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Building the Business 101: Client Service Models

How you decide to manage client service and workflow will have a long-lasting effect on your firm's growth.

Veena A. Kutler and Annette F. Simon, 08/23/2007

This monthly series of articles describe the many steps and occasional missteps we have taken in building our financial advisory business, Garnet Group LLC. Currently, Garnet has eight staff members, more than 90 clients, $300 million in client net worth under advisement, and offices in Bethesda, Md., and Boston. Veena Kutler, CFA, and Annette Simon, CFP, are the principals managing the Garnet office in Bethesda.

In our next two columns, we will discuss different approaches to serving clients in offices with more than one planner. The model that we most often see is the assignment of a client to a single planner. The planner may have been responsible for bringing the client into the firm and handles all contact and client service. Compensation of the planner may be tied to the revenues associated with his or her client pool. Other firms work in matrix fashion, with different professionals responsible for an aspect of each client's needs. Compensation in this case may depend on team work and functional expertise.

This month we discuss how we manage client service and workflow in Garnet's two offices; next month, we will see how other planners handle teams in their practices.

The Bethesda Office
When the two of us first began working together more than five years ago, our goals were to provide outstanding service to our clients while enjoying our lives, families, and free time. Given our different backgrounds and strengths--Annette's in financial planning and Veena's in investment management--deciding that all clients would belong to the firm and that we would service them together was a no-brainer. We each needed the other's expertise and quickly found that we made a good team with complementary skills and styles.
That initial decision has had continuing implications in our structure and work process, our growth, and our compensation and lifestyle.

Structure/Work Process
Over time, we have developed a matrix structure with functional responsibilities. Veena directs all investment management, and Annette does financial planning. We've also split operational tasks with Veena heading up compliance in our office and Annette handling financial management. Strategic planning and human resources are shared functions at this point.

Our two Bethesda staff members report to both of us. Mary, our paraplanner, completes data entry and report generation in support of the financial planning process. On the investment side, she is responsible for trading support and portfolio management record-keeping. Andrea, our client service manager, handles most administrative details of our office including account paperwork and scheduling client meetings.

Because no one person is solely responsible for a client, constant communication among the four of us is critical to the smooth and efficient operation of our office. We rely heavily on our CRM, which for almost a year now has been Redtail, an ASP system we share with the Boston office. We enter everything that goes on in our office in Redtail--every client-related phone call, action, and event. Redtail hosts our e-mail, capturing every incoming and outgoing message and linking them to client records that are stored permanently and securely. At our request, Redtail added a team activity notification function that allows us to notify other team members of newly assigned tasks (Andrea assigns tasks in our office) as well as updated and completed ones.

With everyone working together and handling different aspects of client service, we consider this level of communication and functionality from our CRM essential. Since we've chosen to keep our client base small and manageable, every client is important to us.  We can't afford to let any detail slip through the cracks, and Redtail keeps us all on top of the minutia.

Like Redtail, our other key software systems--financial planning (MoneyGuidePro), portfolio record-keeping (Morningstar Advisor Workstation Office Edition), accounting (Quickbooks, hosted by an online service provider), and client account data (T.D. Ameritrade's Veo)--are all ASP-based, thus available to us from anywhere via secure Internet access.  Moreover, because our practice is completely paperless, every document is available to us on a secure Internet database (also hosted by Redtail). This ASP-based and paperless infrastructure allows us to work efficiently from home and to stay in touch with our practice while traveling.

Because we were never comfortable working with clients on a piece-meal or one-time basis, we provide essentially the same service to all clients: on-going, coordinated financial planning and investment management. It requires the efforts of our entire team to meet the needs of each client, and it limits number of clients we can profitably serve. Over the years, it has become necessary to increase our minimum fee to cover the expense of this high level of service.

We continue to grow selectively and have the capacity to serve another 15 to 20 clients at our current staffing levels. Longer term, we hope to add to our local staff--probably two advisors and one or two additional support staff. In our existing office space, where the lease extends to 2010, we can accommodate only one more person. We plan to coordinate our hiring with our next office move, but subletting our space is another option if rapid growth forces us to move before the end of the lease. We would view that as a high-class problem.

