Practice principals using a business coach are the ones likely to fatten profit margins by an average of 46 per cent, according to a practice development company.
But some boutique owners do not want help because they have an entrtenched one-sided view of their practice, Business Health managing director Terry Bell says.
Statistics compiled by the coaching firm show 42 per cent of practices have little or no contact with a business coach or consultant of any kind.
Those practices risk falling behind because they do not have a business coach to give guidance, a structured plan, criticism or an 'outside the square' view of how their business runs.
"To work alone, to work in isolation will become increasingly difficult as the market evolves," Bell says.
"The market will become ever more competitive, changing and challenging and often an external perspective can help you journey through that changing marketplace."
What do coaches do exactly?
Strategic Consulting and Training (SCAT) managing director Jim Stackpool says that like a life coach, a business coach examines and builds the bridge between where a practice owner is and wants to be.
"[A business coach is] like a guide who takes you over the mountains compared to a map, which just shows you where the location is," Stackpool says.
Generally speaking, depending on the organisation and the arrangement with the practice, coaches and planners meet hourly once a week, have full-day bi-monthly meetings, half-day workshops and arranged phone calls for their coaching sessions.
SCAT has identified five stages of that bridge, called "the wobbles of growth".
Those stages are starting out, administration, management, branding and merging.
"So if you are suffering from those wobbles then we would come in and say 'okay we need to come and do this course of action, in three months time you are going to be here and your numbers are going to look like this, you are going to feel like this'," Stackpool says.
An example for each of those phases is:
. Getting the basic set-up of a firm right during the starting out phase, understanding what the practice sells and making sure it is sold to the right clients, and getting prices right.
. Investing in the right staff and right systems for proper administration procedures for maximum practice efficiency.
. Separating management from ownership to make all aspects of the business accountable to their potential.
. Reducing the dependence on the owners so new or younger staff can build their centers of influence.
. Helping firms that are aggressive on growth to acquire other firms, whether they be financial planning or accounting based, to implement and conform to systems quickly.
Best Practice winner used a coach
WB Financial St Leonards, winner of IFA's Best Practice award for 2007, hired Stackpool as a business coach in its early days.
"We were going through the wobbles of growth," principal Paul Carroll says.
Stackpool pointed out Carroll's practice needed to upgrade the processes of how things were done, be more cost effective on time management and stop undercharging for its work.
However, Carroll says the biggest contribution Stackpool made was to get the practice and the staff out of their comfort zone to make those changes.
It is an indication of moving forward if the principal and coach are having heated discussions and differing view points, he says.
"(He) challenged us to make a commitment to our coaching program, we stood toe to toe," he says.
"He stood in my face and said 'you have to do it, commit me to do it and commit to me a time frame'.
"I literally in front of the staff publicly made the commitment to the coach that we would address this and address this within a 12-month period."
From that stage, the practice met with every client and explained why the fees needed to increase.
Both Stackpool and Carroll expected some clients to leave, but none did.
"Without the coach drawing this to our attention and challenging us, we probably would have fiddled with it rather than addressed it," Stackpool says.
Not inexpensive, but an investment
SCAT charges around $30,000 a year for its coaching services.
Both Carroll and Stackpool agree a fee like that can and has given many practices second thoughts.
"It is not inexpensive, but an investment," Carroll says.
"The comparison to how much he helped the business compared to how much he charged was blown away."
He says it is a good idea for any practice - whether they are new or old - to get a business coach if they do not already have one.
"It is a hard road to walk on your own, particularly when you are building a business," he says.
"It is always good to have an arms-length eyes and ears reacting to what you are doing."
Regret
RMG Financial Services adviser and general manager Patrick Canion regrets not getting a coach in the early days of the practice, which was over a decade ago.
He was afraid they might not be a credible business person or have a clue about the profession, but that turned out to be wrong.
The sixth-place finalist in IFA's Best Practice awards in 2007 decided to get a coach five years ago and discovered something - the practice found its clients thought differently to its advisers.
"We were aiming for a corporate approach and the business coach really got us thinking about 'what market are you in?'" Canion says.
He says the coach challenged the practice to cater only to retirees or high income self-employed people (RMG's target clients) or see if it could handle both.
"You cannot be a waiter in a silver-service restaurant if you are wearing polyester trousers," he says.
The practice is now in the process of sorting out its client focus and value proposition. Canion says it is a difficult process, but the business coach is helping the practice through it.
"Financial advisers hate to say no to people. If someone has money you love to have them as clients and what he is challenging us to do is say no because they do not fit in with our value proposition," he says.
Horses for courses
There are different coaching approaches within different organisations.
What worked for Carroll and Canion may not necessarily be the approach big institutions take.
St George Bank-backed dealer group Securitor, which has 440 advisers, uses internal specialists, which it calls business development consultants (BDC).
Securitor has seven BDCs, who play different roles for the practices depending on what stage they are in.
BDCs are usually very experienced and have been with the firm in some respect for over five years.
"The reality is that running a financial planning practice is much more complicated than being a retailer or a wholesaler," St George-owned Asgard Wealth Solutions director of sales and distribution Wayne Wilson says.
