January 2015 10 Questions

​Deborah Fox on How to Evolve, Systematize, and Build Workflows

Journal of Financial Planning: January 2015


Who: Deborah Fox

What: CEO and founder of Fox Financial Planning Network

What’s on her mind: “We are able to standardize our services with many different templates, whether it’s back office processes or client facing. We save anywhere from 50 to 75 percent of prep time for client meetings because of that.”

Podcast: Listen to our podcast with Deborah Fox on our PODCAST PAGE.

Deborah Fox was a self-proclaimed “science girl” pursuing a career in fish farming when she realized she’d rather work with people. At the suggestion of a friend who recognized her aptitude for critical thinking as well as her desire to interact with people, she looked into financial planning. That was 30 years ago.

Her success as a planner led her to coaching and consulting work. Then the financial crisis hit. Fox noticed that many planners she coached were working much harder to communicate with clients in ways they never had to before, and she saw an opportunity. She went through the workflows and procedures of her planning practice and made them customizable to any firm in any business model. The result: Fox Financial Planning Network.

Today, the Fox Financial Planning Network helps planners build and maintain workflows that integrate the practice management, operational, technology, and human capital aspects of a planning practice.

The Journal sat down with Fox recently to talk about how others can learn from her experience.

1. You have been providing consulting services to financial advisers for more than 20 years. What do you feel is the biggest challenge for advisers today, and is it different from five, 10, or 15 years ago?

One of the biggest challenges today is the complexity and number of financial products in the marketplace now, versus five, 10, or 15 years ago. For instance, we have liquid alternatives today that we didn’t have five years ago. I think it’s very difficult to keep track of everything that’s out there and clients ask questions about them.

Another critical challenge today is since the financial crisis, many clients are scared and we’re having to do a lot more reinforcement of the foundational financial concepts and investment philosophies to keep them on track. Some clients feel it’s just a matter of time before the other shoe drops. 

Another challenge is the unlimited amount of information clients can find on the Internet. Clients will Google something, and then you get an email from the clients asking, “What do you think about this,” or “Maybe it would be a good idea to look at product X or try strategy Y.” In some cases the feedback can be good, but in many cases it’s counterproductive to what we’re trying to implement with our clients. We just didn’t have to deal with that 10 or 15 years ago.

One gripe I have that is a challenge is the way that a lot of these annual best-of lists are created, such as the best or top financial advisers, according to AUM. Just because a firm has a large amount of AUM doesn’t necessarily mean they’re that profitable or they’re providing excellent service to their clients. This is a challenge because it is these types of rankings clients see on the Internet when they’re searching around for an adviser.

Another challenge is getting out of a rut. It’s hard. It comes down to breaking old habits. For instance, advisers have to stop doing certain tasks manually and instead automate them to stay competitive. They need to adopt new technology and change how they’re communicating with their clients. They need to shorten what used to be an hour or two meeting because people have a shorter attention span. 

Even writing blogs, articles, and other communication needs to be approached differently. We used to put out newsletters that were maybe 1,000 words. Now we’ve cut them down ... because we know they need to be read within a minute or two. That’s a challenge because it’s really starting from scratch to learn how to communicate differently.

2. What role do you see robo-advisers playing in the financial planning profession?

There’s been so much written about robo-advisers and how they are disrupting the industry to the point where advisers need to be beware of what the effects are. I agree there are going to be effects, but I tend to be a person who looks at the glass being half full, so I view robo-advisers as a positive invasion into our industry. 

So I think their presence is great because robos are really causing us to rethink how we can better provide services to our clients and prevent complacency from setting in. Many of us who have been around a long time tend to operate by the adage, “If it’s not broke, don’t fix it.” Yet, we all need to assess how we can work more efficiently, especially on the investment management side, and provide a higher level of services to clients without working harder. There are many ways firms can do that. One way that is probably counterintuitive is partnering with a robo-adviser, especially for those who believe in a passive investment approach and currently don’t have a lot of technology to use for portfolio management.

Some robo-advisers have decided to focus on serving the adviser rather than going direct to the public, which I think is a smart move, and some of their technology is really great. Literally almost overnight a firm can start working more efficiently on the portfolio management side of things.

On the negative side, I think the robo-advisers are contributing to the inevitable lowering of AUM fees for firms that only provide pure investment management services. Eventually, this could be catastrophic for firms operating under this business model and not planning to add other items to their service offerings and wanting to be able to charge the same fees. 

