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'Being Done' for the Smaller Firm

Advisors weigh in on limiting business growth to balance personal growth.

David J. Drucker, 07/17/2008

The basis of these articles is the concept of "being done," as advanced by coach Bill Bachrach of Bachrach & Associates Inc. in San Diego.

Bachrach likes to tell his advisor clients that they're done growing their practices when 1) they run out of time to serve more clients and don't see degrading the quality of their services in order to free up time as a solution, and 2) they're serving only clients who meet their ideal client profile. Of course, there are other, ancillary signs you're done, say Bachrach, like being able to clearly communicate the span and quality of services you provide and the types of clients you enjoy serving.

The problem is this: Not all advisors identify with this concept.

"There's a real separation in our industry between individual or small groups of professionals, and those building businesses around professional services," said Brian Hamburger, head of the Hamburger Law Firm LLC in Englewood, N.J. "The issue seems to apply only to the former. A true business operation would never be in a position of degrading its service to make time for new clients."

Are only smaller firms likely to fit the issue of "being done?" Not necessarily but, by definition, they're more likely to identify with the issue because small firms--unless the owner is just starting out--are usually small by design. Behind most small firms are practitioners who want to lead a certain lifestyle, and that is a priority to which they adapt their business model. Many are quite clear on how large they want their firms to get in terms of clients served because anything greater than their established target will mean hiring employees (or more employees) and that, in itself, is lifestyle-changing, since people management is a different job from client management.

Let's examine some of these practices to understand the kinds of lifestyle goals their owners have set for themselves and by which they have defined their firms' growth limits.

Hourly planner Cheryl Krueger of Growing Fortunes Financial Partners, LLC in Schaumburg, Ill., has a "being done" goal of working with 80 clients per year, based on her expected available hours, paraplanner assistance, and desired time-off goals.

"Since I'll always have new clients, I won't strictly meet that part of the 'being done' criteria," she said. "But Bill Bachrach's 'being done' goal helps me keep a balanced life, and that's very important to me."

Another hourly planner, Dylan Ross, owner of three-year-old Swan Financial Planning, LLC in East Windsor, N.J., bases his goals on hours rather than clients.

"I will be done growing when I'm billing 900 to 1,000 hours per year. This doesn't mean I'll stop taking on new clients," he said. "It's my hope that the longer a client works with me, the less time they'll need with each passing year. Also, a fair portion of clients engage me for one-time issues. So I don't expect to hit a client capacity limit but rather a time limit."

Once at his hourly capacity, which he has almost reached, Ross said that he will focus his practice more on the types of planning projects he particularly enjoys while referring clients who don't meet his definition of "enjoyable" to other colleagues with specialties different from his.

One might argue that hourly planners are more likely to have a "being done" outlook on financial planning because their capacity (defined by hours in the day) is capped and/or less amenable to leveraging than that of other planners.

For example, Everette Orr of Orr Financial Planning, LLC in McLean, Va. provides a comprehensive service with investment management, yet still has a "being done" goal. Assuming that he has assembled a base of clients whom he loves working with, Orr said that "I believe I can effectively serve about 50 families, and that is about it. With average household investments of, say, $400,000, that would be assets under management of $20 million with annual gross revenues of about $200,000. This will give me a lifestyle practice where I love coming to work each day, I have meaning and purpose in my profession, and my practice uses my natural gifts and talents."

Currently at 16 families and $11 million under management, Orr said that he's a long way from the finish line, but he keeps that goal clearly in sight.

"As my grandfather used to say, I want to naturally 'wear out' from a profession I love but never 'rust out' from doing nothing in a meaningless retirement," he said.

Don Whalen, owner of five-year-old Versailles Financial, LLC in Alpharetta, Ga., emphasizes the "ideal client" portion of the "being done" definition perhaps more than the capacity limitation part.

"I will be 'done' when I can no longer find clients whom I want to serve. For every client I accept to humbly serve (as I would want to be served), I politely decline 10 interested prospects," he said. "I want to be able to call up my clients and be excited to talk to them, and I can't serve someone if I dread talking to them."

Whalen acknowledged that his actual capacity goals are made a bit hazy by technological advancement.

"As technology and outsourcing allow us to work more efficiently, we can take on more clients and free up more time," he said, adding that he doesn't rule out hiring more people to increase "bandwidth."PAGEBREAK

Technological tools and other resources available these days to advisory firms of all sizes do tend to make the picture a bit fuzzy.

"When I first started my practice, I thought that if I ever made it to 100 client families, I'd be 'done,'" said Wayne Titus of AMDG Financial in Plymouth, Mich. Yet he's well past that mark now and still doesn't know exactly where the end point is.

"I never felt the need to maintain a client minimum, nor decide that when I reach 'X' dollars of assets under management, I'd be 'done,' " he said. "At some point down the road, if it makes sense to add more personnel to support delivery of services, I may decide to do that, but given the processes we've put into place and the excellent support I have, I don't see the need for that for quite a few years."

Some might say that the advisors I've quoted are too new in business (although most have long careers in financial services, working in other capacities before starting their own firms) to know what they're actually going to do in five or 10 years. For example, we get a cautionary tale from Ted Feight, who operates Creative Financial Design of Lansing, Mich., with two assistants and has worked in financial services for 34 years:

"During the late 1980s and early 1990s, I thought I had grown my practice to the point that I stopped taking new clients. What a mistake that was," he said. "Now, I have about one funeral a month. My older clients, who have the larger accounts, are dying off. I had slowed down my marketing and now find it hard to get the rusty wheels moving again."

Feight suggested that advisors who are capping their practice growth should never consider themselves completely done with growth.
"As someone once said, 'The first step to moving down the ladder of success is when you stop moving up it and try to stand still," he said.

As Feight pointed out, "being done" isn't impossible, but advisors should take precautions to prevent their practice from declining before they're ready to leave the business.

The more interesting question to me, though, is why some advisors so readily take to the "being done" concept while others have trouble relating to it. The former tend to be advisors with operations they've deliberately limited, in some fashion, so as to preserve a work-life balance that is, for them, of the highest priority. Does that mean that other advisors who don't "get" the "being done" concept have unbalanced lives--or do they simply have a different view of what it means to serve clients?

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