Cut your costs, boost your profits

Running a financial planning practice is a wonderful thing, however, it is key to keep operating costs lean so you can make it through those difficult times. With that in mind, I put together a few tips on how to reduce operating costs so you can run an efficient practice.

1. Cut administrative costs

I am always surprised at how many support staff advisors have working for them. In some cases I am sure it is necessary but couldn’t there be some reductions here and there? Does any one advisor managing $100 MILLION really need 4 assistants? Assistants are fantastic and can really propel a business but in my mind, an office would need to be running a few hundred million in assets and at least 700 clients before needing that many admin hours, assistants. The most successful advisors I know run pretty tight ships with books of well over $100 million and only an associate, an assistant helping them.

2. Use technology to your advantage

• Go paperless. Start emailing letters to clients. We save about $1,000 a year in postage because we have 98% of clients that are using email.
• Send enewsletters. We use Constant Contact, they have very affordable and easy to use enewsletter systems.
• Start smart marketing and hold webinars. They are much cheaper and appeal to a different type of client. We recently held a client quarterly update online and had a great turnout. We also received great feedback. One client even tuned in by the pool in Costa Rica. For info on the software we use, see Advisor.ca article by my colleague Mathieu – Tech every advisor needs part 2
• If you wish to work remotely or check email in the evening consider free solutions like logmein.com

3. Consider taking on an associate

Just make sure your associate shares your main principles, beliefs when it comes to investments and planning. Most offices have all the infrastructure needed to run a practice, so adding one more person to the mix really can save money.

Make sure you collect an override that is appropriate or set up a cost sharing model if overrides is not the preferred way to go.

4. Negotiate bulk service discounts

Our dealership cut our Fedex costs by approximately 40% and they’ve worked out a 40% reduction on webinar software as well. We are happy and the dealer is a hero. Win-win!

5. Focused renos

We’ve been at our location over 15 years so it needed a little sprucing up. Instead of doing the whole office, we did the main entrance and converted our boardroom into a meeting/presentation room. The result is fantastic and cost efficient.

Sometimes we get so busy and things have run a certain way for so long that we forget to keep in mind key business principles. As business owners we need to constantly be looking at the cost and benefit of all our expenses. This will keep your practice strong and running like clockwork for many years to come.

Best of luck with your practice.

Robert Abboud, CFP, PFP, is the co-founder of AdvisorPractice.com, which offers advisors practical solutions to help transition to a financial planning practice and offers a 12 week training program. He is also the author of ‘No Regrets, A Common Sense Guide to Achieving and Affording Your Life Goals’. He has been offering life goals financial plans for over 15 years through his firm Wealth Strategies. Robert is available to speak at conferences and educational days. You can contact him at rob@wealthstrategies.com.