This is going to be an interesting trend to watch because we are in the early disruption phase. Right now firms are okay, but as the disruption moves to later stages, I think there’s going to be a lot of firms that were so complacent and just procrastinated evolving their business model that they are going to be caught flat-footed. I believe this disruption will accelerate exponentially, so now is the time to really address it and take action.

3. Why is developing a “Starbucks experience” (a consistent and outstanding client experience) so critical for an adviser’s profitability and growth?

A firm cannot scale and grow without having a well-thought-out, detailed and standardized service model that resonates with those they serve or want to serve in the future. The “Starbucks experience” means designing a premium service that supports premium pricing where clients focus on the value of the service provided, not the price.

Due to the disruptive robo-advisers, it becomes even more important that clients should be focusing on the experience and value they receive. This becomes very critical considering the growing pressure put on AUM fees by robo-advisers or other low-cost online options, and not just investment management options, but also planning options as they receive more attention.

There’s the saying, “Build it and they will come.” I think that’s 100 percent true. Two important things are accomplished if a firm carefully thinks through all their service components that a prospective or existing client would want and appreciate, and then systematizes the delivery process with the ability to personalize for each client.

First, prospective clients will be attracted to the firm when an adviser is able to describe a service that sounds exactly like what they are looking for.

Second, a firm can deliver the service in an organized, efficient manner that allows the firm to scale and grow. Advisers can survey their existing clients to discover the facets of their service clients most appreciate so they’re sure to continue to include those as they think of other ways to improve their service offering.

4. Your research has found that only a small percentage of advisers have a detailed workflow system in place. Why do you think that is, and what is one small step an adviser could take today to begin to change that?

A lot of firms do have certain procedures detailed out, but typically the procedures they have aren’t really idealized to flow in the way the procedure is intended to. There are a couple reasons for that. 

First, advisers have no idea where to begin. We found that most don’t really know what a workflow system is or what it can really do for them. This term “workflow” has been put out in our industry yet there hasn’t been a clear definition of what it is because it means something different to various people. 

For some reason, in our industry, when advisers open their own business, it has been typical to have the mentality: “I just signed a lease. I furnished an office, and I have this part-time admin person. Now that I have these expenses I’d better go get clients to start bringing in revenues.” Advisers start bringing in clients before they think through their service model in detail, develop systems, and put operational procedures into place. They haven’t put the foundation of their business in place in the beginning and so in most cases, it never gets done as it should.

We’re probably one of the only professional industries that operates this way. Conversely, CPAs in the tax-advice industry typically have everything systematized and are very process-oriented. They live and die by checklists. It’s fascinating to watch them get into wealth management. 

Another reason more advisers don’t have workflows is documenting all of the firm’s processes is laborious. It has to be a marathon, not a sprint, but therein lies the problem. Advisers want everything with the snap of a finger. When they start a project, they want to see it come to fruition quickly, and there’s no way to have that happen when you’re documenting a whole business. 

The writing process needs to be broken up into segments over a period of months or years, depending on how a firm approaches the project. And it’s worth it. It was the single best thing we’ve ever done in our own advisory firm for operational efficiency. Firms need to understand what is going to occur when they do get processes in place. Operations have been sorely neglected in many firms, and that has to change because it’s akin to constructing a building on an unstable foundation. Eventually it’s going to topple.

Here’s what we did to start to make progress. We started with a process that we knew was broken and we built and implemented a workflow to correct that. When we saw how much more efficiently we were able to work by having the steps idealized and documented, we realized that this was something that we needed to commit to no matter how long it took.

I think that’s the key—start with processes of the firm that are not working well or where things are falling through the cracks. Look at how you’re doing things now, and then add or change the steps to change the flow and the outcome.

5. There’s still confusion about how workflows should be constructed and used every day. Can you provide some clarity?

Yes, and I think this is a really important part of the discussion. I often say workflows need to “flow.” They need to represent how the firm actually delivers services and how their various team members interact, or should be interacting, on a day-to-day basis. 

Many times the problem is how workflows have been constructed and thought through. When workflows are being written, it is important that the people who are actually involved in completing various steps of a task are able to give their feedback on how things are being done now, and how they think things could be improved if done differently. 

