What is a Practice Management “Go Bag” & Why Should It Be on Every Advisor’s Desk?
Nov 22, 2022
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Financial advisors discuss the importance of having a practice management 'go bag' to navigate challenges during volatile times. They explore the brain physiology behind decision-making and the need for proactive strategies. The chapter also highlights the importance of self-care and balance for advisors. Additionally, they discuss the concept of a 'Go Bag' in the context of practice management and emphasize the importance of being prepared. The speaker shares a personal story about being prepared for a hurricane and stresses the importance of planning for the worst in financial management.
Creating a practice management “go bag” can help financial advisors navigate challenges and uncertainties in volatile times.
Advisors should engage their neocortex and overcome impulsive reactions to effectively plan and prepare for adverse situations.
Advisors need to prioritize self-care, involve family and team, and provide a high touch client experience to effectively manage their practice during challenging times.
Deep dives
Taking Care of Yourself and Your Practice
During volatile times, it is important for advisors to prioritize self-care and the well-being of their practice. This includes exploring the concept of a go-back, which involves intentionally putting together resources to navigate challenges and uncertainties. By having a plan in place, advisors can move forward with intentionality and planfulness when faced with time constraints or threats. This concept is especially relevant in the current marketplace, where advisors may experience significant corrections and compressed fees. By acknowledging the cone of uncertainty and preparing for potential risks, advisors can creatively and thoughtfully address these challenges.
The Brain Physiology of Planning Ahead
Human beings are naturally inclined to be reactive rather than proactive when it comes to decision-making. This is due to the brain's functioning, where the neocortex, responsible for rational thinking, planning, and self-awareness, requires time and effort to process information. On the other hand, the cerebellum, associated with quick reactions and emotions, tends to drive impulsive actions. To effectively plan and prepare for adverse situations, such as market downturns, it is essential for advisors to engage their neocortex and overcome the tendency for impulsive reactions. By doing so, advisors can make well-thought-out decisions and navigate challenges creatively.
Taking Care of Yourself: Vital Organ Perspective
To effectively manage their practice, advisors need to prioritize their own well-being. This involves taking the time for restoration, paying attention to sleep, diet, and avoiding overworking. Additionally, advisors should consider reassessing their growth goals and reallocating their time and energy towards maintaining what they have. This may involve pausing or scaling back growth efforts temporarily to protect the practice and ensure that resources are focused on supporting existing clients during challenging times.
Taking Care of Your Family, Team, and Clients
In addition to self-care, advisors should also focus on their family, team, and clients. Advisors can involve their family in the conversation about the potential challenges and collaborate on ways to navigate them together. This not only reduces the advisor's burden but also teaches family members to face adversity and prepares them for future challenges. When it comes to the team, advisors should have a proactive plan in place, defining trigger points and strategies for potential restructuring or shared sacrifices in the face of prolonged financial difficulties. Finally, advisors can provide a higher touch client experience by increasing communication, conducting more in-depth conversations, and reassessing portfolios and financial plans to address volatility and client concerns.
Engaging Firm Leadership
Advisors should communicate their plans and reasoning to firm leadership to gain support and understanding. In the face of potential misalignment with firm goals, advisors need to explain their rational decision-making process and demonstrate thoughtfulness in their approach. By sharing their plans and triggers, advisors can build trust and respect within the firm and gain appreciation for their leadership in navigating challenging times.
Conclusion
The concept of a go-back emphasizes the importance of proactive planning and preparation for financial advisors. By prioritizing self-care, involving family, strategically managing teams, providing high touch client experiences, and engaging firm leadership, advisors can navigate volatile markets and protect their practice effectively. Planning ahead and being prepared for potential challenges allows advisors to make thoughtful decisions and overcome impulsive reactions, ensuring the best possible outcome in uncertain times.
As the saying goes, “Failure to plan is a plan to fail.” And with global markets down significantly, many financial advisors are unprepared for the declining revenues that come from a reduced asset base or unexpected client attrition. However, an advisor “Go Bag”—specific, tangible resources to help your practice and clients—can make a big difference in this environment. AllianceBernstein Advisor Institute’s, Ken Haman discusses how the brain naturally separates thoughtful preparation from motivated execution, why advisors often avoid preparing for challenging times, and more.
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