3 Secrets Financial Advisors Use to Run High-Efficiency Practices

"Carol and Lisa, please get me the living trust and all included assets for the Mahoney family… you know the drill".

Immediately, Carol proceeds to search specific desktops, emails, and the network server.

Lisa's job is to check the file room and offsite storage.

This "process" takes Carol and Lisa about 30 minutes each to locate the document.

Just another day at the office for this Connecticut-based family office.

And sadly, still the case in most of the 311,305 financial advisor offices in the United States, per Cerulli Associates.

The next example is not common, but it is an almost catastrophic situation that occurred to an advisor on the West Coast.

The advisor, we'll call him 'Dave,' was going through an RIA audit.

The audit took much longer than expected because Dave couldn't locate a requested document quickly enough. Dave was scheduled to leave for vacation with his family on a Thursday.

On the Tuesday before the advisor was expected to leave for vacation, the auditor required a final document.

Yes, just ONE final piece of paper.

Wednesday evening rolled around and Dave and his team still couldn't find it.

Needless to say, Dave canceled his vacation because he was not able to find the requested document and additional information requested by the auditor while he was waiting for the document.

Sorry, Dave.

Now you're probably thinking, it's not that big of a deal. Dave didn't have to pay a huge fine or go to jail. Is it really that catastrophic? since Dave did not have to pay a huge fine or go to jail, this should not be considered an "almost catastrophic situation".

Well, it was...for the kids.

Situations like these are, unfortunately, quite common. They happen every day to financial advisors around the country, and the results are predictable:

• Lost revenue
• Frustration
• Stress and anxiety
• Strained relationships

But not every practice is like this. If you study the most efficient ones in our industry, you'll discover that they do things differently. They have a number of "secrets" they use to run highly efficient practices.

And you can, too.

Secret #1: They've Graduated from Paper to Running on a BOS (Business Operating System)

Today, more advisors are turning to Business Operating Systems (BOSs) to help them develop more efficient practices, save time, and deliver superior, more responsive service.

This includes advisors like John P. Laurendi, CAIB, CLU out of Toronto.

With over 18 years of business experience, John has helped hundreds of small business owners protect their assets, secure lucrative tax benefits, and ensure their corporate dollars work harder for them. J.P. LAUREN & ASSOCIATES is growing quickly and has expanded across Ontario.

So much of John's success and, by extension, his practice's growth hinges on their ability to streamline practices and processes.

You might not realize what you're missing out on.

Here are five indicators that your advisory needs a BOS:

1. You're constantly putting out little fires.
2. Meetings are a time suck because they are nothing more than sessions where team complaints get aired and nothing is accomplished.
3. No one really knows what their responsibilities are and are proud to 'wear many hats.'
4. Balls are constantly getting dropped, leading to poor client care.
5. Churn baby, churn. You have high employee turnover, and good talent doesn't stick around

A successful BOS entails the effective interaction of people, processes, and systems so that firms can improve operational efficiencies.

Secret #2: They Have A Document Management Strategy

We are going to start with what most people probably consider a simple process, document management.

Within a given firm, documents are typically filed in emails, desktops, laptops, personal Dropboxes, mobile phones, network servers, memory sticks, onsite filing room and offsite storage.

This is an example of how a simple process can turn into a chaotic process.

Where do you actually go to find documents? Everywhere.

That's not a strategy.

Long delays in finding documents are sure to happen if you do not have a records retention and filing plan for the organization to follow.

The challenges advisors experience in this type of environment include spending extra time to locate documents and the risk of losing documents or confidential information getting into the wrong hands.

I want you to meet another real-world advisor:

Bisi Ogunwale, a licensed financial professional, provides financial knowledge and empowerment that help people save, protect, invest, and retire right. He has worked with hundreds of clients across the country to put in place workable plans to help people achieve a lifetime of financial independence and security.

