Our last blog focused on helping you work out your capacity for work using a simple calculator. This time, we are taking a deeper dive into understanding how your client numbers and other factors affect your capacity.
🚘 Do you know how many spaces are in your car park?
No, not where you actually park your car when you go to work! The car park I have in mind, allows you to understand how many clients you can successfully service in your firm. Knowing this number is critical.
Put simply, the number of spaces in a firm’s car park is equal to how many clients you can take on based on the amount of capacity at your firm’s disposal, which is affected by the following key factors:
- Your service proposition(s)
- The size of your team
- Your operational efficiency
Let’s take a closer look at each of these factors.1. Your service proposition(s)
It’s important to remember that for most firms the number of spaces in your car park is finite.
For a moment, lets assume that a car park has a capacity of 100 spaces. Of the 100 spaces, 20 spaces are Premium and are constantly monitored by security, provide car parking service, car wash and valeting daily. Another 60 spaces are guaranteed to be available to Standard members but don’t receive any of the benefits available to the Premium members. Finally, you have 20 motorbike spaces that come at a somewhat lower price to the Standard membership as they take up less space and have no additional benefits. When thinking of this model, I’m sure that none of you would allow someone to park a motorbike in the Premium spot unless its owner was prepared to pay for the Premium service. Similarly, you wouldn’t offer the Premium service to any of the Standard members, yet when it comes to financial planning, I often see these lines being blurred resulting in a ‘car park’ that holds firms back.
Having defined service proposition(s) and knowing how many clients (and the demographic of the clients you wish to service) is critical for success as it directly affects your capacity. You don’t want to put yourself in the position of providing a Premium service to your Standard membership clients as that requires far greater resource of time and staffing. In practical terms, I often hear of teams being overwhelmed with work due to ‘overservicing legacy clients’. That is clients who are paying lower fees and receiving the same level of service as those on new ‘Premium’ service propositions.
You can fill the car park spaces however you like, but if they aren’t filled with your ideal clients per service proposition, the firm will be at risk of not reaching its goals.
Once you are clear on the number of spaces per proposition, you need to have a good understanding of how much time is needed on average to service your clients per proposition. You will need this data to complete your capacity calculations per role (see our last blog for details).2. The size of your team
It goes without saying that the more people there are on your team, the more clients you can service, and the more personalised service you are able to offer. I’m often asked what is the optimal number of team members but I’m afraid that there is no ‘one size fits all’ answer to this question. Much depends on what your service proposition includes, the complexity of the clients you are dealing with, the structure of your team, and of course your operational efficiency, which I shall discuss in the next point.
For example, if you are offering a highly bespoke service and work with very complex clients and high value cases, it might be that a team of one Adviser, one Paraplanner and one Client Relationship Manager needs to be allocated to every 70 clients, in addition to having a centralised team of Administrators. Equally, if you are delivering a subscription type service that offers a monthly group webinar related to the topic of personal finance and a 30-minute Q&A call per year, your capacity will be many times greater and you won’t need a large team to support such a business model.
When thinking about the size of the team needed and their capacity for work consider the below:
- Realistically how many Advisers are needed compared to the servicing team members (that is Paraplanners, Client Relationship Managers, Administrators etc) to deliver your service proposition(s)? Often firms believe that they need large numbers of Advisers but if you are working with clients on a relationship basis rather than transactional basis, chances are that you need a much larger support team compared to the ‘sales team’! After all, when thinking about service components that are being delivered as part of your ongoing service proposition throughout the year, isn’t most of the work done by the support team rather than Advisers…
- When thinking about how you deliver your service propositions consider if your current allocation of resources is optimal? That is, consider various roles and whether each of the tasks undertaken by the individuals in these roles is the optimal use of their time, expertise, qualifications, and skills.
- Build contingency and succession into your Business Plan and remember that succession planning isn’t just about creating new Advisers. In fact, in most small firms’ capacity is often severely affected if any of the support team members leave the firm unexpectedly or are absent from work. Consider offering apprenticeships and internships and hiring graduates. You always need to be thinking of your next hire long before you have a need for it. By the time, you are at 100% capacity it’s too late and you have no scope for dealing with new leads or extra work.
