Running a practice is hardly a matter of "just do it." When advisors gather now, the discussions are as likely to be about practice management as they are to be about the practice itself. What happened? Financial planners have achieved great success--and the headaches that go with it.

To help keep your practice vital and growing, Financial Planning and its sister magazines, On Wall Street and Bank Investment Consultant, are launching AdvisorMax, a new members-only website that will feature expert forums, coaching and social networks.

To celebrate our new site, and the industry that spawned it, we asked seven leaders to identify the most important issues in practice management today. One of them, Schwab Institutional's Deborah McWhinney, plans to cut many advisors from the company's referral program, Schwab Advisor Network, and to raise prices for those participating in the program. Success breeds competition, and the advisors who come out ahead will know how to run their practices like businesses.

Deborah McWhinney
President, Schwab
Institutional, San Francisco

Deliberate Growth Follows Market Cooldown

We do business with 5,200 firms and the vast majority of those firms have moved beyond practices to businesses. The wake-up process has come in the past 36 months. In 2001 and 2002, when the market was really crummy and we had just survived one of the biggest catastrophes of this country, advisors would take all comers, any clients. The very reasons that people were leery of using someone as conservative as an investment advisor in the late 1990s suddenly made advisors very, very attractive. Clients didn't want to hear about IPOs anymore. They just wanted to retire in style, they didn't want a grand slam and that's what the RIA industry does.

The firms that we see grow have strategies, plans, roles and responsibilities defined within the firm. Now even the really small firms, with less than $10 million under management, are starting to ask, "How am I going to grow this business?" Once you are registered with the SEC, which is at $25 million in AUM, you have to be prepared to grow because of the cost of compliance. It is just too hard to do it all yourself. It's like crossing the Grand Canyon: If you're going to get close to $25 million, you have to zip right on by and get to $50 or $75 million as fast as you can, so that you can pay for the overhead that comes with the regulatory environment. None of us likes regulation. None. But there have been many aspects of the regulatory environment that have really helped the industry to secure its place with investors. Even with small firms, people know there's something behind it when they're registered with the SEC. Everybody's heard of the SEC.

Louis Barajas
Financial planner/author
Santa Fe Springs, Calif.

Underserved Communities Deserve Advice--And Will Pay For It

I deal with underserved communities, mostly Hispanics and African Americans. We do have clients who are very wealthy, but the majority of our clients are not. One misconception that people in the financial planning industry have is that this large group of people, which I'm going to call the bottom 50% of the market, should be taken care of by pro bono work. I do believe in pro bono, but for emergencies. In the FPA, we've done pro bono work for Hurricane Katrina victims, for example. But I believe if you're going to do consistent work with the average working-class person, you need to provide continual conversations and meetings. We charge our clients an hourly fee for advice. We have people on welfare who pay us. Our fees run from $200 per hour to free, but rarely do our fees go lower than $50 per hour. When people pay, they follow through.

The whole industry has heard about the changing demographics in America, but I don't think they get the consequences of that. Right now the Hispanic population is about 14% of the entire U.S. population, the African American population is 13% and the Asian population is about 6%. By the year 2050, it's predicted that 50% of the entire U.S. will be culturally diverse. But if you look at people in the industry, you'll see all three groups probably make up less than 5% of planners. I'm speaking at high schools around the country to get minority kids interested in the planning profession. Our professional associations too, need to understand. Those are the big elephants out there, but because they don't have any minority representation in their organization, they don't get it yet.