Practice Made (More) Perfect: Transforming a Financial Advisory Practice into a Business

324 Pages·2011·2.41 MB·English

by  Mark Tibergien

Additionalpraisefor
Practice Made (More) Perfect:
Transforming a Financial Advisory Practice into a Business
“Therehasneverbeenabettertimetoaggressivelybuildyourbusiness.Makeit
easy...trustMarkandRebecca’ssageadvice.”
—DeborahD.McWhinney,formerPresident,Schwab
InstitutionalandCitiPersonalWealthManagement
“Evenaquicklookatthemostsuccessfulfirmsinourindustryshowstheyhave
process excellence at the heart of their success—truly allowing them to create a
greatclientexperienceagainandagain.That’sthedifferencebetweentheleaders
and the rest of the pack. I believe that this is [Tibergien’s] best work yet as
it provides real-life anecdotes that can be applied to managing an investment
advisoryfirm—smallorlarge.”
—RudolphA.Galera,multi-familyofficeprofessional
“Thiseditionisamust-read.Addingtowhatwasalreadyaninvaluableresource
areMarkandRebecca’snewperspectivesontheindustryaswellascurrentbench-
marking data. If you are going to read only one book on practice management
andleadership,thisistheone.”
—KelliCruz,DirectorofInvestmentNewsResearch&Consulting
“Passion can start an advisory practice, but it takes intentional business man-
agement to achieve long-term success. In this book, Mark and Rebecca provide
step-by-step guidance on how to think about your business, the decisions that
must be made, and howto get the measurable results thatyou want. Ifyou feel
overwhelmed with the task of running a business, this book will be an invalu-
abletool.”
—ElaineE.Bedel,CFP,President,
BedelFinancialConsulting,Inc.
“Today,alladvisoryfirmsstandatthecrossroadsasclientdemographics,manu-
facturerinterests,andregulatorimperativesseektoaligntopresentonecoherent
picture to the marketplace. It will inevitably fall to the advisory firm to deliver
within the new framework. It is within this context that Mark Tibergien and
RebeccaPomeringhaveproduceda‘mustread’manualforallthinkingadvisors
whoarelookingtoevolvetheirpracticetothenextlevel.”
—TerryBell,foundingPartnerandManagingDirector,
BusinessHealthPtyLtd
“Over the last 20 years, Mark’s sage words have helped us develop our practice,
through good and bad years. Mark and Rebecca’s revision of a fabulous book
bringsthetopicrightuptodateandprovidesasuperbroadmapforthoseseeking
tomakethemostofthefabulousopportunityandchallengesweallface,resulting
inbetterinformedchoices.Withoutthisintelligence,businesslifeisunnecessarily
moredifficult.”
—MarkRalphs,Partner,FinancialPlanningCorporationLLP
“Mark and Rebecca are exceptional industry consultants who, in their current
roles as financial services executives, have further enhanced their solid industry
credibilityandthought-leadingperspectives.Advisorswillbewell-servedtoapply
these new learnings from Practice Made (More) Perfect in order to better assure
sustainablebusinessperformancethroughchangingoperatingenvironments.”
—ElizaDePardo,PrincipalandDirectorofConsulting,
FAInsight
“Thereissimplynootherresourceonthesubjectofmanagingafinancialadvisory
practiceascomprehensiveANDaspracticalasPracticeMade(More)Perfect.Of
coursethat’shardlyasurprisesincetheresimplyaren’ttwootherpeoplewhoareas
knowledgeableonthesubjectastheauthors.Ifyouareanadvisorwhoislooking
to build a more profitable, faster growing, and more valuable practice, you can
begin with this book and come back to it every time you face an important
decision.”
—PhilipPalaveev,industryexpertandPresident,Fusion
AdvisorNetwork
PRACTICE MADE
(MORE) PERFECT
Since1996,BloombergPresshaspublishedbooksforfinancialprofessionals
oninvesting,economics,andpolicyaffectinginvestors.Titlesarewrittenby
leadingpractitionersandauthorities,andhavebeentranslatedintomorethan
20languages.
TheBloombergFinancialSeriesprovidesbothcorereferenceknowledge
and actionable information for financial professionals. The books are writ-
ten by experts familiar with the work flows, challenges, and demands of
