Way back in 2019, Bob Veres wrote a monster-length article (actually two articles back-to-back) containing his findings from a dozen or so interviews with planners who track their time.
The entire article is worth reading, downloadable here with the kind permission of the author.
If you are in a hurry, here are four counter-intuitive takeaways I got from re-reading the article.
1. You don’t know what you don’t know
You would think that so far as your own time goes, at least, you have a fairly good grasp of how you spend your day. A recurring theme in the interviews is how surprised advisors were upon discovering where their time actually went, which only became clear when they began tracking it.
One advisor in the article found that face-to-face meetings took less time than meetings over the phone. Whoda thunk? And very often, findings like this lead to material changes in how firms operate, especially in terms of the delegation of tasks from senior advisors to junior staff.
2. You can design “products” again
Most planners see the word “product” as a throwback term to the days before firms started charging based on assets. But there is a problem – once you get rid of products, you are then in the vague world of delivering ‘comprehensive, holistic advice’, which is confusing for clients (in fact everyone).
Seeing time in building block terms – described by category, ascribed to specific clients, and with minutes and seconds next to each entry – allows you to plan out a provisional service schedule or service tiers in detail, bounded by realistic assumptions, rather than good intentions.
3. You can innovate on fees – the safe way
Intelligent advisors understand that innovating on fees can be a very short road to bankruptcy, and are wary of thought leaders who airily enjoin radical change in this area (“Everyone needs to stop charging AUM right now, it’s time for retainer/subscription/% net income!”). And yes, I have been guilty of this in the past.
A large part of the problem with moving to non-standard fee metrics like fixed fees is that you need to be an order of magnitude more efficient (compared with the rest of the industry) to make them work, as they are nowhere near as forgiving as the AUM model. When you are realistic about time-taken to deliver service, you can assess fees in the cold light of day.
4. You can serve the Under-Wealthy and the Uber-Wealthy
This builds on the previous point that time-tracking allows you to assess a fair fee for clients who have cash to pay for advice, but no liquid assets to invest. Less intuitively, the same logic applies to serving ultra-high net worth clients.
These clients tend to pay the most, and if they are smart, may be interested to know exactly what it is that they are paying you $100,000 per year for. In response to which, you can offer them an itemized list, with time, activity and resource. Time-tracking is a non-trivial aid when it comes to value communication and negotiating fees.
For me, the most interesting takeaway from the article is the variety of advisors it featured, only one of whom (Mark Berg of Timothy Financial Counsel) bills clients by the hour. Time-tracking is often dismissed as either impractical or undesirable, yet a small group among the planning community apparently see it as valuable enough to undertake voluntarily.
See this article for practical tips on how to implement time-tracking in your firm, or get in touch to discuss how to use time-tracking to improve your proposition, pricing and operations.