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What Not to Do When Growing an Advice Practice

August 30, 2016

Behavioral finance has become fashionable for understanding how investors go wrong, but a similar analysis can help advisors run more efficient businesses, one commentator writes in InvestmentNews.

For starters, advisors need to learn that delegating is cost-effective, writes Joni Youngwirth, managing principal of practice management at Commonwealth Financial Network. If they want to have more time for growing their practice, doing analysis, prospecting or just working less, advisors need to hand off busywork such as scheduling, filling out forms and looking at investment performance, he writes.

Advisors also need to learn to refer unprofitable clients to practices where they would be welcome, according to Youngwirth. There may be a benefit to keeping unprofitable clients who helped an advisor get where they are or a wealthy client’s children, but otherwise there’s no more reason to hope that an unprofitable prospect will become wealthy than betting on the lottery, he writes in InvestmentNews.

It’s also key for advisors to have a continuity plan – something many avoid when they don’t find a replica of themselves, according to Youngwirth.

That’s akin to a client missing an estate plan, he writes.

Finally, advisors must have a growth plan that’s not tied to their performance, because no advisor can consistently beat the market in the long term, according to Youngwirth.

By Alex Padalka
  • To read the InvestmentNews article cited in this story, click here.