A proper assessment of your business revolves around the frequency of serviceerrors, rising overhead expenses, compliance violations, declining client satisfaction, high staff and client turnover, lower profit margins and delays in getting things done right. Most advisors do not have a baseline against which to compare any of these data points, so initially you may be forced to set an arbitrary standard that is acceptable.

For example, you might tolerate no more than four errors a year that cost you money. Such errors may be the failure to execute a trade on a timely basis or to bill fees on the right amount of assets. After thinking about the types of mistakes you and your associates are inclined to make, you can install measures and training to minimize future failings.

Diagnosing the problems may be the easy part. Implementing a new approach may be more challenging, especially for advisors who are not comfortable delegators and for firms that have neither the time nor talent to address management issues properly.

As a result, once you have begun to look at the patterns unfolding in your business, it will be time to ask several critical questions:

* Are my strategy and optimal client obvious?

* Does my organizational structure support my strategy?

* Do I have the right people doing the right things to execute my strategy?

* What measures should I put in place to evaluate performance around operational issues?

* What changes in my client service experience do I need to make to ensure consistency and focus?

Growth has many benefits. It enhances personal income and business value. It results in a greater presence in the marketplace. But it always carries with it material risk, particularly around how to manage quality and span of control. There is a direct correlation between rapid growth and business deterioration if the right processes are not in place or the staff is unprepared to manage through the evolution from job shop to enterprise, from entrepreneurship to professional management.

The good news is that many advisors are warming to the idea of document management as an efficiency tool. But what's often missed is that the value of a paperless office is not just saving trees and office space but moving documents around effortlessly. This is the concept of workflow management.

As advisory firms grow, they begin to outstrip their ability to operate efficiently or achieve scale. This symptom is being revealed in the rising overhead as a percentage of revenue for the average advisory firm. Often, advisors perceive that their processes are simple when in reality they have many moving parts involving technology, people and procedures. When one looks at a function, it's easy to overlook the components, not unlike an investor who looks only at return without regard to risk, liquidity and how the market has already moved.

The primary culprit dragging down efficiency is the absence of any workflow model. We know this because the expense ratio is going up for the average firm at the same time revenue is. The optimal overhead ratio is 35% of revenue; in 2010, the average expense ratio increased to almost 45%. Multiply that variance times your annual revenue and you will see the real financial impact of an inefficient business.

It's no surprise that expenses rise in dollar terms when a business is growing, but expenses rarely should increase as a percentage of revenue unless a firm is investing ahead of anticipated growth. This proves that manual processes often cause advisors and staff to plow through the day doing things that don't add value for the client or the business itself.

As the chart below indicates, there is a huge difference between how top-performing firms and average firms manage their time. By automating workflow around routine procedures, advisors with lower operating costs and higher margins can spend more time with clients and prospects. For the average advisor, every task that is not automated or delegated adds a 10-pound sack of potatoes to the load. With pounds of spuds hanging from their shoulders, they can't move quickly or efficiently, and eventually reach the limit of what they can carry.

CONSISTENCY AND QUALITY

The absence of an appropriate workflow model also suggests that advisory firms may have weaknesses in how they ensure consistency and quality in their client service experience; more disturbing, it may reveal the lack of an adequate, automated command-and-control process to guard against risks.