Bisi has always had a great heart and a strong mission, but if it weren't for his willingness to get organized, he would have never grown his business to the size it is today. And he's a living, breathing example of the fact that advisors who prioritize efficiency come out on top.

Other financial advisors who are looking to centralize documents to become more efficient and improve security should take a few specific steps.

The first step is to list all of the documents that must be maintained, including documents for clients, accounting, tax, human resources, compliance, etc.

Then, identify all of the possible locations the documents are currently maintained.

The whole team should weigh in on this.

Many firms do not realize how disparate their information is until they go through this exercise.

Finally, list the records retention requirement for each document type based on guidelines established by the firm and local, state and federal regulating agencies for RIAs, employment and taxes.

Secret #3: They Use A Secure Online Document Management Tool

Once you've done this, you'll want to choose a secure online document management system. For example, BOX is a cost-effective alternative that is FINRA and SEC-compliant. Users can access the application via desktop, laptop, and/or mobile device.

The application includes unlimited storage and various levels of security and controls, such as two-factor authentication, and data is backed up daily in replicated servers. User permissions can be set (i.e., no access, view access, or edit access) so you can share with strings attached.

The application includes an audit log, and deleted folders and documents that go to "trash" can be recovered up to 30 days or longer (if you prefer). Documents and folders can be shared via email via a password protected link for better control of sensitive documents.

This solves classic problems of email, like attaching unsecured documents and/or sending files that exceed the maximum size limit. Above all, BOX includes collaboration, robust search options and integrates with CRM, project management, collaboration, and other applications.

According to Gail Woronick, Business Operating System Consultant for investment firms, "Due to the continued change in the governance, risk and compliance landscape, and the need to improve efficiency, this is all great functionality to have. However, you can have the best solution in the world, but it will be worthless if it is not set-up effectively and bad information is loaded.

"As they say 'garbage in, garbage out,'" Woronick continues. "When document management systems are implemented, an intuitive folder structure and document naming conventions should be established. Then, the process should be followed by everyone in the organization so that documents can be easily found. Otherwise, the document management system will turn into an online version of the file room in the back of the office, where it is hard to find documents."

It is also common to see contact, process, referential and other information for advisory firms stored in many different places, including email contacts, phone contacts, Excel, Word, business cards, data basis and, believe it or not, inside people's heads.

Per Woronick, "Implementing a CRM system is a great way to centralize information. These days, it is easy to customize CRMs so that they operate as a data warehouse. All front- and back-office processes can be centralized and automated with CRM systems like Zoho and Salesforce. For example, lead, prospect and client management, client onboarding and support, vendor management, deal sourcing, investment management, and the list goes on."

"Some of the types of information that can be stored in a CRM system include contact information, referential information for data mining and analytics, notes, and tasks," Woronick explains. "Advisors can set-up an e-form on their websites so that leads can enter inquiry information that will automatically feed to the CRM. Also, all of the new client paperwork can be converted to e-forms. After clients fill out the e-forms, the information will feed to the CRM. My favorite feature is the automated workflows to streamline processes. Workflows can be set-up to automatically create task reminders, display checklists, send emails, update fields, etc. You can kiss paper manuals and checklists goodbye."

A Real-World Case Study of a High-Efficiency Practice

A single-family office on the West Coast went through the process of customizing a CRM to centralize all of its information.

The first step in the process was to identify what information should be maintained in the system. The firm decided to maintain the following items in the system:

• Contacts
• Referential information
• Notes and tasks for entities (LLCs, corporations, trusts)
• Investors list
• Investments (real estate, operating companies, private equity funds, listed securities and managed accounts)
• Insurance
• Loans
• Vendors
• Employees

Since the system was a relational database, users could pull up an investment and all investors would be displayed and vice versa. Or users could pull up a real estate property and the insurance policies and vendors would be displayed.

The next step entailed information gathering. Information was gathered from various locations. However, a lot of the historical investment and process (i.e., how to) information were stored in employees' heads.

Several employee meetings were held to do brain dumps.

