best practice

1. Practice Management INTERNAL USE ONLY Page 1 of 1
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Optimize the 80/20 rule
The 80/20 Rule, also known as the Pareto
Principle, is a common evaluation standard in
business management. It was originally developed
by Vilfredo Pareto in the late nineteenth century
when he established that approximately 80% of
the land was owned by 20% of the population.
The 80/20 rule is widely known, so chances are
good that you have heard of it. It means that
roughly 80% of effects are derived from 20% of
the causes.
Simply knowing what the rule means is not
enough; the most successful advisors implement
strategies to optimize the result of the principle.
How does the 80/20 rule apply to an
advisor’s practice?
When analyzing the impact of the 80/20 rule to
your practice, you may find the math is not
precise, but the philosophy is. Those clients who
provide 80% of your revenue are deserving of
same level of attention. This may be 20% of your
households, or it may be 40%. Regardless, there
should be an alignment of your time to respect
the value they provide.
Working with advisors has revealed two other
areas — activity management and client service
— that can be positively impacted by optimizing
this view.
Activity Management
If you are being completely honest about your
work day, on average how many hours of focused
effort do you work? For many, it’s typically a
fraction, with the bulk of work getting done in a
small percentage of the total hours spent in the
office.
For a typical work week, do you know which
clients you need to call, meet, or follow up with
regarding outstanding deliverables?
How much energy/time is exerted by you and
other team members just to keep the basic day-
to-day activities on track?
Do you set aside specific times to work on similar
projects/activities? For example, blocking off an
hour in the morning, mid-day and late afternoon
to return calls. How about using Monday as a prep
day to work on all client review appointments
scheduled during the week?
What would harnessing the power of structured
activity management do to increase your
productivity?
Client Service
In principle, advisors agree that there should be
an alignment between the value a client provides
and the amount of attention they receive, leaving
no client unattended. Many believe they are in
fact allocating their time accordingly.
When clients call the office, do you find yourself
stopping what you’re working on to take the call,
regardless of the client’s segment within your
practice?
How much time do your team members spend
with clients? Is there an imbalance of their time
on the lower tier clients?
The value of high-quality service is virtually
immeasurable. Nordstrom’s has built a retail
enterprise around the practice and as a result,
they have a near cult-like following from
customers who are willing to pay more because
the exceptional service is worth it.
You can cultivate loyal relationships in your
practice by establishing a service model focusing
the core of your energy on your Ideal Clients.
Ask yourself, how is your time and energy truly
being spent?