This is part of the problem ... the study of practice management is neither rewarded nor regarded as highly as the study of technical topics like investment portfolio design, tax avoidance strategies, or risk management. Earning one's CFP[R] designation gives one the right to strap on a very sophisticated tool belt, but it confers no knowledge of business management. That's as it should be, many educators and Certified Financial Planner Board bureaucrats would say. "We can't teach CFP[R] candidates how to be effective businesspersons; that's not our job." "Practice management is too broad a subject. It is the responsibility of each practitioner to garner the required skills through additional studies and field experience."
Is practice management really so expansive a subject that students can't get some benefit from just one, intensive course? Frankly, we don't think so. The book you are about to read is one in a series dubbed "The Tools & Techniques," which, until now, has covered only technical subjects. Since almost everything you need to know to run a financial planning practice fits nicely into one Tools & Techniques volume, maybe practice management isn't so broad a subject after all? Sure, there's always more one can learn about any subject, but that doesn't excuse one from at least taking a surface look and The Tools & Techniques of Practice Management goes well beneath the surface.
What is practice management anyway? It's the difference between a good technician making a so-so living while spending too many hours each day doing something he once loved, and a small business owner who's still passionate about his work, which provides him more than enough income and leisure time to meet all of his personal needs. To invoke an old cliche, "it's work ing smarter, not harder." It's what transforms the planner's tool belt full of tools into something much more: an organization, a living entity with a mission to assist others in a critical aspect of their lives. Understanding the importance and vastness of practice management will lead you--as it has us--to vigorously challenge its absence from financial planning's training grounds.
We'll go so far as to declare that the person with only average technical skills but a keen sense of (1) how to market, (2) how to convert prospective clients into clients, and (3) how to manage a growing business will be far more successful as a financial advisor than a good technician who possesses only rudimentary versions of these skills. This, in fact, is the essence of the argument for honing your practice management skills.
The Certified Financial Planner Board of Standards, and some educators, would argue that practice management is not critical because it does not serve the public interest and it does not help you serve your clients. In other words, they are saying that it is you who benefits from practice management skills, not the public, so it is beyond the scope of the CFP[R] educational program and continuing education requirements. We could not disagree more strongly with this argument.
There are currently about 43,000 CFP[R] certificants in the United States. That is not nearly enough to satisfy the demand for competent financial planning expertise. If today's financial planners are only working at a fraction of their true potential, some consumers in need of help are going unserved.
Ideally, of course, one should want to have it all--technical skill and practice management aptitude. The combination of the two is what produces truly great financial planning organizations, whether 20-person firms or sole practitioner shops.
So, don't be misled by the light emphasis the planning profession places on practice management. If you want to know its real priority in the minds of veteran planners, cruise the hallways of professional conference venues in between sessions and eavesdrop on planners' conversations. I guarantee you the vast majority of those conversations will have something to do with running a practice--not whether separately managed accounts are better than mutual funds, or the correct methodology for doing a Monte Carlo simulation.
The topic of practice management fits well into The National Underwriter's Tools & Techniques series because there are practice management strategies, or techniques, and practice management technologies, or tools. Dave Drucker is primarily responsible for the techniques chapters in this book; Joel Bruckenstein is primarily responsible for the tools portion. That being said, we are constantly cross-pollinating each other's ideas as we work on our monthly newsletter Virtual Office News (www.virtualofficenews.com), a practice management and technology periodical for financial professionals.
In the course of our work, we are constantly interacting with other experienced advisors, and some of the ideas presented in this book are the fruits of those conversations. While we can't thank each of you individually, you know who you are, and we thank you for sharing your ideas with us and, through this book, with a much wider audience.
It is the sincere wish of your authors that this volume can provide you with the answers that you have not been able to find elsewhere and, in so doing, will allow you and your clients to achieve your personal and professional goals.