- Finally, thinking about your service proposition(s), target clients, and business ambitions consider how you structure your team. Should some of the financial planning functions or processes be allocated and others centralised? That is, should for example, the administration function be centralised and the paraplanning role be allocated to working with specific clients. This decision can make a very big difference to your potential capacity.
As already mentioned, you need to have a good understanding of how much time is needed on average to deliver each of your service propositions and the time taken to deliver various tasks will be greatly affected by your operational efficiency. While I’d love to think that in today’s day and age, it takes a click of a button to produce a valuation for any of your clients, I know for certain that this often isn’t the case. This isn’t just down to the ‘legacy holdings’ where data isn’t freely available but often inefficient use of technology by the advisory firms. The number of firms that still rely on manual input for generation of valuations or other documents rather than a templated and automated process is still high. The more manual input, the less integration across different systems, or outdated technology the more inefficiencies there are in your process resulting in tasks taking longer. Working smarter not harder is key.
The goal is to optimise the use of technology, eliminate complexity from the way in which you operate, and maximise the automation of various tasks. Did you know that a 2 mins task undertaken 10 x per day for 228 days in a year takes 76 hrs, which equates to 10 business days per year. Now multiply this by 10 people and you could save yourself a staggering 100 business days per year by simply automating some of the lower ‘value’ yet frequently undertaken tasks e.g. acknowledgement of receipt communication. This will free up time to personalise the things that truly matter.
So here are a few questions to work through to improve your operational efficiency :
- How many systems do you use to deliver your service propositions and is the integration seamless? (e.g. back office, task management, analysis, risk profiling, cashflow modelling, client portal)
- What are the complexities in your current process?
- What are the most repetitive tasks in your annual review process?
- How often is the data entered twice or more – is it necessary? Is there a way around it?
- Is it likely that the process will result in re-work of any of the tasks? If so, can you eliminate the need for re-work?
- What tasks take the longest to complete? Is there anything that can be done to reduce time taken without compromising quality or the final outcome?
These questions form part of our free worksheet, called Process Prep Sheet, which you can download here. We introduced it when discussing creation of, or revision of your Annual Review Process, which you can read about here.
Good luck working out the capacity of your car park and the time it takes to deliver your service propositions. Here is a list of key causes of capacity issues which may help you understand what to focus your energy on next!
Members of our Master Practitioners Club can find these relevant resources in our library.
- How to fix capacity issues with Dominika Sieradzka-MacCuirc
- Service propositions & pricing from an operational perspective with Dominika Sieradzka-MacCuirc
- Best Practice Advice Flow in IO: 2 hours training session with JigsawTree
- How tech can help maximise efficiency and improve client experience with Andre Costa
- How to ensure successful selection of a Back Office System with Sarah Challenor of Adviser Outsourcing
- How to manage my tasks in Intelliflo Office efficiently by Informed Training
- What’s the latest in Technology? with JigsawTree
- Introduction to macros with Jenny Melvin
- Document Designer Tips with Joanne Morgan
- moneyinfo demo with Sim Sangha
- Personal Effectiveness Tutorials by FP Advance
- Improving Your Execution Skills with Brett Davidson
- Capacity Issues Matrix
- Cost of Ongoing Servicing Calculator
- Internal Service Proposition Checklist
- Skills Matrix
- Master Practitioner Organiser
- Capacity Calculator for Financial Planners
- Capacity Calculator for Paraplanners
- Capacity Calculator for Administrators
- Best Advice Flow in iO notes by JigsawTree
- Back Office Scorecard by Adviser Outsourcing
- Back Office Reference Questions to Ask by Adviser Outsourcing
- MI Report Details & Exported Fields in IO by Adviser Outsourcing
- Introduction to Excel Macros Notes by Jenny Melvin
- Daily Planning Template by FP Advance
- Weekly Planning Template by FP Advance
- 14 Day Journal by FP Advance
If you are not a member why not consider joining us now 👉 htps://rie.solutions/services/master-practitioners-club/.