investmentprofessionalswhotradethemarkets,managemoney,andanalyze
investmentsintheircapacityofgrowingandprotectingwealth,hedgingrisk,
andgeneratingrevenue.
Foralistofavailabletitles,pleasevisitourwebsiteatwww.wiley.com/go/
bloombergpress.
PRACTICE MADE
(MORE) PERFECT
Transforming a Financial Advisory Practice
into a Business
Mark Tibergien
with Rebecca Pomering
Copyright©2011byMarkTibergien.Allrightsreserved.
PublishedbyJohnWiley&Sons,Inc.,Hoboken,NewJersey.
PublishedsimultaneouslyinCanada.
ThisbookisarevisededitionofPracticeMadePerfect:TheDisciplineofBusinessManagementforFinancial
Advisors,publishedbyBloombergPressin2005.
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LibraryofCongressCataloging-in-PublicationData:
Tibergien,MarkC.,1952–
Practicemade(more)perfect:transformingafinancialadvisorypracticeintoabusiness/
MarkTibergienwithRebeccaPomering.
p.cm.–(Bloombergfinancialseries)
Includesindex.
ISBN978-1-118-01931-3(cloth);ISBN978-1-118-09547-8(ebk);
ISBN978-1-118-09548-5(ebk);ISBN978-1-118-09549-2(ebk)
1.Financialplanners. 2.Management. I.Pomering,Rebecca,1974– II.Title.
HG179.5.T528 2011
(cid:2)
332.60681–dc22 2011008889
PrintedintheUnitedStatesofAmerica
10 9 8 7 6 5 4 3 2 1
Ourtremendousgratitude forArleneTibergienandGrant
Pomeringfortheirloveandsupport,andtoourcolleaguesand
partnersatPershingLLC andMoss AdamsLLP, fortheir
wisdom, insight, andfriendship.
Contents
Preface xiii
Acknowledgments xvii
Introduction xix
CHAPTER1
TheFinancialAdvisoryBusiness:What’sNext? 1
WhatAreTop-PerformingFirmsDoing? 3
TheBusinessasClient 4
10ThingstoThinkAbout 4
CHAPTER2
StrategicBusinessPlanning:DefiningtheDirection 11
MuddledMessages 12
WhatIsYourStrategicDifferentiator? 14
WhatIsStrategicPlanning? 14
TheStrategicPlanningProcess 16
CHAPTER3
ManagingWorkflow:TheBackOfficeMovesForward 35
SourcesofInefficiency 36
AchievingEfficiencies 37
DoesEfficiencyComeataCost? 39
ManagingRisk 45
CHAPTER4
BuildingLeverageandCapacity 55
GettingtotheNextStage 56
BecomingaMarketDominator 57
TheChallengeofGrowth 58
TheEntrepreneurialCrossroads 59
CornerstonesoftheProfessionalPractice 66
ModelsThatWork 68
ix
x Contents
LeveragingYourAffiliations 72
BigIsBeautiful 76
CHAPTER5
TheHumanCapitalPlan:PeopleWhoNeedPeople 81
TheProblemYouCan’tDoWithout 82
AligningHumanCapitalwithStrategy 83
TheNatureoftheWork 86
TheNatureoftheWorker 90
TheInterviewingProcess 93
CHAPTER6
CreatingaPositiveWorkplace:
ProfessionalDevelopment 99
TheCareerPath 101
TheAppraisalProcess 104
CoachingandDevelopment 107
TheWorkplace 109
BuildingaFoundation 114
TheFour-WayTest 115
LessonsonInclusion 125
CHAPTER7
RewardingBehaviorandPerformance:
CompensationPlanning 129
DevelopingaPlan 135
TheComponentsofCompensation 139
EstablishingBaseCompensation 149
EstablishinganIncentiveCompensationPlan 150
Owner’sCompensation 153
CHAPTER8
ReadingtheFinancials:FinancialManagement 155
FundamentalsofAccounting 155
ConstructingaFinancialStatement 156
TyingtheFinancialsTogether 165
CHAPTER9
Income,Profit,CashFlow:WhattheNumbers
AreSaying 167
FormattingtheFinancials 168
AnalyzingtheIncomeStatement 169
AnalyzingtheBalanceSheet 179
AnalyzingtheStatementofCashFlow 184
FinancialImpactAnalysis 185
Contents xi
CHAPTER10
ManagingGrowth:TheSearchforSolutions 189
HarnessingResources 190
UsingFinancialLeverage 192
ManagingCashFlow 194
HowAboutEquity? 195
ReferralAgreementsandJointVentures 196
PracticeAcquisitions 199
InvestmentsinNewInitiatives 203
CHAPTER11
Exit,StageLeft 205
ThePriceofIndecision 206
SalePlanningversusSuccessionPlanning 207
WisdomorObsolescence? 209
WhattoDo? 210
KeepingItintheFamily 211
HowtoMakeaPartner 217
WhatAbouttheSuccessor? 223
MergerasaSuccessionPlan 226
SoWhatDoYouDo? 228
SeekingCounsel 230
DevelopingtheAssumptions 231
TakeControl 232
CHAPTER12
OnLeadershipandManagement 235
WhatDefinesaLeader? 236
WhoWillEmerge? 239
IsAnybodyLeading? 240
RitesofPassage 242
Ready,Fire,Aim 244
AwakeningtheManagerinYou 248
PracticeWhatWePreach 251
HiringYourBoss:DoYouNeedaCEO? 251
Afterword 257
Appendix 261
AbouttheAuthors 297
Index 299