Advisors that view their back-office as an investment will structure the back-office to support their business plan. Advisors that view their back-office as a cost tend to invest in what they consider affordable – altering their business plan based on what the back-office can provide.
When advisors initially set-up their operational structure, they envisioned utilizing the technology available to independent advisors and staffing the back-office in-line with the business plan.
That is, until they saw the costs associated with building out the operational structure.
To manage costs, advisor may have decided to do some of the back-office functions themselves, including using their own CRM tool, using spreadsheets to calculate fees, and handling some of the client service requests and reporting needs.
Who is running your business?
Even if your back-office structure is currently working, is it supporting the business as you envisioned it? Is it able to support the growth of your firm?
As you plan for 2013, review all areas of your operations to determine if it is structured to meet your business needs or if the limitations of your back-office are running your business.
Your back-office review
- Information Needs Assessment: Are you getting the information you need to make the right business decisions, or are you making decisions based on the information you are able to retrieve? Too often, advisors define their needs in terms of data and reports, not information they need to make decisions. Advisors need information regarding the business as well as their clients. Having the right information enables them to focus on the “problems” they are solving, the “questions” that need answering, and the “decisions” they are making.
- Support Staff: Do your staff have the necessary expertise, experience, and more importantly, the time to help you run the business and service your clients? Is your staff too busy each day just trying to get through the daily/month-end/quarter-end/year-end processing while also servicing clients? Whether your back-office is run by employees or staffed at an outsourcing firm, you should evaluate whether the services provided to you are in-line with your business plan.
- Workflow Process: One way to analyze your workflow processes is to determine how many Excel Spreadsheets are maintained by you and your staff. Do you utilize spreadsheets to consolidate clients’ assets, calculate fees, and perform other tasks that should be left to the right tools? Once you have a handle on how many spreadsheets are used in your firm, determine how manageable it will be with a 10% or 20% increase in the number of accounts.
- Technology: Did you make the appropriate investment in technology to support your business (CRM, portfolio reporting, re-balancer, trade order management?)Have you budgeted for increases in technology costs due to growth? Areas to include in your budget are new technology tools for your firm, equipment upgrades, and technology costs for additional staff.
The sum of all the parts
Your staff, technology tools, work-flow processes, and outsourcing services need to work together to support your business. Perhaps you have the latest software tools but not the staff who understands how to use them effectively. Perhaps your back-office is run efficiently by the one person you rely on, but you could be vulnerable if that person leaves or needs an extended absence. Perhaps your outsourcing services, which years ago worked fine, no longer supports the direction your business is headed.
Perhaps it is time to adjust your back-office structure. This time, let your business do the talking.