I see firms that will get very enthusiastic about getting a workflow system in place and then they assign someone in the firm to write the workflows and the processes and that one person can’t possibly have all of the perspectives of everyone who would be involved in completing tasks. So a team approach is critical, and buy-in from the team is also a necessity. Whoever in the firm is responsible for completing a particular task needs to have input into the final version of that workflow. 

I also see workflows that are either written too simply or too detailed, where they don’t end up helping the firm work more efficiently. This can lead to staff members not adopting them or using them because they just don’t flow.

Also, many firms aren’t differentiating between a workflow step and a procedure. A workflow step represents the higher-level view of one step of the task, and a procedure documents the detailed steps necessary to complete that one particular workflow step. What I see often is that firms combine procedures with workflow steps, and when that happens, the workflow stops flowings because a workflow step that’s written like a detailed procedure will get caught up in too much detail and become a log jam stopping the flow.

6. How have you systematized your own financial planning practice, and what have you gained from that?

We embarked upon creating a workflow system after recognizing that we were quickly becoming a train wreck as we were growing our firm. For us, it was purely out of the agony of being disorganized, and I just couldn’t take it anymore. I knew we needed more standardized delivery of our services. I had read The E-Myth by Michael Gerber, and it really helped me understand that we needed to get systems in place. I tried to research what other firms had done to address this. I knew we weren’t the only ones going through growing pains, but I couldn’t find anyone who had any documented systems—at least in my vision of what I felt that should look like. 

When I couldn’t find a model, I went outside the industry to see how others had approached building workflows, and that’s when we began trying to adopt a couple different formats that didn’t end up working. Finally, we learned from our mistakes how we could better document our processes. We came up with our design, and it ended up working really well—so well it was the most important thing we’ve implemented in our firm to date. It allowed us to design our perfect service, the service that we had envisioned and ultimately were able to deliver.

We became acutely aware of who we wanted to serve and why. Once we had that figured out, the way we talked about our service and met with prospective clients had a very different message than before. Prospects genuinely needed to qualify for us to accept them as a client. We want to make sure our clients fit our service model so we could service them efficiently and they would always be really happy clients. 

Once you do communicate legitimately to clients that you’re not going to automatically accept them, it actually makes them want you that much more. We felt that if we were going to create this exceptional client experience, we needed to make sure we were delivering it to the right people. 

The result is we are more profitable, we require less staff, everyone knows who does what and when, and all tasks can be tracked at any given time. We have seamless service delivery and a much improved working environment. We can see right in our CRM what everyone is working on at any given time.

When you have written procedures, you build in the compliance steps so they happen automatically. During an audit, I can show what we do for every client at every stage of our service delivery, and that significantly cuts down the time of an audit.

We are able to standardize our services with many different templates, whether it’s back office processes or client facing, and these can then be customized for each client. We save anywhere from 50 to 75 percent of prep time for client meetings using the templates we’ve created.

And, I can also monitor each member of our team. I can see if anyone is falling behind or having issues. And I can see when someone is a workflow champion so I can recognize work that is well done.

7. You say firms need to evolve. Where should they begin?

The first thing is making sure they’re clear as to who they want to serve, because you can’t start improving processes and service offerings unless that’s clearly defined on the front end. 

Then you need to perfect how you communicate your value proposition based on who you have decided to serve. When the service model is built around a certain demographic, and you effectively communicate the value you provide, prospective clients feel like your service was built for them. 

I also belive in the development of a service team. I think every firm should have a service team in one form or another. A solo adviser can still build a service team by using an outsourced consultant, such as an admin person, or a financial planner who runs plans, or an adviser who performs investment or other types of analyses. It is desirable to have clients working with a team of people rather than being dependent on just one person, especially the lead adviser, because the lead adviser can become a slave to the business. But even within ensemble and larger firms, the service team approach allows for different personalities to work together.

For instance, my associate adviser has an analyst-type skillset and loves digging into the details, doing investment analysis and running financial plans. I, on the other hand, am the big picture, client relationship person, and the strategizer. Not that I can’t do analysis, but I prefer to look at the bigger picture and then work together with my associate adviser to come up with the best solutions for our clients. I think having these two different combinations of personality and skillsets has been critical in coming up with the best advice for our clients.

Clients become more loyal when they know they have a whole team working on their behalf.

