Recently, an advisor told me he had reached a stage in his career where his practice was stable, but not growing at the rate it once did. He wanted to break out of the doldrums, but, as a company of one, didn’t feel he could work much harder. And he wasn’t comfortable with, what he perceived as, the risk inherent in hiring junior advisors and assistants, or making huge investments in new marketing schemes.
Good news—it is possible to increase your practice’s capacity—if you cultivate the right mindset.
Return on effort—a new way of thinking
It’s common to think of business decisions in terms of your expected Return On Investment. In the finance/insurance industry, where technology is becoming such a driver of success, it may be more beneficial to consider your Return On Effort—what you will get out of each hour of time spent on a task. That’s because technology, more than ever before, is making possible transformative changes in the way you spend your time. It’s a true driver of success because it enables you to delegate more, spend less time on low-value work, and more hours in front of clients. It increases your Return on Effort dramatically.
If you could carve an extra ten or even twenty hours of time out of your month and spend it in front of clients instead of getting caught up in the low-value work that eats so much of our days—how big a difference would that make to your topline over the course of a year? For most advisors, it would mean a step-change in the size of their practice.
How to determine the value of your time
To optimize your efforts you first need to understand what an hour of your time is worth so that you have a benchmark against which to judge which tasks are most worthwhile.
The first step in figuring out the value of an hour of your time is to identify your revenue goal for the coming year—perhaps something like $140,000. Now, start breaking that goal down. Estimate how many weeks in that year you plan to work—let’s say 40. If you work five days a week on average that means you’ll be putting in 200 days during the year. At eight hours per day you’re up to 1600 work hours. A little math reveals that, to reach your $140,000 revenue target, you need to average $87.50 per hour. That is the value of your time—the benchmark against which you can judge the worth of every task you undertake.
Make conscious choices
Once you have calculated the value of your time the next step is to review the tasks you are involved in. Determine which ones provide a return greater than your benchmark rate. Try to review each task as it comes up and ask yourself how much revenue it will generate. If it falls below the $87.50 threshold, it should be delegated to staff or technology.
The key is to continually work at making conscious choices about what tasks you take on and which you delegate. It takes vigilance to make sure that even those little ‘just-five-minutes’ tasks that we do every day without thinking don’t slip through the cracks. They can add up to a lot of misspent time over the course of a week.
Delegate to staff and technology to maximize your return on effort
To effectively delegate low-value tasks first define each of your key marketing, sales, and operations processes. Identify the steps involved in each. Then look for ways to streamline each process by eliminating steps or finding better ways to achieve the desired result. Finally, take the human hand out of your key processes by delegating to technology to automate steps that don’t require you or your staff to get involved.
Breaking out of the mid-career doldrums and re-igniting your growth curve is possible if you embrace a Return on Effort mindset. It puts your focus on time instead of income. It forces you to make quality, conscious decisions about which tasks you will get involved in and which will be delegated. When you delegate to technology and start spending most of your time on tasks that exceed your revenue per hour threshold your practice’s growth curve will soar.
Kronos Technologies is a strategic partner of Advisor Websites. This is first of a two-part guest post explaining how to break out of a stagnant cycle in your practice and re-ignite revenue growth. In this post I’ve discussed a new mindset that makes growth possible, and explain how to calculate the value of your time. In the follow-up post I’ll drill down on four things you can do change your growth curve, without risk or extra effort.
For over twenty years Ray Adamson has held senior leadership roles in the financial services industry. At companies like Kronos Technologies, Bluesun, Great West Life and the Covenant Group he has worked to implement national practice management strategies, increase client acquisition and retention, and build out sales capabilities. As an advisor, consultant, practice management coach and speaker, he has helped management and advisors at the largest carriers and distributors in North America take their business to the next level. Ray has presented to many of the top North American financial services companies and associations, including MDRT & LIMRA.
As Chief Customer Officer at Kronos Technologies, Ray works with carriers, distributors and advisors—helping them leverage Kronos’ suite of industry specific web applications to manage and grow their businesses.