Efficiency key to bigger book size: Study

Advisors who worry an idle minute results in less business might be right, according to new research sponsored by Univeris.

The research, conducted by Advisor Impact, surveyed 1,000 Canadian advisors in June 2007 and found a direct correlation between advisors making the most of every minute and the size of their assets under management.

“When financial advisors adhere to a set of time management principles inside their practices, this can lead to 31% more assets under administration, which in turn generates up to 18% more gross revenue and 26% more net income, before expenses,” says Carmine Tullio, CEO of Univeris, which provides technology solutions for financial service companies.

Tullio says the correlation between time efficiency and financial success was established in a similar survey they commissioned in 2006. With this study, Univeris was able to glean some sense as to why this is, as well as some best practices of efficient advisors.

Julie Littlechild, the president of Advisor Impact, says efficient advisors separate their efficiency planning into three core areas. The first is called strategic efficiency, which refers to what an advisor wants to accomplish overall. The second is structural efficiency, which is the system and processes developed to deliver on those goals. The third is personal efficiency, which is the advisor’s plan for each day.

Littlechild says her company conducted similar studies in the U.S. and found a much higher proportion of efficient advisors there. She attributes this to superior structural efficiency planning in U.S. firms.

“It was interesting to note the more efficient advisors in the U.S. had 60% larger practices than their less efficient counterparts and a 30% edge on less efficient advisors in Canada,” she says. “One of the key differences appears to be a greater focus on structural efficiency in the U.S., and that represents an opportunity for Canadian advisors.”

Advisor Impact identified five general areas where Canadian advisor firms can improve their structural efficiency, Tullio says.

“First is to establish clear practice goals. Second is to maintain one’s teams by clearly defining roles and establishing clear processes,” Tullio says. “Good structural efficiency delegates and administrates the responsibilities while at the same time allows advisors to focus on client management. A fourth feature is to establish and maintain minimum asset levels, and the fifth is to institute technology more effectively.”

Tullio emphasizes that structural solutions can’t just be implemented at the independent advisor level but need to extend to support staff.

“Of those five areas that are outlined, some require a change in behaviour or discipline. Some require a change in technology, which is where we can add value,” he says. “Firms just aren’t advisors — they’re advisor teams. It really is those goals and processes that an advisor team has to engage in.”

Advisor Impact also found that 68% of efficient advisors have formal business goals; 45% of efficient advisors implement some system of time tracking, versus 2% of less efficient advisors; and roughly the same amount (43%) of efficient advisors dedicate 30 or more minutes a week to planning their time.

The study focused only on how time was maximized and did not address the performance of advisors who work longer hours. It did note, though, that efficient advisors tend to have a greater number of clients, which may necessitate a greater need to be efficient.

Filed by Mark Noble, Advisor.ca, mark.noble@advisor.rogers.com