Why managing capacity is key for advisors

Al Nagy has seen his fair share of financial advisors struggle to manage a growing client roster and book of business during his 23 years in the financial services industry. But one experience with a colleague stands out among the rest.

“I was working with an [advisor], and he was talking about the promises he’s made to his clients and being unable to fulfill them. He broke down crying because he found it so overwhelming,” says Mr. Nagy, a certified financial planner with IG Wealth Management in Edmonton.

For many advisors, the story is an all too familiar one: their client bases grow in an exponential manner as referrals snowball, prospective clients multiply, and books of business spiral out of control. Overextending oneself and subsequently underdelivering on promises can cause advisors to become emotionally wrought, he says.

“We put on this thick skin, this persona of strength and courage, like we’re like Superman, like we can do all things,” Mr. Nagy says. “And yet, when it comes right down to it, when we start failing, it’s tough.”

In order for advisors to avoid becoming overwhelmed, managing capacity is key. For Mr. Nagy, that starts with managing client expectations.

“You have to have – as a part of your onboarding process – guidelines that both you and the client can follow,” he says.

Although it can be tempting for advisors who are just starting out to take on as many clients as they can, regardless of workload, establishing boundaries from the get-go is essential to managing growth, Mr. Nagy says.

“It also shows an element of professionalism right from the beginning, that this is the way our relationship is going to work. I think clients generally respect that,” he says.

Mark Halpern, certified financial planner and founder of Wealthinsurance.com Inc. in Markham, Ont., follows a similar rule: “I say to all my clients, ‘How often would you like to hear from us?’”

From there, priorities are set. Mr. Harlpern groups his clients based on value and frequency of contact, a process known more commonly as segmentation. He typically delegates the liaising with lower-contact groups to his assistant, whom he believes most of his clients have come to know and trust over the years.

Mr. Halpern says passing off administrative duties affords him more time to focus on relationship building, a move that’s proven to be beneficial both for his mental health and for his business.

“You can’t be all things to all people,” he says. “Do what you love and refer out all the rest.”

He says advisors feeling overwhelmed by their to-do lists should get honest with themselves about what duties they’d be better off passing on.

“What aspect of the business do you love doing? It’s a very honest question. In my case, I love relationships,” Mr. Halpern says. “After that, I hate everything else.”

Grant Hicks, president of Advisor Practice Management in Calgary, says advisors should take a methodical approach when budgeting their time.

For example, he says advisors should set their sights on saving 100 to 200 hours this year, and keep track of where they’re losing time to tedious tasks or dead-end prospects. Much like one might approach a monthly spending budget, advisors should review how they use their time with a critical eye.

“We keep track of our expenses so we know where the money is going,” Mr. Hicks says. “And when we do that, we get frustrated with ourselves, right? But that exercise helps.”

Both Mr. Halpern and Mr. Hicks are also firm believers in using technology to cut down on administrative burdens. Specifically, customer-relationship management software and automatic scheduling tools take some of the tedium out of day-to-day work, affording advisors a few extra minutes each week to meet a prospect or develop an existing relationship.

Some of these tools may require an upfront investment but offer meaningful returns in short order. The same goes for investing in staff, Mr. Hicks says. Having extra hands on deck to handle overflow helps keep clients within a practice, ensuring that they always have someone to talk to, regardless of how busy things get.

“Adding people to your team will give you an extra 200 to 400 hours each year,” Mr. Hicks wrote in a blog post he published in March. “At $500 [of gained productivity] per hour, this is a simple return on investment calculation.”

Mr. Nagy echoes that sentiment: “Don’t be afraid to invest in your practice. It may seem costly, initially, but in the long run, that investment will pay dividends – big time.”