Securitor tackles practices by using a practice development manual called Business Torque, which BDCs are familiar with and advisers can use.
The dealer group's 22 years of experience has been put into the manual, which includes solutions and different approaches to problems practices can face.
The combination of storing that wealth of experience and using BDCs has lifted adviser productivity by 56 per cent, Wilson says.
In Business Torque, the firm has identified five stages boutiques go through - entry, grow, maintain, expand and exit - and developed a specific approach on how to deal with practices in those stages.
"When we sit down with practices quite often what we will say to people is that rather than develop a particular skill that we feel they might not have, do not waste your time on being somebody you are never going to be," Wilson says.
"There are planners who have key skill sets around sales and marketing but are having a hard time being technically correct.
"Back office [work] can sometimes be a dog's breakfast."
He says this system ensures Securitor practices install solid fundamentals that could define if they are every going to be productive or not.
For example, if a planner does a single and unique investment profile for every client, it can become time consuming and choke the practice with too much work, he says.
However, if clients are categorised into specific profiles, a lot of time and risk can be saved and the BDCs help the practices realise and administer this correctly.
"Imagine a practice with 1000 clients and imagine writing a review for each one of them," Wilson says.
"But if you have 150 clients who have the same profile, say a balanced one, you can just apply the review to each of them."
Ensuring practices have systems like that saves time and money and boosts productivity, he says.
Securitor advisers love the system and it helps them grow faster from internal feedback, he says.
"These businesses have become so complex. For an adviser to just be technically competent is a full-time job," he says.
"They have a desire to grow fast and they do know that we know what the best practices do and it is part of the dealer group arrangement so we do not charge.
"I would still argue that an external business coach is not going to know the critical things involved in running a financial planning business. The intricacy of getting a statement of advice right is something a coach is just not going to have an idea about."
Securitor is so happy with Business Torque that it has taken it online for its advisers and BDCs to use.
When advisers use it online they can go through step-by-step procedures on dealing with problems and implementing best practice with BDCs being a phone call away, Wilson says.
Not worth 20 cents
Australia's biggest dealer group, Professional Investment Services (PIS), also uses internal specialists because business coaching has produced mixed results.
It is a matter of getting a good one and that is the hard part, PIS managing director Grahame Evans says.
"There are plenty of coaches out there that I would not give you 20 cents on," Evans says.
Regular business coaches have a very general skill base and may not have the skills to deal with specific practice problems, he says.
"In a medical issue if you go to a generalist he can only take you up to a specific level and that is why we believe in having a range of people in the organisation when we need them," he says.
PIS deploys internal specialists in its practices when they have a problem.
For example, if a practice was having trouble with tax structure, a tax specialist would be sent, or if it was having trouble getting good staff, a human resources specialist would help.
There are around 10 specialists in the firm's network and Evans says the practices have a reactive approach to their issues, rather than a proactive one.
PIS does not charge its practices for those services as they are part of the company structure.
Coaching firm Advice Centre Consulting managing director David Fox argues against the dealer group's 'generalist' claims.
"It is far more important to understand the components and challenges of a business model that need to be addressed to build that business which is going to be able to operate continually and successfully in the future," Fox says.
"And that only comes from experience."
Fox helps boutiques realise that being a $3 million business is different from being a $1 million firm.
"To change the thinking of the principals does take some time," he says.
Fox has helped Hobart-based boutique Davey and Scurrah boost its revenue from just under 50 per cent to 100 per cent within three years.
One of his first ideas was to convince the boutique principal to employ a general manager, which was not easy as they do not come cheap.
"That was a huge step for them," Fox says.
Davey and Scurrah needed a general manager because it was stuck in its growth path, but Fox had a hard time convincing the business of the boost a general manager could bring.
When it got one, it had a better ability to recruit staff and improved recruitment policies, and better technology and processes.
Fox says it also saved the advisers a lot of time, which they were then able to spend with clients.
The next step was to get a marketing manager, who is creating a proper brand, developing advertising and working with professionals to source clients.
The boutique's growth rate would have been 40 per cent without Fox's services, but is now expected to be around 300 per cent in three years.
Bit of a fad
Coaching is an on-off trend, Stackpool says.
"People only turn to business coaches when there is something wrong. In the last 12 months there has been nothing wrong," he says.
He says coaching in 2007 probably did not earn anywhere near the results as coaching from previous years because advisers were too busy coping with demand to bother getting coaches.
"When the wind is at your back and you are making a hell of a great run at it, then that is the time you should be investing in making sure you can still make a great run when there are not great economic conditions," he says.
Advisers with better business skills than financial planning skills are the ones reaping the rewards in the current marketplace because business coaches have helped them install the fundamentals, given them a business and a client perspective, and criticised and challenged them to progress.
He admits one of the main turn-offs for having a business coach is price, which for SCAT hovers around the $30,000 a year mark.
But he says it is worth it because practices can gain a fivefold return.
"It is an investment, we price it accordingly, we only want people that can see that if they want to spend $30,000 on us then they are going to make in the order of $150,000 a year," he says.
"Price is a time management tool; if you are too busy, you are too cheap."
