Tracking Time

Do you track your time?  Like good economists, we can argue this question from both sides of our mouths.  Where do you stand?

By editors@strategic-i.com | August 05, 2013
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Professional retirement plan advisers do a ton of good work every day, collectively helping millions of Americans achieve better retirement savings outcomes.  Margins are not fat at most advisory shops, so to be able to continue to do the “good work,” advisers need to keep an eye on their revenue, which translates into getting paid for their time.  Sure, there are additional factors in determining fair compensation, such as fiduciary exposure, model portfolio management, and level of expertise, but the biggest factor is time.

A seasoned adviser can estimate the time demands of a plan client based upon a detailed service agreement or through past experience with similar clients.  But, sometimes, things don’t go as anticipated.  The scope of the work may change, or a plan may be unusually needy of attention.  Sometimes the extra workload is temporary, and sometimes…

Without tracking your time, how do you know whether a particular client relationship is financially viable?  Spending double the anticipated number of hours on a plan is effectively taking a 50% pay cut.  Without knowing approximately how much time is devoted to serving a plan, how can you assess the reasonableness of your own fee?  Too low?  Too high? Just right?

On the other hand, obsessing over time can be counterproductive.  It takes time to track time, and software for this purpose can be expensive.  Excessive focus on time can change the dynamic of a client relationship.  Clients are very sharp, and can sense cut-backs in the attention they are receiving.  Conversely, if you start explicitly billing for your time, the client may develop concern that your normal chit chat has devolved into a billing opportunity.