By BRETT DAVIDSON
If you want to grow your business faster AND have more fun while you do it, then it's vital to consider hiring a practice manager.
After 15 years of consulting to financial planning businesses, I’d go so far as to say it’s the most important hire you’ll ever make.
I used to say that, when firms reached a turnover level of between £600,000 – £800,000, pa they needed to consider hiring a full-time practice manager.
Some firms used to freak out a bit about that, thinking they might struggle to afford the cost of such a key hire. I think many business owners believed they could still handle the business management stuff for a little while beyond that level. (They can’t, by the way).
However, I've seen a major shift in the marketplace.
Forward-thinking advisers who are looking to grow their businesses are hiring a full-time manager when they reach as little as £300,000 of revenue. It might be the second or third person they bring on board. That’s a big change from even 5 years ago.
I also happen to think it's the right approach.
What started to shift my thinking was a conversation I had with Dominika Sieradzka of RIE Solutions, who is an operations consultant I’ve worked closely with on a ton of jobs over the years.
When I told Dominika about my guidance on when to consider hiring a manager, she said, “Brett, if you and I set up a financial planning business tomorrow, the first person we’d hire would be a practice manager.” And she’s right.
I'm often asked, what does a practice manager do?
The truth is, they take away a lot of the day-to-day ‘management stuff’ that owner/advisers just don’t usually want to do, OR don’t have time to do properly, even if it does interest them.
There are six key areas that tend to be picked up by a manager:
Taking the vision that has been created by the owner/s of the business, and making it happen in practice. That's an overarching role that sees them involved in the next 5 areas below.
Processes and procedures
Reviewing business policies, processes, procedures, and internal service standards on an ongoing basis to ensure client satisfaction, profitability, and efficiency.
Human resources (HR)
Hiring / firing, training and developing the team to best achieve the business' goals.
Compliance and finance
Overseeing the compliance and finance functions.
Making sure that all IT is fit for purpose, improving efficiency and creating a great client experience.
Overseeing and managing the marketing efforts of the firm.
The practice manager's role is to make sure all of these areas are well managed and on-track. They need not be experts in all of these. In the last three areas, they may lean heavily on external consultants or suppliers, just like you do.
Their job is to make sure things that need to be done get done. That might mean arranging meetings between various owners, team members and external suppliers from time to time.
You as the owner will still be heavily involved in decision making, you just won’t need to be involved in follow-through and project management. That usually leads to a massive time saving, not to mention a much better final outcome for the business.
And before you ask, yes, it is a full-time role.
Some business owners believe that because they split their time between advising and managing that perhaps it’s not a full-time position. Yet I believe that most owner/advisers who split their time end up doing a sub-optimal job as both a manager and adviser.
Just ask yourself, if you could delegate a lot of this ‘management stuff’ and freed up some time, how much more productive could you be as an adviser? How much more business might you be able to generate? It’s usually a pretty big number.
You could also look at the reverse of your situation. You're first and foremost a great adviser who has ended up having to do some managing on the side. Yet you'd never hire a manager and ask them to do some advising on the side, would you? How effective do you think they'd be?
So don't do it yourself. Focus on your core skill and hire a great practice manager to do what they do best.
Let me know how you go.
BRETT DAVIDSON is chief executive of FP Advance, a boutique consulting firm that specialises in working with growing and aspiring financial planning firms.