The Advisory Career

Taking Your Practice to the Next Level

You have to work ON your business to effectively work IN it

by Herbert K. Daroff, J.D., CFP

Mr. Daroff is affiliated with Baystate Financial Planning in Boston, and is a contributing editor to this magazine. Connect with him by email:

Think of your practice as an “S” on its side. There are five stages of development:
1. Start-up
Learning, licensing, developing a clientele; 

2. Survival
Making a good living, but substantially less than the top advisors; 

3. Growth
Now you are sitting at the big kids’ table; 

4. Maturity
Is your practice still growing, plateauing, or beginning to decline; and 

5. Transition
Are you planning to retire, or should you re-invent your practice and begin another “S” curve?

What do you need to take your practice to each next level? You need to spend some amount of time working ON your business as well as working IN your business.

From 1 to 2

You need someone to service your existing clients and the centers of influence (attorneys, accountants, property and casualty insurance agents, bankers, etc.) you have cultivated, as well as to handle all of your paper work.

Please don’t think of this person as an administrative assistant. This person needs to be your client (and COI) service manager. This could be another advisor; someone newer than you that you can mentor.

Also, you should avoid thinking that you can wait until you can afford this person to hire them. In order to make more money, you have to spend some money. You have to invest in your practice.

From 2 to 3

You need to build a team. Your existing clients (now considered “B” and “C” level) are holding you back from working with your newly defined “A” clients.

This is the classic point where you are spending 80% of your time deriving 20% of your income. Let your protégé service your “B” and “C” clients and help you develop more ”A” clients and develop more centers of influence.

From 3 to 4

So, we took the Mentor/Protégé model for advisors and applied it to its ranks of Specialists. It has sufficient design capacity to add another 100 advisors and still have a 2:1 advisor to staff support ratio.

You need to expand your team. In addition, you need direct access to case design. Home Offices have great teams of great experts. However, they work with a great many advisors. You may be better served having the experts available to join you on appointments, in person.

Waiting for home office experts to get back to you may no longer be acceptable. You don’t want to be up at midnight putting together a presentation for an “A” client or new “A” prospect. You are no longer in school where last minute cramming and all-nighters may have worked for you. However, this can be very expensive.

You may want to join forces with other Mentors Or, you may want to be part of an advanced planning firm where these Specialists are already on staff.

Baystate Financial

One such example is my firm, Baystate Financial Services, LLC in Boston. In 1996, Baystate Financial was in its 95th year of operation. It started out in 1901 as a life insurance agency and then added investments in the 1970s and 1980s.

It was deep into Level 5 (Transition). It had been declining in size. There were 44 people; 29 advisors supported by 15 staff, a 2:1 ratio. It needed to be re-invented. So, a new management team came in and designed a new “S” curve.

In 2015, the firm has grown to 500, but now with a 3:2 or 1.5:1 ratio; 300 advisors supported by 200 staff ranging from Management (who recruit and train protégés for you) and Outside Specialists to teams of client-centric Inside Specialists.

So, we took the Mentor/Protégé model for advisors and applied it to its ranks of Specialists. It has sufficient design capacity to add another 100 advisors and still have a 2:1 advisor to staff support ratio. Baystate did not wait until it could afford to add the Specialists.

Its Managing Partner, Dave Porter, using his own entrepreneurial spirit, invested in Baystate so that it could grow.

From 4 to 5

As part of your transition plan, think about who will service your existing clientele. Selling your practice may be an option that benefits you, but will it benefit your clients (your friends and family)? Instead, consider finding protégés, teams, or firms that can continue to work with you and your clients. ♦