After the system design and customization was complete, data was loaded.

How did the new CRM impact the business?

The firm no longer lost historical information when there was turnover.

The learning curve for new hires was reduced.

The ability to search for key information eliminated the need to search through documents to obtain information.

Users could run analytics.

Furthermore, the firm was able to improve controls by limited employee access to information on a need to know basis.

Processes: An Investment for The Future of a Healthy Firm

Implementing new systems and processes is like an investment.

In the beginning, the firm must invest time and money to establish the new systems and processes in the hope of improving operational efficiencies in order to add capacity, beef up operating margins, and grow the business.

When tackling this, however, one of the most important things firms should consider and plan for is the fact that many people tend to not like change.

There are a few things a firm can do for effective change management.

Keep employees informed, have an open-door policy so that employees can ask questions, and help employees understand how the change will benefit them.

Up to this point, we covered systems for document and information management. Advisors that want to improve efficiencies also use systems to streamline and automate marketing, project management, collaboration, etc.

In a perfect world, when data must be maintained in multiple systems, interfaces should be set-up to seamlessly feed data between systems. In today's environment, this is much easier to do.

However, randomly buying and setting up applications without taking a holistic view of the firm's technology needs is not the way to go.

Advisors should do a thorough due diligence to confirm each application will meet the firm's requirements and understand if and how the applications interface with each other.

As stated above, a Business Operating System (BOS) entails the effective integration of people, processes, and systems so that firms can improve operational efficiencies.

We reviewed strategies for using systems to improve operational efficiencies. Now let's look at what effective integration of people, processes, and systems look like.

Integrating Right Processes with the Right People

A firm that plans, meets its targets, is profitable, has productive meetings that start and end on time, and covers everything on the agenda. People are held accountable, and when employees challenge each other, it results in the creation of great ideas (rather than a dysfunctional environment).

This probably sounds nearly impossible to accomplish.

It is feasible, but it does require dedication.

Advisors who want to accomplish this implement solutions such as the Entrepreneurial Operating System (EOS). EOS consists of a set of simple tools, guidelines, and exercises that synchronizes how people in an organization meet, solve problems, plan, prioritize, follow processes, communicate, measure, structure, clarify roles, lead, and manage.

Here are a few examples of EOS tools.

The Vision Traction Organizer (VTO)

Used to create an effective one-page business plan that includes core values, marketing strategy, and 1/3/10 year plans.

According to EOS, firms should hire, fire, review, reward and recognize people based on the core values.

All sales and marketing efforts should be in line with the marketing strategy, and employees' priorities should be in line with the 1/3/10 year plans.

Accountability Chart

The accountability chart is an effective organization chart. The process of creating this chart entails making sure managers can LMA (lead, manage, and hold people accountable) and the firm has the right people in the right seats. It also allows all employees to know who is accountable for what.

Level 10 Meetings

The Level 10 Meeting format allows the management team to stay abreast of how teams are performing and obtain updates on "Rocks," which are quarterly priorities and weekly "to dos." Most of the 90-minute meeting is spent effectively solving issues. The Level 10 meeting is a very structured process.

According to Woronick, "Initially, some people are uncomfortable with this process because they are not allowed to speak out of turn, talk on top of other people, or quarrel. Furthermore, no bullying, politicking, or elephants in the room. After a while, people start to get the hang of the process and begin to enjoy the meetings - especially when they start to see results."

To elaborate more on Rocks: This process allows firms to establish quarterly priorities and stick to them. The process is intended to prevent firms from getting distracted by "shiny objects."

Score Card

The final example is the score card. This process entails establishing KPIs (key performance indicators) to help monitor how the business is progressing.

These are exciting times. The technology disruptors are making it easier for advisors to take their businesses to the next level.

Centralizing information, streamlining and automating processes, and system integrations are much easier to do today than in the past.

Furthermore, technology is more feature-rich, intuitive, and cost-effective.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.