Bowen, founder and CEO of CEG Worldwide, previously worked as a financial advisor and firm executive. He served successively as CEO of Reinhardt Werba Bowen Advisory Services and Assante Capital Management.

Delegate It!

By John J. Bowen Jr.

Business development and relationship building are two of the most important skills you need to create a great practice. Of course, finding the time to devote to these tasks can be one of the biggest challenges you face. You're often pulled this way and that way between back-office problems, staff issues and client opportunities, significantly impacting your business' progress and profitability.

The Four D's
Happily, you can avoid nearly all these distractions by applying the rule of the four D's to every task, in this order:

Drop it. If there is no compelling business reason to spend time on a task, drop it. You can nearly always drop non-revenue-generating activities.

Defer it. If you are unsure whether a task will benefit your clients or your practice, defer it. Schedule a time to reevaluate it, and make a decision at that time to drop it, delegate it or do it.

Delegate it. When a task lies clearly outside of your core competencies, delegate it to a staff person or to an outsourcing partner.

Do it. If a task is part of your core competencies, and if none of the previous three D's are appropriate, then—and only then—do it.

What To Delegate
It's the third D-delegate-that is becoming particularly important for today's top advisors. Those who run their practices most effectively are delegating just about every function that's outside of their core competency involved in helping clients solve their most pressing financial challenges.

To delegate at a high level that gets results, you'll need to outsource at least some of your business functions. Outsourcing is critical because it allows you to do more of what really matters—building relationships with your existing clients, fostering your relationships with outside experts who are part of your team and starting relationships with potential clients. Spending more time with these people leads to more revenues and profits for you.

There are two options. The first is to outsource everything you can to your wirehouse, your broker-dealer or a turnkey asset management program. However, if a financial institutional partner cannot meet all your needs, you can turn to the second option—delegating specific non-core functions to independent providers on an as-needed basis.

The first step is to identify what you can call on others to do. You must decide which tasks you will do yourself, which ones you will rely on an institutional partner to do and which ones you will need independent contractors to perform. Start by reviewing your business processes and procedures to identify the specific tasks that would be more effectively (or profitably) completed by an outsourcing partner than by an in-house staffer. The most successful advisors frequently delegate advanced planning, business development, back office, compliance, technology, public relations and team building.

The Freelance Route
Today, more advisors are turning to independent contractors-freelancers-to perform tasks outside client relations. Independent contractors are often more focused and committed to completing projects successfully than employees. This leads to higher profit margins and better quality control.

Even though independent contractors offer many advantages, they also present new challenges when it comes to finding, hiring and managing. With that in mind, here's a three-step process to use:

Step 1: Plan
The first step is to plan. Advisors must define their needs and required skills, and anticipate any problems.

Define your needs. Decide exactly what you will outsource. Pull together the current costs of doing each function in-house. Be clear on the results you hope to achieve by outsourcing (such as lower costs, better performance, enhanced service or overall responsiveness). If it's a large outsourcing project, design a request for proposal (RFP) that includes performance metrics, evaluation criteria, a scoring process and a financial model to evaluate price or cost.

Define the needed skills. Determine the specific skills that you will need in an independent contractor before you start searching for one. Most individuals specialize, so don't expect to find a broad range of diverse skills in any one person (and if you do, expect to pay very well for it).

Anticipate issues. Take a moment to think through how delegating this particular function will affect your business. If necessary, act to head off any potential problems.

Step 2: Select
After you have finished planning, it's time to select an independent contractor. Advisors should obtain referrals, interview candidates, check references and make sure the contractor is a good fit with existing staff.

Obtain referrals. More advisors today are moving toward a virtual office business model characterized by networks of independent contractors working together. These advisors can be a great source of referrals for high-quality freelancers.

Interview candidates. Identify the most qualified candidates and interview them. Again, if it's a large project, evaluate the candidates' proposals in response to your RFP.

Check references. Check each reference you're given. Ask if they know anyone else the independent contractor is working with—and place a call to those firms as well. Often you will get a different and more insightful perspective because the freelancer will not have preselected these additional references.

Create a good fit with existing staff. Independent contractors should complement your existing team by bringing in new expertise and talent. They should not displace or alienate your team by working on interesting projects that your current staff is perfectly capable of doing. Duplicating existing skills will erode the morale of your team. Where appropriate, involve your staff in independent contractor hiring decisions.

Select your new provider. When choosing among two or three finalists, be sure to weigh the relationship factor in your final selection. Expertise is key, but credibility and chemistry are crucial, too.

Step 3: Manage
Once you've chosen an independent contractor, it's time to manage the relationship. Advisors should negotiate a written contract, begin with small projects, monitor results and pay promptly.

Negotiate a written contract. Once you've chosen the best candidate, negotiate the details of your contract. Create a clear agreement that defines the project, deliverables, deadlines and benchmarks. It should spell out the billing and payment process and deal with any intellectual property issues and noncompete provisions. An employment attorney can draft a boilerplate agreement that you can use repeatedly with freelancers.

Start slowly. Start with bite-size pieces. Assign a meaningful project (but not one that is mission critical) to assess the contractor's performance. If you are forced to delegate a mission-critical project to an unfamiliar contractor, you can evaluate the contractor on the fly much as you would a potential employee. Hire the contractor as a consultant to put together a plan for how he or she would complete the project in the assigned time frame. Have the person talk to clients and internal staff as appropriate and then present his or her solution to you.

Manage and monitor. Be clear about expectations, but don't micromanage. Allow freelancers to use their own expertise and creativity. Give them access to internal staff and resources as needed. Set up a clear channel of communication, preferably with a single point person in your firm so that you can stay apprised of project progress, and your independent contractors can keep current with any changes in the firm that affect projects.

Pay promptly. We all appreciate being paid promptly. If independent contractors are diligent about completing their projects in a timely manner, they will be justifiably annoyed if you take too much time to process their invoices. And you'll quickly get a reputation as a slow payer among the network of freelancers, making it more difficult for you to find good talent.

In the end, effective delegation can free up an enormous amount of time and energy. That will allow you and your team to focus on what counts most—providing world-class client service and building a more profitable practice.

Reprinted from: Financial Planning