Top 12 Practice Management Trends (Part I)

Growth forces innovation, both in small and large firms.

Here's what I mean. You've grown your firm intentionally and with success. After 10 years, you have one partner and a staff of five. You can't run the business with the same systems you used when it was just you and your partner. There are seven people who have a need to know what each other is doing. Seven people are coordinating their efforts for the benefit of what is probably at least several hundred clients. You've developed sophisticated internal systems out of necessity.

Or you're a successful sole practitioner. You've peaked in your growth and can no longer wear all the hats if you want to make more money. But you neither want to surround yourself with a big staff nor with a lot of complicated desktop systems. There are practice-management systems that will take you to the next level, waiting to be discovered.

I'm in the catbird seat as a practice-management journalist. My job affords me the privilege of talking to the most innovative members of the profession and seeing those innovating systems and procedures that will carry this industry the final steps to being a true profession. In a two-part article, I'll cover the top 12 practice-management trends I'm seeing in the industry. This article will cover the first six. I'll finish the list next month.

1. The Continued Move Toward Fee-Based and Fee-Only Planning
One way to tell this story is to look at the experience had by broker-dealer organizations that encourage their reps' move toward a more fee-based business.

Dennis King, vice president of business development for Securities America, tells the BD's story: "We've seen a tremendous shift in recent years that has led to 1,500 of Securities America's 1,800 reps being registered to do fee-based business. Assets under management by our reps rose from $1.1 billion in 1998 and $2.1 billion in 2000 to $8.4 billion in 2005 and $9.5 billion today."

King further notes that fee-based revenue has risen from about 15% of total revenues in 2000 to 26% today.

And this story is repeated throughout the industry by most enlightened broker-dealers. Why? Because the industry is catching on to the connection between running a fee-based operation and achieving many advisor and broker-dealer goals: