A benchmarking study of the top practices in the Professional Investment Services (PIS) network will create the foundation of a program to reduce expenses and increase revenue and profit for practices across the network.
PIS has worked with the research firm Beddoes Institute to benchmark its top practices against the top practices in the Beddoes database to identify areas where efficiencies and improvements will lead to increased revenue and profit, including steps to substantially improve the number of new clients and the amount of new business sourced via referrals.
The general manager of strategic initiatives for Centrepoint Alliance, Anne Fitzgerald, says the exercise is part of PIS’s so-called SMART Practice program, which is designed to strip out as much as 50 per cent of PIS practices’ expenses and increase revenue by as much as 25 per cent. Fitzgerald says it will do this by helping advisers to identify and reduce low-value-add activities, and by increasing the consistency of operations across practices to help harness economies of scale.
Analysis
Rebecca Sheils (pictured), a director of Beddoes Institute, told the PIS annual conference in Shanghai that the benchmarking study divided PIS practices into broad categories. It analysed salary costs, overheads and profit as percentages of revenue for each category, and these findings will be used across the PIS network to assess where individual practices can work to improve performance.
“The key thing for me, when I look at data like this, particularly in relation to mixed businesses…and even more so financial planning specialists, in both our [benchmark group] but more [particularly] in PIS, the question that comes to mind is what systems and processes and operational changes can be made in those businesses to drive efficiency?” Sheils says.
Sheils says a key factor is increasing the amount of business a practice generates from referrals. Earlier Beddoes work has identified referrals as perhaps the most efficient way of attracting new business and converting prospective clients to clients. And there are three factors that need to be in place to maximise the conversion rate.
Quality of adviser
The first is the quality of the adviser, which encompasses the adviser’s range of technical skills and their interpersonal competence. The second is the clear articulation of a value proposition, including the fee arrangement – not the quantum of fees, but the transparency of the arrangements and the clear demonstration of value.
“If you optimise these, you will get your clients referring,” Sheils says.
“There’s a caveat to this: your client needs to know that you have availability, that you have capacity. Many of the advisers I work with don’t have capacity, but it’s about creating the perception in the eyes of your clients that you do.
“If you are doing that, if you are nailing those two things…then you will get client referrals. Guaranteed.”
Simon Hoyle travelled to Shanghai to attend the Professional Investment Services annual conference as a guest of PIS.