However, if the operational and workflow foundation is not in place, it’s going to be impossible to evolve to the extent that most firms want to. Additionally, programming the workflows in the firm’s CRM workflow engine is really important. The CRM should be the hub of the practice from which all activities emanate and should also integrate with the other software applications the firm is using.

8. You were an early adopter of the cloud. Did you have any reservations adopting cloud-based technologies for your business, and if so, how did you overcome them?

I was cautious at first, especially with security. I wondered whether clients’ and our firm’s information would be secure in the cloud. I was able to get over that concern relatively quickly as I became better educated. I like to be an earlier adopter of new, cool things, so when I saw that I could run a financial plan in the cloud rather than on the desktop—and a CRM and document storage too—I was all for it. I really championed trying to get that in place for our firm as soon as possible.

Technology is always evolving. You don’t stick with something for a decade like you used to. When you bought software, you could run it for many, many years, but now there are new features coming out all the time. One of the hardest things for me was breaking the habit of working off of my desktop where I knew where everything was. 

It’s different working in software applications in the cloud where you can’t organize your work or run different processes the way you have in the past, so you do have to be flexible and recognize that you can change your habits. Oftentimes software companies that have created these applications have really thought through workflow, and once you get used to it, it provides a way to work more efficiently than how we were all working on desktops. 

The appropriate software application purchases are so important. For instance, advisers always ask, “What’s the best CRM?” There is no one best CRM. You have to look at how different CRMs are set up, what features they offer and see which one resonates with you. You have to analyze which user interface feels right to you. That might take a little bit of time to determine, but in the end, it is great to have choices now that allow us to really run our businesses in the cloud, which means we can work anywhere, and access our data, 24/7.

9. I’ve seen various industry research indicating that most advisers do not specifically budget for technology needs. In your experience, do you find that to be true, and what advice do you have for advisers on how best to determine an annual technology budget?

I would agree that many firms aren’t including technology in their budget. Obviously they have technology in their budget if they are already paying ... for their CRM or financial planning software. However for purchases that are for future needs, many times firms do not have a well-thought-out process for creating their technology budget. And each firm has their own situation.

The global fact that applies here is there should always be a technology budget, and it needs to be looked at on a year-to-year basis to determine what percentage of revenues can or should be spent.

The most important component of determining a technology budget would be looking at what the firm’s needs are for both the coming year and even over the next few years. This is because sometimes a technology budget needs to be established well before the purchase depending on the cost of what will be purchased. With relatively expensive technology, such as a portfolio management system, even though a firm knows it wants to make that purchase, they may not be ready to handle that cost the year they are discussing it, so that might become a two- or three-year budget plan. Then there are needs and wants, so advisers need to prioritize. They can then look at the ranges of cost and determine whether the purchase can be budgeted for the coming year or whether it needs to be spread out over multiple years. Firms should also be careful to not purchase too much technology at one time, because then they’re not going to get the adoption and implementation or an immediate return on investment.

10. Advisers can try to figure out everything themselves, or they can seek out the help of a professional. When should an adviser consider working with a consultant, and how should they decide who to use? 

This is an important decision for advisers because money can be wasted, or it can be one of the best investments they’ve ever made.

First, the adviser needs to determine whether they’re coachable. They have to be in the frame of mind to receive feedback and information and be willing to [implement]. 

Finding the right person is important. They need to determine [if] they want someone who is going to hold them accountable to getting things done, or someone who will actually be helping them figure things out and finalizing decisions. 

Know that anyone can call themself a consultant or a coach ... so advisers need to make sure they’re researching the background of who they might be working with. 

Find someone with industry-specific experience if you want industry-specific coaching or consulting. There are so-called consultants in this industry who either have little to no experience in this industry or they have only been a consultant for a short time. Some consultants are advertising services in areas they have either never worked in or worked in so long ago that their experience is no longer relevant in today’s world. For me, I want someone who is going to resonate with me, who understands where I’m coming from and has deep knowledge in the area in which I need advice or support. 

Before advisers hire a consultant, they need to ask candidates about their specific experience in the areas in which they are seeking help and then verify the information. 

Once the appropriate match is found, advisers who fully engage with their consultant can potentially bypass incremental improvements and instead, make a quantum leap toward achieving their goals.

Carly Schulaka is editor of the Journal. Contact her at CSchulaka@OneFPA.org.

General Financial Planning Principles
Practice Management