growing, and managing a retirement practice and the designations are meaningless to prospects.  Advisors need a forum to learn from other practitioners and a medium to network with them.  They also need a designation that generates more business.  To be a successful retirement advisor, there are three required skill sets:  1. technical knowledge of ERISA and investments, 2. new business generation, and 3. business planning and management.  Right now, advisors have to build from a patchwork of resources to create a complete training system.

These tough economic times have forced retirement advisors to admit that principles win out over personality.  Very few if any can succeed just on the force of their will or relationships.  Those advisors that build a strong practice management system will not fear the next down-turn, rather they will welcome it because they will take over from advisors who did not prepare properly.

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