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Positioning Your Firm To Profit In Lean Times Ext raordinary - - PowerPoint PPT Presentation
Positioning Your Firm To Profit In Lean Times Ext raordinary - - PowerPoint PPT Presentation
Positioning Your Firm To Profit In Lean Times Ext raordinary Insight s From Mark Tibergien Advisors are facing an environment characterized by unprecedented money in motion. What does this mean for advisors in terms of business opportunity
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Overcoming Obstacles
Environment Hazards
S
- urce: Moss Adams LLP, 2008 Financial Performance S
t udy of Advisory Firms, S ponsored by Genworth Financial Wealth Management
Operational Risks S ymptoms
- f S
train Operational S
- lutions
Growing client loads Wider span of
control
Training deficiencies Multiple office
locations
Talent shortage Compliance burden Experience gap Low esteem of
- perations staff
Underutilization of
technology
Management void Workflow kinks Outmoded pricing Culture dysfunction S
ervice errors
Rising expenses Compliance
violations
Failing client
satisfaction
Turnover Profit drain Declining
productivity
Inefficiency Dedicated
management
Clear roles and
career paths
Workflow definition Operations equal in
stature to advice
Targeted training Meaningful
benchmarking
Right people in
right j obs
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Percentage of Firms with Individual
- r Firm Goals Tied to Incentive, 2005–
2007
Individual Firm
45% 41% 54% 47% 2005 2007
S
- urce: Moss Adams LLP, 2008 Financial Performance S
t udy of Advisory Firms, S ponsored by Genworth Financial Wealth Management
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How does an advisory business grappling with lower revenues find the resources to capitalize
- n the opportunities created by
high-net-worth individuals searching for new advisors?
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The Capacity Challenge
Create Capacity
S
- urce: Moss Adams LLP, Mission Possible II: The Link Bet ween Operat ional Efficiency and Human Capit al, Pershing Advisor S
- lutions 2009
S erve More Clients S erve Fewer Clients Build Teams Acquire Practices Refine Focus Change Experience
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Where Advisory Firm Owners S pend Their Time
Client S ervice 37%
S
- urce: Moss Adams LLP, Mission Possible II: The Link Bet ween Operat ional Efficiency and Human Capit al, Pershing Advisor S
- lutions 2009
Other 4% Operations 10% Portfolio Management 18% Business Management 14% Business Development 10%
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One obvious answer to the margin squeeze problem is improved operating efficiencies. But implementing cost savings programs are often easier said than done.
What are some of the leading firms doing?
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Understanding What the Financial S tatements Tell You
Revenue Direct Expense Gross Profit Overhead Expenses Operat ing Profit
Source: Moss Adams LLP, Mission Possible II: The Link Bet ween Operat ional Efficiency and Human Capit al, Pershing Advisor Solut ions 2009
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Employee and Technology S pending
0% 20% 40% 60% 80% 100%
S alary Expenses Technology Expenses Non-S alary Employee Expenses Other Overhead Expenses
S
- urce: Moss Adams LLP, 2008 Financial Performance S
t udy of Advisory Firms, S ponsored by Genworth Financial Wealth Management
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Overhead Costs as a Percentage of Revenue
Under $250k $250k– $500k $500k– $1M $1M– $2M $2M– $3M $3M– $5M Over $5M
S
- urce: Moss Adams LLP, 2008 Financial Performance S
t udy of Advisory Firms, S ponsored by Genworth Financial Wealth Management
44.7% 42.9% 42.5% 40.9% 37.6% 37.3% 39.0%
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Distribution of Overhead Expenses by Firm S ize
Under $250k $250k– $500k $500k– $1M $1M– $2M $2M– $3M $3M– $5M Over $5M
S
- urce: Moss Adams LLP, 2008 Financial Performance S
t udy of Advisory Firms, S ponsored by Genworth Financial Wealth Management
16.4% S alary Expenses Technology Expenses Non-S alary Employee Expenses Other Overhead Expenses 20.6% 9.1% 54.0% 19.6% 22.2% 6.4% 51.7% 27.8% 19.4% 6.9% 45.9% 28.3% 20.9% 6.3% 44.5% 31.8% 24.1% 5.3% 38.8% 31.7% 20.8% 5.1% 42.3% 37.5% 16.5% 5.5% 40.5%
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Retention Rate by Position Type
Professionals
S
- urce: Moss Adams LLP, 2008 Financial Performance S
t udy of Advisory Firms, S ponsored by Genworth Financial Wealth Management
92% 2004 2005 91% 78% 77% 81%
S upport/ Technical Administrative
81%
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Advisors of all types are confronting increased regulation and compliance costs.
How can they build these additional costs into there business structure and is there a way to use technology to simultaneously meet compliance requirements and increase the operating efficiency of the firm?
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Transformations Occur With S ize
S
- urce: Moss Adams LLP, Mission Possible II: The Link Bet ween Operat ional Efficiency and Human Capit al, Pershing Advisor S
- lutions 2009
S treamlined Delegation Committed Delegation Tentative Delegation Do-It-Yourself
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Advisory firm growth is ultimately limited by the number of advisors it employs.
What are some of the best ways to develop and retain human capital?
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Firms With Dedicated Managers Experience Higher Growth
Revenue
18.4% 16.5% 21.2% 16.4% With Dedicated Manager
Source: Moss Adams LLP, 2008 Financial Performance S t udy of Advisory Firms, Sponsored by Genwort h Financial Wealt h Management
9.4% 7.6% Without Dedicated Manager
Clients AUM
Compound Annual Growth Rate 2005–2007
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Advisory Firm Rate of Growth by Firm S ize
< $500k
6.3%
S
- urce: FA Insight, 2009
Compound Annual Growth Rate 2006– 2009 5.5% 5.0% 8.8%
$500k – $1.5M $1.5M – $3M > $3M
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What are the elite firms doing?
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Clear Positioning Aligning Business Organization
With New Vision
Managing to Profitability Implementing a Human Capital S
trategy
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