Journal of Financial Planning: January 2017
Too many advisers linger in a state of mediocre fulfillment, unsure what to do next to spring from their current plateau. Stuck in their status quo, they are unable to envision new possibilities to achieve what they want from their business.
If you’re an independent financial planner who has an established business, you may have doubting questions that cross your mind more often than you want to admit. Questions like: “When will I feel that my practice is sustainable and I can stop the constant hustle?” or “For all of the energy I devote to my business, why don’t I make more money?”
How can you do the work you love, make your practice viable over the long term, and unlock more freedom to enjoy your life outside the office? Master your return on effort.
Think about all of the time, money, energy, heart, and soul you pour into your work. You invest your whole self and count on yourself for income. The sum of this outpouring is your effort.
Now consider your revenue. To maintain a sustainable business, you need cash flow to cover business expenses and the necessary personal expenses that your income funds. Revenue over that baseline provides for savings and retirement, donations, gifts, luxury personal expenses, child or parent support, and whatever else you choose.
The relationship of effort invested in your business and the revenue it generates is your return on effort. This return on effort derives either positive or negative fulfillment.
If your revenue is greater than your effort, you have positive return on effort and therefore a positive level of fulfillment. You are profitable, and you may be satisfied with your current position. Or, you may desire to achieve new levels.
If your revenue is less the sum of your effort that you invest, then you will be in a negative state of fulfillment, perhaps questioning why you are continuing on this path or wondering how long it will last. You may feel fulfillment from helping people in your work; however, your overall sustainability is in jeopardy without the revenue you need.
Keeping effort constant, as you increase your revenue, you can achieve a higher return on effort and greater fulfillment. When revenue stays the same, as you decrease your effort, you also increase your return on effort and fulfillment level.
Address either of the two variables, and you can shift your status quo.
Increase Your Revenue
To increase your revenue, you must focus on marketing. Marketing is more than creating awareness to generate action; it spans from that first impression through developing deep client loyalty and inspiring ambassadors. Marketing encompasses the experience you offer, the service you deliver, and the fees you charge.
Strategically crafting this full spectrum of relationship marketing can pay off with increased cash flowing into your firm. Choose from the following four ways to improve your revenue:
Attract more high-quality leads. Most advisers want more people coming into the “funnel,” but volume without quality can keep you from meeting with better-suited people.
Before you attract more leads, you must first identify your “high-value hyper-target,” the specific type of person who appreciates your value and is more likely to sign on at higher fees. Consider the client who pays you what you want and who you look forward to seeing. When you pinpoint your messaging to this type of person, you attract more of the right people.
Scattered efforts like the occasional blog post or coffee with an influencer do not count as a marketing plan. You must have a client attraction marketing system that starts with your “home base” content marketing channel. Select a single outlet—a blog, podcast, video channel, LinkedIn posts—and commit to it.
Create and share content that educates, entertains, and empowers on a regular basis in this first channel. This is the one content marketing effort you will do no matter what each week. Remember that consistency and quality over quantity is essential.
Only after you establish your cadence for this single channel do you layer on new initiatives and expand your presence.
Improve your conversions. The lead-to-client conversion process begins when a person identifies herself, and you start communicating one-to-one.
Ease website visitors in with a free guide or a podcast recording in exchange for their name and email address. Generic content does not work. You have to zero in on what matters to your hyper-targeted audience, such as a tech-exec exclusive report titled “4 Steps to Craft Your Incentive Stock Option Selling Plan and Eliminate Regret.”
Cultivate the lead and send additional educational content throughout the next few weeks before adding them to your regularly published distributions, such as a blog digest, for example.
When a prospect schedules an initial meeting, get her excited in advance with a video and welcome packet and send a thank-you note after you meet. Be sure to follow up at least twice in the next week.
Establish check-in points across the following year and keep sending your content. You’ll be first on her list when she is ready to hire.
Increase engagement of your clients. Your clients are your strongest advocates and most would engage more if you would do the same.
When you implement a proactive communication strategy you can: accelerate the time between planning sessions; aid in areas where clients may not think to contact you; inspire clients to invest new money with you; or demonstrate value and service that retains them as loyal clients.
Build an engagement calendar that outlines personalized client communication based on their relationship stage.
Make sure you connect on social media, share your content, and invite them when you host educational events. They appreciate the opportunity to learn, you reinforce your expertise, and you may spark a referral.
Revisit your pricing and service offering. Advisers often structure their services and pricing from a defensive position. Fear of missing out results in an everything-but-the-kitchen-sink list of services and scope of work variable pricing that can confuse potential clients. And confusion equals indecision and inaction.
Streamline your service offering and pricing. Make it easy for your prospect to understand what service(s) they are buying at what fee, what you do not offer, and for whom your service is best. Outline it on your website and in your welcome packet.
When it comes to setting your fees:
- Consider the value of the service for the client and align your fees. Is it time for an increase?
- Keep negotiation out of the equation. Have a method for setting fees and stick with it. Clients often appreciate when there is no room to bargain.
- Vary your level of engagement relative to your fee. When you work just as hard for less income feelings of regret or anger can tarnish the relationship.
- Eliminate any service you do not enjoy or for which you cannot justify the fee. This can have an immediate positive impact on your fulfillment.
As you increase your revenue, you’ll have more profit to invest in your support system to help reduce your personal effort.
Decrease Your Effort
With only 24 hours in a day, multiple hats to wear, and the daily pressures of life, your personal effort can only take you so far before you start to exhaust your resources. You need to shift your support system to team and technology.
With a disciplined approach you can position yourself to scale. Start by outlining where you are now and where you want to go. Explore where you direct the most time, money, and energy in your business right now. List out all of these current efforts. Next to that list, write the three or four areas where you want to exert your effort in your practice. With this information in hand, you can apply this three-pronged approach to reduce your effort:
Eliminate what no longer applies or what you can’t do well right now. Cross off any efforts you currently make that do not support your goals to attract your high-value, hyper-targeted client.
If you meet with centers of influence seeking referrals and you have not established the home base of your marketing plan, then halt or reduce those meetings until you connect with your audience directly. If you dabble in Facebook ads but have not launched a lead magnet, get this foundation in place first.
Focus your effort; don’t spread yourself too thin.
Hire technology. Which of the efforts on your list has a technology solution that could handle the bulk (or all) of the work? If you do not know what technology is out there, start researching.
Highlight all of the items on your list for which you want to consider a technology solution. Some common applications that can lighten your load are email marketing solution MailChimp, social media tool MeetEdgar, appointment reminder Apptoto, and scheduling software SetMore.
Outsource work to your team. Many entrepreneurs fear recreating the bureaucratic organization they left behind in corporate America. You may not want to be in the employee development business, but you will have an easier time increasing your return on effort when humans help you. Fortunately, we operate in a global sharing economy where entrepreneurs abound with the skills you need for freelance or project-based work.
Circle the jobs on your list that could be implemented or managed by another person. Consider technology solutions such as virtual receptionist My Receptionist, freelance marketplace Fiverr, and chore services TaskRabbit.
Amplify Your Fulfillment
As you eliminate efforts and shift responsibilities to team members and technology, what remains are the areas that you want to do. With your newfound availability and energy, you can focus where you want and do it well.
When you leverage marketing systems to increase your revenue and decrease your effort by finding operations support, you will experience a powerful shift. As you master return on effort, you will amplify your fulfillment.
Kristin Harad, CFP®, a former RIA-owner, is a marketing trainer and coach for independent financial advisers. To learn more about how to increase your return on effort and amplify your fulfillment, sign up for her complimentary educational webinar at amplify.kristinharad.com.