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Practice Management December 1, 2023
Profitable Endeavors
Plan advisers discuss how they provide best-in-class services while still meeting—and trying to exceed—client needs.
Reported by Elizabeth Harris
Art by Ellen Weinstein
When Jim O’Shaughnessy reflects on the acquisition of his advisory firm, Sheridan Road Financial LLC, by Hub International five years ago, he is struck by how much the business climate has changed in that time.
Before the sale, O’Shaughnessy and his business partner, Daniel Bryant, had grown their firm to eight offices run by teams of specialists whose focuses ranged from investment research to compliance and marketing, with the whole company overseeing about $15 billion in assets. But increasingly, the two principals saw how firms such as theirs would benefit from better economies of scale.
“It’s a different conversation working with strategic partners that allow us to scale differently with centralized resources,” says O’Shaughnessy, a managing partner in Hub’s retirement and private wealth division, which is based in the Chicago area, about Hub’s roughly 10,000 plan sponsor clients today. “The goal is to allow that adviser or team to be able to do more of what they love, which is meeting new clients and working with existing clients.”
Finding efficiencies is part of the answer for some plan advisers intending to ensure the profitability of their business without sacrificing service. At a time when many plan participants want increasingly personalized advice and plan sponsors are seeking robust financial wellness programs, plan advisories are turning to a range of solutions aimed at managing costs while also expanding their offerings. Some are leaning on technology solutions to help curb expenses, while others are spending more time planning with their clients to identify what services they value most.
Practice Focus
If there was any hesitation about replacing in-person meetings with video conferences, COVID-19 did away with them. Even today, with in-person meetings available again, O’Shaughnessy says that, together with clients, his team is being more thoughtful about when to meet virtually and when gathering in-person is preferred. Pre-pandemic, quarterly meetings all occurred in-person and were costly in both time and travel expenses, as well as in preparing and shipping printed, color, 150-page materials, O’Shaughnessy recalls. He estimates his firm held close to 800 face-to-face client meetings then, whereas today, the majority of their meetings are virtual and are significantly shorter.
“In March of 2020, almost 100% of all our client meetings were face-to-face—so planes, trains and automobiles,” he says.
In the past, he typically would see one client in the morning and one in the afternoon. Now, he sees four or five in one day.
“On the one side, we are way more efficient,” he says. “But I also find that our team is probably working at least as hard, if not harder than, as they were before.”
For Mike Webb, a senior manager in plan consulting for CAPTRUST based in the New York metropolitan area, a principle focus area on the business side of an advisory is the “ideal customer.”
Most advisories have what he calls a “sweet spot” in terms of their client. For instance, if the ideal client has between $30 million and $100 million in plan assets, and a new prospect with $5 million in assets comes along, Webb advises the firm not to take on that new customer unless there is a separate, compelling reason to do so. That strategy will help avoid painful and potentially damaging conversations later if an adviser has to scale back on clients.
“A lot of what’s written out there talks about how to fire your unprofitable clients, and I guess most of the people who write those things haven’t actually had to fire them,” he says. “It’s not a pleasant experience, and it doesn’t tend to win you friends and the influence of people.”
Webb sees much more benefit in being strategic about which RFPs to respond to in the first place. “We don’t bid on all of them, because we may say, ‘That’s just not a good fit for us in terms of not only profitability, but relationships,’” he says.
Job Priority
Identifying ways to streamline work at OneDigital starts with an annual conversation in the fall when Jania Stout, Retirement + Wealth senior vice president based in the Washington, D.C., area, asks her team to note the top three tasks that prevent them from being more proactive with their clients. In some cases, this dialogue leads to recommending a new hire to take over specific responsibilities.
For example, OneDigital has a specialist dedicated to helping clients manage conversions from one recordkeeper to another. This fall, the team identified the need for a director of engagement services, she says. While the firm has focused on financial education for years, its employees noticed clients were seeking more support on an ongoing basis.
“Anybody can just offer education and webinars, but to really track the results and see if you’re on the right path to making a difference, you’ve got to have somebody that’s focused on it,” Stout says.
Stout says OneDigital is also thoughtful about managing its client workload in terms of both number and revenue.
“Once you get about 20 clients, that’s when …. the yellow light is on,” Stout says.
Limiting the number of clients per adviser could seem counterintuitive to the idea serving as many clients as possible with the fewest advisers. But Stout says providing services clients are looking for is the key to profitability.
“If you look at our client base, we don’t lose clients, so we don’t have to worry about replacing a client that walked out the back door with someone new in the front door. That helps with profitability,” she says.
Existing clients may also benefit from OneDigital’s complimentary services, such as wealth management or employee benefits, Stout says.
“Additional people on the team might cost more money in the beginning, but at the end of the day, we’re going to get additional services, because we’re going to be able to provide more value to our client,” she says.
Stout also sees how the selective use of technology helps keep costs down. She watches how the efficiencies multiply with one-on-one financial coaching over Zoom, scheduling by Calendly and even relying on artificial intelligence-backed notetaking that feeds into the customer relationship manager the firm uses to track client interactions. But those features are not meant to replace one-on-one meetings, she says.
“At the end of the day, you still need humans to deliver the advice to the participant from a financial wellness perspective, and that’s always going to cost money,” she says.
How do firms know whether their clients are happy with the service they are receiving? For Webb at CAPTRUST, asking detailed questions of clients in a review process is key.
“It’s a pretty comprehensive survey,” Webb says. “We’re discovering not only why you like us or don’t like us, but how exactly we can improve.”
