The Practice Doctor is IN

Al Depman, CLU, ChFC, CMFC, BH

The Greatest Gift for You, Your Team, and Your Loved Ones

As we wrap up a rather, um––what’s the right word––interesting 2008, it’s a good idea to take the temperature of your practice going into 2009. Most advisors I’m working with these days are trying to put the best finish they can on a tough year, closing deals and getting business through the pipeline.

Last month we discussed various methods of giving thanks and appreciation to your clients and other key people in your practice. Let’s pick up the mirror and look at you and your practice. The greatest gift you can give yourself, your team, and your loved ones is a strong start to 2009. In the year-end craziness, both professionally and personally, allow yourself a moment to pause and take your practice’s temperature.

In all my research into best-practices, I have simultaneously uncovered some of the worst-practices in the financial services business. One of the worst of the worst-practices is exhausting all one’s resources in an all-out year-end push and entering the New Year having to essentially start all over again from scratch.

This is a formula for discouragement. Traditional wisdom in our business is summed up in “As January goes, so goes the year.”  I’ve come to agree with that maxim.  A slow or poor January puts undue pressure on the all-too-short February and before you know it, the first quarter is over and you’re already in the hole for the year. The resulting performance pressure causes shortcutting of business systems and processes and a truncated ability to be proactive with top clients. In short, a bad January can have long-term stress implications to your stomach, your team, and your family.

There are four indicators to review to see whether or not your practice has a fever going into 2009.  See how you fare in each:

1. Prospect Inventory
2. Open Cases
3. Submitted Cases
4. Opportunity Inventory

Prospect Inventory

The prospect inventory reflects the number of new prospects you have to call in the New Year. These are prospects, not suspects. Suspects are just names and numbers.  Prospects have some substance: they’ve been referred, provided in a warm context (by a Center-of-Influence, for example), meet specific criteria (executives at a particular corporation or a targeted list of architects), or have indicated in the past to be “called back later.” 

A healthy prospect inventory number is 50 or more. 25-50 is a mild fever and fewer than 25 puts you in the danger zone. 

Open Cases

Open cases are clients or prospects you have asked to buy something but they have yet to say yes or no. The presentation has been done, and some exploratory underwriting may have been started. Still, your offer has not been formally accepted.

This is an area where too many outstanding open cases can be as dangerous as too few. 10 is a good, healthy number. Fewer than 5 can be as problematic as 15 or more. Too few might suggest not having enough prospects or an inability to close. Too many open cases can indicate a lack of urgency on the prospect/client’s part, which speaks to the advisor’s inability to close.

Submitted Cases

Often referred to as “pending business,” these are the cases where you have gotten agreement on a course of action and collected the check or initiated the transfer.  Smart advisors will have a healthy number of these cases crossing over into the new year.  Depleting this supply before yearend almost guarantees a slow January. Here, the bogey is not so much a number as a percentage of income. The submitted cases awaiting completion should be approximately 50% of your average monthly income in 2008. I like to see this be spread out among five cases or more––to prevent the “elephant hunting” mentality and mitigate risk. 

50% or more of average monthly income in submitted business is very healthy. The temperature rises as you get closer to zero.

Opportunity Inventory

These are the seeds you’ve already planted with current clients.  During the course of the year, you know that a certain amount of business will be written from current clients based on their implementation plan, interest areas that were to be addressed later, and cross-selling campaign plans.

Recording these opportunities is an exercise that can provide great peace of mind. There is a form on which to record these opportunities that is available for the asking (just email me at aldepman@mitchanthony.com and I’ll send it to you).

A healthy opportunity inventory is to know what the next sale or asset-gathering opportunity is for at least 50% of you top-tier (A and B level) clients. These opportunities should be addressed at the annual review or at some pre-determined point in 2009.

In summary, the four aspects of your practice’s health speak to:

1. The immediate future: pending cases;
2. The near future: open cases;
3. The intermediate future: opportunity inventory; and
4. The far future: prospect inventory.

Take time to check your practice’s temperature. These elements also form the basis for your 2009 marketing plan.  If you’d like to develop a more thorough 2009 game plan, contact me!

Until the New Year, have a safe, secure, happy, and holy holiday season.

The Doctor is OUT.

Al Depman, CLU, ChFC, CMFC, BH, a.k.a. “The Practice Doctor”, is MitchAnthony.com’s Business Practice Consultant. He is the creator of “The Practice Management Assessment” tool and materials and has authored numerous articles in professional publications on practice management, and author of the forthcoming book, How to Build Your Financial Advisory Business, to be published by McGraw Hill in 2009. Al combined his Liberal Arts studies with 10 years of management experience with McDonald’s Corporation to enter the financial services world 25 years ago. Since then, Al has evolved from an MDRT-level sales rep into a full-time consultant specializing in helping others engineer their business practices to the next level. Contact him at al@mitchanthony.com.

© 2008 Al Depman