Bill Hortz's picture

"An advisor can begin walking the path toward being “nextgen” simply by taking small steps like adding efficiency through technology and leveraging digital communications." - Jon Robinson, Blueprint Investment Partners

[The sheer fact of choosing to be a business owner is a brave and even noble act to be recognized and celebrated. Unfortunately, while business owners can be seen as being entrepreneurial in spirit, in today’s new operating environment of accelerating change, there is a major distinction that needs to be recognized between a “business owner” and an “entrepreneur”.  There is a very different mindset and set of behaviors between the two that leads to completely different ways to manage and steer their firms and work with their clients. The difference goes right to the heart of the challenges facing the Financial services industry.

To better understand these differences and how they apply to financial professionals, we talked with Institute member Jon Robinson, Co-Founder and CEO of Blueprint Investment Partners. In addition to asset management services, the Greensboro, NC based firm provides its advisor clients with practice management solutions, including tools and coaching to help advisors implement an optimal business model/strategy to compete in our industry’s new operating environment. We were interested in exploring their thinking and experience behind developing The Elite Advisor Playbook and promoting the Entrepreneurial Operating System (R) as a tool for creating focus in an advisory practice.]

 

Hortz: Can you walk us through the key pillars of your The Elite Advisor Playbook? How did you determine these specific components?

Robinson: The four pillars of the Playbook are: Client Service, Practice Management, Wealth Management, and Business Development. We believe this framework is the optimal picture of an elite advisor, an assertion based on extensive research and 10+ years of seeing what success looks like.

We observed that best-in-class and average advisors often look quite similar at first glance. Both clock long hours, are active in their communities, and have strong personal and professional networks. But, when you take a closer look, elite advisors are operationally strong in each of these four pillars. Within each, they focus their time on the activities that add the most value to their businesses. As a result, this leads to better performing businesses that generate higher margins and lower attribution.

The point of The Elite Advisor Playbook was to highlight these business pillars and help advisors consider how to strengthen their own practices in each of the four areas.

Hortz: Are there any specific tools that you have developed as a result of creating the Elite Advisor Playbook that might assist advisors in strengthening their business decisions?

Robinson: Absolutely. Your question reminds me of the Buckminster Fuller quote, “If you want to teach people a new way of thinking, don't bother trying to teach them. Instead, give them a tool, the use of which will lead to new ways of thinking.”

We developed several tools and resources as supplements to the Playbook. First is the, “Are You An Elite Advisor?” quiz, which helps advisors compare their practice to a standard in operational performance in just a few minutes. Another concrete tool is the Entrepreneurial Operating System for Elite Advisors, a practice management solution. We also have several, “how to” articles on our website that correspond to each pillar of the Playbook.

Hortz: How does the Entrepreneurial Operating System provide a road map or process to follow?

Robinson: The Entrepreneurial Operating System (R) (EOS)  is a set of simple concepts and practical tools that readily apply to a financial advisor practice. We partnered with Ray Reuter at Kaizen to help advisors implement this framework in their practices. The model builds and strengthens each area of the business by: 

  • Ensuring everyone on the team is 100% on the same page about where you are going and how you plan to get there
  • Instilling focus, discipline, and accountability throughout the company so that everyone executes on the vision every day
  • Confirming your business has the right people in the right seats
  • Defining key metrics for consistently monitoring the health of your practice
  • Encouraging the documentation and consistent following of high-impact processes

We think the model is comprehensive and assists advisors in taking their practices from good to great. In fact, we have skin in this game. We have been working with Ray to implement EOS in our own business. The model Ray introduced us to has helped us achieve better focus on the high-leverage, mission-critical activities of our business. We are working on spending our time only on those things, while looking to outsource, partner, or leverage technology solutions for anything that falls out of those bounds.

Hortz: Why do you believe this change in managing and operating a financial advisor practice is so needed at this time amid such volatility, uncertainty, and complexity of issues on so many fronts that we are dealing with right now?

Robinson: The reasons you mentioned are precisely why we believe that adapting and changing to current conditions is perhaps the only way to survive in any field, but especially as an advisor. Consider the headwinds affecting advisors right now: fee compression, consolidation, the move to virtual advice, robos, etc. In some cases, these are systemic shifts. An advisor can choose the status quo, but the risk of making that decision today is multiples higher than that same decision 10 years ago.  We have found that advisors who are also entrepreneurs are more inclined to attack these shifts head on, where an owner or steward might react slower. 

