Pershing

Transitioning to a Fee-Based Business

Issue 8 - July / August 2009

Increasing Your Capacity

This final installment in our transitioning to a fee-based business model series focuses on efficiency. Once you have made the decision to transition to a fee-based advice model, you will need to consider capacity limitations when determining how to best implement your plan. After all, there is truth to the familiar expression that “time is money.” Many advisors, in striving to provide quality service and advice, find themselves with little time to focus on other revenue-generating activities such as client prospecting. Some even find themselves unable to take on additional clients, limiting growth opportunities.

This makes it crucial that you identify tasks and processes that can be performed by a larger team, or outsourced to industry providers, allowing you to focus on your clients and the aspects of your business about which you are the most passionate. Three key areas to consider include:

• Expand your staff
• Leverage technology
• Explore outsourcing options

Expanding Your Staff

Bringing on additional resources allows you to delegate time-consuming or non-revenue-generating functions to focus on what you do best. You may be wondering if you can afford to hire staff at this time.

Consider this: While there is a cost to expanding your team, doing so will allow you to concentrate on further engaging your clients and prospects and refining (or increasing) the services you provide, thus driving revenue growth.

Take a look at how you spend your time and the revenue associated with each of those tasks. Next, think about the revenue opportunities you may be leaving on the table due to capacity constraints. In most cases, staff expansion leads to new and increased revenue streams.

Leveraging Technology

Put your broker-dealer affiliation to work for you. Through your broker-dealer, you have access to technology resources designed to help you drive revenue and increase your efficiency. Platforms such as Pershing’s NetX360™ can provide you with one complete solution. There are options for managing your commission and fee-based business, including advisory and managed accounts. Designed to help you effectively manage clients’ accounts, deliver first-rate service and develop new sales and revenue opportunities, NetX360 will simplify daily tasks performed by you and your support staff, enabling you to save time, reduce errors and accomplish more. If you want to be even more technology savvy, you may consider expanding your staff to include a technology resource responsible for identifying and implementing solutions, which complement your business model.

Exploring Outsourcing Options

Given your business goals and current resources, it may make sense to explore outsourcing options rather than bringing on additional staff. Outsourcing allows you to simultaneously grow your business and your value proposition. Clients do not expect you to be an expert in all matters. They will, however, value your trusted and expert opinion for referrals to estate-planning attorneys, accountants and other professionals. The outsourcing concept also applies to functions such as financial planning or money management, especially for smaller clients. Third-party providers can save you valuable time, while still allowing you to deliver value to your clients.

For more information about these and other aspects of transitioning to a fee-based practice, we encourage you to review our new guidebook, Transitioning to Fees: An Investment Professional’s Guide.

For Professional Use Only.