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A New Kind of Consultant

A Web site could be your next personal practice manager.

Joel P. Bruckenstein, 06/11/2009

The financial-services business is getting more competitive, so in order to prosper, it is not longer sufficient to be a good advisor; one also has to be a good business manager. Unfortunately, many advisors are lacking in the business-management department. There are a number of reasons for this. First, despite the few rotten apples that have been in the media recently, the vast majority of advisors I know spend more time worrying about their clients' financial well-being than they do worrying about their own. As a result, they spend less time than they should analyzing their own business. Second, the asset bubbles that we experienced late in the last decade and earlier in this one helped fuel top-line revenue growth without much effort on the part of advisors. For example, among firms that charged clients on an assets-under-management model, it was not unusual to see 20% top-line revenue growth with little change in the client base. Advisors were able, to some extent, to sit back and allow the market to increase their profitability. Under such a scenario, there is little impetus to maximize efficiency. Many advisors took the "if it ain't broke, don't fix it" approach.

Now, things have changed. At many firms, revenues shrank faster than expenses did, putting pressure on profits. This in turn is leading many firms to re-examine their business practices. Many of these firms are turning to practice management consultants for help.

Of course, hiring a good practice management consultant comes with its own set of challenges. One is that as the advisor community collectively comes to the realization that they need more practice management help, demand increases for good consultants. Historically, consulting has been a high-touch, personalized service, so good consultants have limited bandwidth--they can only service a limited number of clients if they are to maintain quality control. It also means that prices can be beyond the reach of many. As a result, a few consulting firms are experimenting with various technology tools in an effort to leverage themselves, thereby enabling the consultants to reach more users at a lower cost.

One of the more interesting newcomers in this space is Advisor Ascent from Quantuvis Consulting. The founder and principal of Quantuvis is Stephanie Bogan, a nationally recognized practice management consultant. She says that her firm's goal is to help advisors transform their practices into great businesses. Like other consulting firms, however, Quantuvis came to realize that the traditional consulting model was not very scalable. Bogan and her team developed Advisor Ascent in order to break out of the traditional consulting mold, leverage their expertise, and reach more advisors.

Some portions of the site are still being built, but there is enough there already to make it worth visiting. The survey portion of the site, the "Best Practices Studies Series" looks very promising. Bogan is somewhat critical of many other industry surveys, so this site seeks to address what Bogan perceives as the weaknesses inherent in other surveys. She says that other surveys take too long to fill out, which limits participation to a small subset of advisors who have the time and commitment necessary to provide all the details required. Advisor Ascent seeks to combat this by providing shorter, quarterly surveys that are easier to complete, each requiring thirty minutes or less. They also provide a worksheet that can be completed before entering the online survey form and clear instructions to further facilitate the process. The survey itself has some intelligence built in, so, for example, if you characterize your firm as an independent RIA, an additional question will appear requesting information about primary and secondary custodians.

The first quarterly study, Business Performance, is open to all interested parties through July 10. Subsequent studies will cover business development, human capital, and operations optimization. Advisor Ascent will publish results of the survey as others do (the findings will be published in August). In addition, Advisor Ascent will use the data collected to power the rest of the site.

For example, after you complete the survey, some of the data you've entered will immediately be used to populate a "financial dashboard." The dashboard initially allows you to track your progress toward your goals. Based on your survey answers, the system will automatically display your 2008 numbers. You can then enter your goals for 2009 and enter your results from the first quarter of 2009. The dashboard would then look at your year to date results, project them out for the remainder of the year, and let you know where you are in relation to the goal. This projection is a straight-line calculation that does not take any seasonal variability into account, but it is a good starting point.

Once the results of the survey are tabulated, the dashboard will benchmark your practice in relation to peers. In addition, it will automatically calculate important metrics that allow you to better monitor your business and your progress toward becoming a more-efficient practice. Furthermore, as you update your data quarterly, the system will automatically feed that data to subsequent surveys, thereby updating the benchmarking data for the benefit of all users.

All of what we have discussed so far is free, and it seems that there is some real benefit here to many advisors For a minimal time commitment, you get some basic analytics, a methods of creating and tracking some business goals, and benchmarking data that may be useful in refining your business plan.

The motivation on the part of Quantuvis is not solely altruistic, however. If all goes according to plan, they will also benefit from this arrangement in a number of ways. By encouraging as many advisors as possible to use the site, Quantuvis will build a richer data set, potentially much richer than what is currently available through other sources. In addition, through quarterly surveys, the data will remain fresh and current at all times. The quarterly survey format will also allow for the inclusion of timely, topical questions.

Quantuvis can also leverage this data by providing paid users access to the data along with the ability to mine and filter the data. In addition, Quantuvis can use the data to develop and sell additional products and services.

It is the personalized benchmarking that holds great potential. Rather than use a standard benchmarking report, you might want to benchmark your firm against other survey-takers that have a much more narrowly defined set of characteristics. Or, you might want to look at a comparison of firms similar to yours that outsource portfolio management reporting versus those that perform the function in-house. The paid custom benchmarking tool should allow you to perform these sorts of analyses, plus much more. For instance, on the paid portion of the site the system can highlight areas of concern, where your firm falls below benchmarks or below the outlined goals. In such a case, the plan is for the program to offer links to articles, advice, and resources that can help address the deficiency being identified.

A key portion of the paid site will be devoted to the tools section, which will mirror the survey topics, so initially there will be sections devoted to business planning, business development, human capital, and operations. The business planning section is expected to address issues such as designing a business architecture; visions values and goals; developing a business plan; financial models and management; and creating a succession plan.

The business development tools will help advisors develop a brand, build a marketing plan, design a referral program and create a sales process. The human capital tools will eventually address hiring staff, employee training, compensation planning and career development. Operations tools will help design a new client process, build a client service model, and document other firm systems. The expectation is that many of these tools will be wizard driven in order to make it as easy as possible for users to access the power of the system. Of course, until these tools are fully built out and ready for testing, it is impossible to gauge their effectiveness, but conceptually, the idea of using technology to provide this sort of practice management help is appealing.

The other portion of the site under construction is the Knowledge Centers. In contrast to the Tools, which are expected to be more wizard driven, the Knowledge Centers are expected to consist of articles, white papers, templates and recordings. Plans call for sections addressing client communications, client events, and adding an advisor.

Admittedly, Advisor Ascent is not as personalized as a one-on-one Quantuvis engagement, but access to their data and their expertise through this medium should cost a fraction of what a full Quantuvis engagement costs. If the concept catches on, it could provide a true benefit to some who would never have access to Quantuvis.

Since most of the premium tools are still under development I currently view Advisor Ascent as a work in progress, however, I would encourage readers to pay it a visit. You can complete the survey in well under thirty minutes, and the results provided may prove beneficial to some. Collectively, the data from the initial survey should give some indication as to whether or not this site will have staying power.

Without knowing the price Advisor Ascent will charge for premium services (it has yet to be set) and without a fully functional premium site to test it is too early to pass judgment on the merits of this system, but it does warrant further monitoring. For now, why not try out the survey and dashboard to see what you think. If the surveys prove successful, and if Quantuvis shares the results as promised through the free site, the advisor community as a whole can benefit.

Take a look at Advisor Ascent here.

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