Compensation and Work Lifestyle
From the outset, we decided that net revenues would be shared evenly; our compensation has always been equal. With no individual ownership of clients, we have no need to compare and contrast the revenue attributable to each advisor's "book of business." On the plus side, because we prosper or suffer equally, we've never had a disagreement about income--we're both focused on the growth of the business not who gets what. On the down side, because we devote so much advisor and staff time to each client (both of us attend almost every client meeting), our overhead costs are relatively high and it has taken five years to bring our personal income from the business to a level we are finally happy with. In past years, we used to joke that between the two of us we made a good income--for a single advisor.

Working so closely together on each client, we're able to effectively cover for each other during vacations, out-of-office meetings, and days off. Mary and Andrea are able to handle many routine client needs using step-by-step processes and procedures that we have developed and documented in Redtail. We consider our staff members critical team players. Each has a job description and an annual performance review, during which we discuss strengths, weaknesses, and goals for the future.  Salary increases and bonuses are based in part on ability to service clients and prospective clients and keep them happy, as well as the overall growth of the office. We've created a process and structure that works for our small team--one that we hope to extend to a larger staff as we grow our business over time.

The Boston Office
Tanya and Lisette, our Boston partners, both began in the profession as comprehensive planners working at the same wealth management firm. Like us, when they left to run their own practice they took on all clients jointly, working as a team on each account but dividing work for each client as the situation presented itself, rather than along functional lines. Because they had only a part-time intern as support staff, as the business grew it became impractical for them to both be fully involved in all accounts. Over time, one or the other became more of the relationship manager for the client. While both worked on initial plans and implementation, the relationship manager would respond to client inquiries with the input of the other partner and take the lead on updates. This helped to facilitate client communication, as it was always clear who would respond to a client request, but since all notes and e-mail were stored electronically, both partners were up to speed at all times. This also worked well for vacation coverage and the general balancing of work flow.

They have continued to work that way until recently, when they began planning for Tanya's maternity leave. Because she wanted to take an extended leave, Tanya and Lisette reviewed their client list, found new homes for certain clients who didn't fit their core business model, and decided to begin to divide responsibilities more along functional lines upon Tanya's return. Lisette will take the lead on investments and financial management, and Tanya will focus on financial planning, compliance, and other responsibilities.

The Boston staff, like ours, now consists of two employees in addition to the two partners. They have a client-service manager who, like Andrea, handles account applications and most office administration tasks. They also have a planner on staff who provides technical support and over time will share client service and relationship responsibilities with Tanya and Lisette.

Like us, Tanya and Lisette work from home frequently. They have arranged through their executive office suite to have their calls directed to them at home. Using Redtail, Webex, e-fax, and our shared Web-based planning and portfolio software, they too work seamlessly with their office staff without physically going into the office every day.

Future Goals
As we mentioned earlier, we hope to grow our practice and to build a staff that can manage many aspects of the business. Our goal is to make ourselves less integral to the day-to-day operations of the office. We want to be free to work on the business rather than in it--a basic tenet of the "E-Myth" business philosophy. As our joint resource pool with the Boston office expands, we foresee a time when certain functions may be shared between the two offices, such as trading, data entry, and plan preparation. Even routine client contact is a function that could be effectively centralized as we grow together and merge our business models.

Your Practice
Are you part of a multi-planner shop, and if so do you operate as a solo or within a team?

We want to hear from you. E-mail us at dc@garnetgroup.com and tell us how you do things in your shop. Don't feel obligated to criticize us in order to highlight your beliefs. It's a big world, and we know everyone does things a bit differently. Feel free to share your story.  Unless otherwise specified, all comments are on record, may be used in future columns, and are attributable to you. In addition, let us know about practice management topics you would be interested in having us explore in future columns.

Next month, we will see how other planners in multi-professional offices handle client work. If you have a unique team approach you would like to share with us, please e-mail us.

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