Hortz: That brings us to an interesting topic. How then would you characterize and define the difference between a business owner and an entrepreneur?

Robinson: Generally speaking, I believe the primary difference between business owners and entrepreneurs comes down to risk. This is both the types of risks taken, but also a person’s preference for risk. In my view, a business owner takes calculated risks that are well-defined and often linear. On the other hand, the entrepreneur is more likely to take larger risks on the basis of recognizing a larger opportunity, which is often unseen to most, even when standard measures might put the risk of ruin higher than the expected payoff. I often sum up the difference with the notion that business owners prefer calculus, while entrepreneurs prefer statistics. 

Hortz: How do you see this difference in mindset applies specifically and is relevant to financial advisors and the financial services industry?

Robinson: In my view, there is a common misconception that all financial advisors are also entrepreneurs. I do not see the advisory business as being statistically different from any other industry in terms of the mix between business owners/operators and entrepreneurs.

The difference in risk tolerance between the two manifests itself in how quickly and wholeheartedly they embrace change. Whereas an owner/operator may choose to more methodically scale their practice, an entrepreneurial advisor is more likely to rapidly implement larger-scale changes.

Even though the pace of change is more rapid among entrepreneurial advisors, that doesn’t mean they do not hit a ceiling from time to time. In fact, hitting the ceiling is a common frustration we hear from advisors who fit the entrepreneurial mold. They see potential for their practice, they sense it’s right in front of them, yet they just cannot quite get to that next level. That’s where the Entrepreneurial Operating System can add tremendous value. It’s an accelerant that helps an advisor figure out how to get there.

Hortz: What are some key questions or distinctions that an entrepreneurial advisor needs to focus on versus a traditional advisor business model?

Robinson: The entrepreneurial advisor continually asks questions like: How do I compete? What’s my edge? Am I personally focused only on the highest-impact activities?

Traditional advisors might try to do a little of each of the four pillars described in The Elite Advisor Playbook. Entrepreneurial advisors take a different approach. Rather than try to carry the world on their shoulders, elite advisors evolve their practice so they can focus only on high-impact activities – while outsourcing anything where they add the least value relative to the time commitment required.

Outsourcing can take many forms. In the area of client service, it could mean implementing technology that makes routine servicing more efficient and differentiates the practice from others. For wealth management, it could be outsourcing the investment management function, which frees the advisor up to spend time on client service and business development. Another big one we have seen in this time of social distancing is the use of video. Elite advisors were early adopters of shifting to video, which gives them an edge.

Hortz: Any other thoughts or recommendations you would like to share with practitioners on becoming a more elite, entrepreneurial advisor?

Robinson: Being elite suggests the ability to perform better than most and demonstrate superiority in quality, rank, and skill. This is inherently a very high standard that is worthy of aiming for because it will improve an advisory firm’s ability to help its client achieve their goals, while improving the firm’s profit margins at the same time. Practically speaking, an advisor can begin walking the path toward being “nextgen” simply by taking small steps like adding efficiency through technology and leveraging digital communications. Additionally, embracing outsourcing in all facets of the business, but especially investment management, can free up valuable time to focus on working “on” the business versus working “in” the business. The bottom line is that the change does not have to be big to be impactful. 

It is vital to understand who you are, where your strengths lie, and how you are going to compete against other advisors who are implementing the strategies and tactics discussed in the Playbook. Perhaps it is best summed up with an Avett Brothers lyric – “decide what to be and go be it.

 

 

The Institute for Innovation Development is an educational and business development catalyst for growth-oriented financial advisors and financial services firms determined to lead their businesses in an operating environment of accelerating business and cultural change. We position our members with the necessary ongoing innovation resources and best practices to drive and facilitate their next-generation growth, differentiation, and unique community engagement strategies. The institute was launched with the support and foresight of our founding sponsors - Pershing, Voya Financial, Ultimus Fund Solutions, Fidelity, and Charter Financial Publishing (publisher of Financial Advisor and Private Wealth magazines).

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