I can recall the moment vividly – it was mid November 2018 and the last day of a three-day conference which had been attended by almost 300 high quality, professional financial planners. The sessions had been informative and educative, the speakers had been interesting and well prepared and the coffee cart conversations positive and confident. But then, during the closing session the convenor posed a question to the audience – who had made a significant change to their business model in the ten years since the GFC?
Put another way, in response to such a major event, how had these business owners reacted? Had they revised their fee structure to move away from asset based for example? Maybe they had tightened up their product selection processes? How about their investment philosophy? Had they built up a cash reserve buffer which would cover them in part for another unforeseen drop in revenue? You get the drift.
I was therefore so disappointed that the response from this quality audience was, to say the least dismal. While there was almost universal agreement that the years following 2008 had been difficult, challenging and indeed threatening AND the attendees agreed that we were getting closer to another significant economic downturn, few businesses had actually done anything to insulate or at least ameliorate their business against another unforeseen disaster. Oh well fingers crossed!
Roll onto March 2020, enter Covid-19. Financial advice practices have again been impacted by an unforeseen disaster, which has challenged their business model. And, in response, owners have responded quickly, positively and empathetically. Significant changes have been made – staff working from home, virtual has replaced face to face, office leases are being reviewed, IT and cyber security measures have been upgraded and so on.
Full marks for a successful response!
But I can’t help but wonder will any of these changes now in place, be seriously considered as potential longer term once this pandemic has passed. Or will the temptation prove too great and advisers and business owners alike will look to return to the previous ‘business as usual’?
Surely COVID has presented every one of us with the opportunity to re-think our longer term business practices, goals and aspirations and, as such, isn’t this now an opportunity which shouldn’t be missed?
So, before you rush to return to the way it was before, why not invest a few hours of your time to:
1. Critically analyse your performance during the lockdown period:
- Clients – Ask them, how do they think you and your staff have performed? Has your communication been effective, how about your ‘virtual’ meetings and response times? What could you have done a little better? We discussed this in more detail recently: https://www.businesshealth.com.au/the-correlation-between-feedback-profitability-has-remained-a-constant-feature-in-data-analysis-for-20-years/
- Staff – Seek their feedback on your leadership. Perhaps even more than their clients, staff have been significantly disrupted during COVID. As always, I think utilising an independent third party to undertake these types of surveys works best. Confidentiality and anonymity provide the best framework for feedback, while the ability to benchmark results against the broader market will allow you to truly (and objectively) gauge your performance against your peers.
- Strategic partners, referral sources and centres of influence – At the risk of sounding like a broken record, reach out to them and gain their feedback and insight into your performance. Best done by phone and they’ll no doubt appreciate receiving your call.
- The financials – How do your revenue and profit levels compare to pre Covid? Ditto re client retention rates and general marketing activities? How do you think these will play out for the rest of the year? Are there any opportunities to reduce some expenses – your rental arrangement perhaps? Do you need to increase your operational expenditure budget to account for any additional short term strategies you’ll implement when we emerge from lockdown?
2.Through the above, you will have gathered all of the information you’ll need to determine the real impact and implications of COVID on you and your business.
Why not hold a PC (post COVID) planning workshop – set aside a day if it’s possible, appoint an independent facilitator and go offsite (virtually or physically – whatever works for you best). Regardless of where you hold it and who can attend, the following topics should be on your agenda:
- How did your Business Continuity Plan hold up during this major disruption? Was it effective or were there holes in it? Does it now need to be re-visited or perhaps even developed? Could it cover a second round of lockdown?
- Review your operational business and strategic plans – are adjustments now needed in terms of your goals, strategies and broader KPIs? Why not model a few different scenarios – for example what would be the impact on your profitability, due to the removal of the JobKeeper subsidisation? What would a severe drop in housing values do to your investment oriented clients?
- Are there any changes (improvements) which should now be made to your business model? How did your technology hold up? Did your licensee and other service providers step up – were they helpful and supportive?
- How about your staff – do their job descriptions need updating? Should their KPIs now be revised?
While there’s nothing wrong with deciding that no changes are needed, it is flawed to assume that’s the case without careful consideration first.
3. If you decide that there are changes that you’d like to make more permanent, the challenge moves towards the ‘how’. How can I effectively implement them? Given that it took a crisis to actually ‘force’ you into them in the first place, is it realistic to expect that they’ll now be easily, quickly made permanent?
This is where I believe that the introduction of an experienced third party can produce real dividends. Behind most success stories, there is invariably an external influence (individual coach or advisory board) who is quietly working to help guide their client towards their goals and objectives. This is certainly the case with at least 44% of Australian practices who are currently utilising the services of an external adviser/coach/advisory board on at least a quarterly basis. PDM/BDM’s are the most popularly used (64%), closely followed by accountants (30%) and an independent business coach (26%).
As an aside, this is also a wonderful opportunity for licensees to step up and facilitate these types of discussions through their various professional development communications and programs.
While the above might seem on the surface to be a lot of extra work at a time when your business is only just emerging from significant disruption, the fact is that most of the hard yards have already been done. Why not leverage it now into a more permanent return on your investment?
Great things never came from comfort zones, right!
For your consideration.