BUTTERFLY
TEAM WORKBOOK
Decisions and Notes
for Modules 1 – 5
BSMART
Business Simulation Management
and Relationship Training
MODULE ONE
Vision, Mission & Strategy
The Foundation of a Business
Your Vision
A vision statement describes the future state you are looking to
create – your desired end-game for the firm in 2020.
We will be a premier provider of comprehensive investment management
and wealth management services. Our focus being analytically minded
individuals, guiding them through each stage of their financial evolution
by offering uniquely tailored strategies. By following our quantitative
investment approach, we seek to grow to over $1 billion in assets under
management by the year 2020. We strive to be an employee owned firm
with 5 partners, 100% employee ownership with next generation
leadership defined, while aligning our growth with that of our clients. By
doing so, we will create an entity that will be able to allow our clients to
be confident in their financial futures, as well as those of their families.
A vision statement describes what you want your firm to look like in the future,
typically three to five years out, or longer, and is both an internal and an external
message. If you keep it front and center, it can help you stay focused on your goals.
It can also help inspire and motivate your staff, and instill confidence in clients that
you know where you want to be in the future.
As you craft a vision statement for your firm, ask:
•
What do we aspire to become in three to five years?
•
What does success look like for our firm over this period?
•
What does our end-state look like?
Your Mission
A mission statement describes why the organization exists – its core
purpose.
Financial markets are complex. Financial planning is a life long
journey. People need help demystifying both and do not have the
time. This is our job. We will offer uniquely tailored investment and
planning solutions to each and every client. Our quantitative approach to
investing and planning differentiates us. We are disciplined, we listen, and
solve problems. We invest for the long-term in the market and in our
clients’ lives. Butterfly Capital is one team focused on one goal: we will be
an extension of our clients journey towards financial success, goal
attainment, and life balance.
A mission statement describes why you are in business, and is primarily used
internally. It plays an important role in helping you assess your activities and
determining if they are in line with your core purpose. It can be used to “sanity
check” what you may be considering doing – if activities stray from your core
purpose, you may decide not to do them or to reevaluate your mission.
As you craft a mission statement for your firm, ask:
•
What is our purpose for being here? Why do we do what we do?
•
What needs do clients have when they come to us?
•
What are the most significant strengths of our business?
•
Why do clients choose our firm over other firms? What are our
differentiators?
SWOT Analysis
Strengths
•
Weaknesses
•
HR structure – no formal HR director.
No clearly defined career
development program, particularly
with respect to outlining partnership
path for advisors. Formal definitions
of partner positions are not defined.
•
Growth tempered – Motorola, long
time source of clients, isn’t producing
prospects since being acquired by
Google. 3% growth in AUM in ‘13.
1% growth in revenue in ‘13. 37% of
clients (representing $115 AUM or
20% of book) are retired and taking
distributions .
•
Shrinking profits - Operating profit
down 14% in ‘13 vs. ‘12. Profit per
client down about 16% in ‘13 vs. ‘12
($3,254 profit/client in ‘12 and
$2,470 profit/client in ‘13)
Solid niche – focused on delivering
quantitative and technical
investment solutions to analytically
minded individuals.
•
Experience & skills – staffed by wellseasoned group with combined 54+
years of investment experience
between the 4 lead advisors alone.
CIO has 35 years in engineering
space.
•
Growth IT focus – outsource all back
office needs. Investments strictly
model-based using Options strategy
and ETF strategy. Tech expense is 5%
of revenue.
•
Profitable – 34% profit margin in ‘12,
29% profit margin in ‘13. Pre-tax
income/owner is $440,000. Net
profit per client is $2,470.
•
Capacity – 32:1 ratio of clients to
employees. Given that all
investments are model driven , less
time on asset allocation, more time
with clients. James and Richard can
offload many clients to advisors.
•
•
4
SWOT Analysis
Opportunities
Threats
•
Increase outsourcing – Take
advantage of bundled services that
will increase efficiencies and lower
costs.
•
Broadening investment offering –
Build portfolios that can be offered to
an expanded client base. Maintain
analytical focus for portfolio
construction at lower entry point.
•
Raise brand awareness – Increase
the visibility of the brand, and adjust
the marketing to attract new
opportunities.
•
Target additional Tech Companies
locally– expand market regionally at
other Tech Firms serving more
analytically minded existing and up
and coming executives within the
industry. Follow the talent that
comes from our core business at
Motorola.
4
•
Next Generation Advisor- Look to
promote advisors from within. Build
a process to grow books within the
firm and build a clearly defined
career path to partnership.
•
Attrition - As client base ages, the
need for planning and investments
for later stages of life are essential.
•
Markets - Look past existing sources
of business and expand reach of
marketing to attract a more diverse
clientele.
Initiatives and Notes
Initiatives for Improvement
Write down and agree on Strategy initiatives in your firm and elect a “champion” for
each initiative.
Improvement Opportunity
Who Will Complete
1.Assess investment offering
James/Rich
2.Define HR structure
Craig
3.Develop marketing plan
Robin
4.Review operational efficiency and
present and potential outsourcing
solutions
Tami
Notes
1. Investment offering needs to be diversified by taking present niche option strategy and
incorporating lower cost investment alternatives ,including ETF portfolios, for different life stages .
James/Rich to evaluate building “product” that can be more efficient and economical for internal
clients and potentially sold as a solution for other RIA firms or reps. Inclusion of ETF and model
portfolios could allow for client base to be expanded to allow for mass affluent, or new wealth
builders.
2. HR structure needs to have a clearly defined paths for career progression, potential for ownership,
and consideration of incentive shares to encourage staff to stay long term.
3. Plan needs to be flexible enough to attract analytically minded investors but also appeal to the
younger executive of technology companies.
4. Create a plan that will enable internal resources to be maximized, saving on cost and making each
functional role more productive. Internal efficiencies will allow for key relationship or business
development personnel to be added without additional back-office need.
MODULE TWO
Growth
Building the Firm
Ideal Profile
Business You
Would Like
To Win
CHARACTERISTICS OF
THE IDEAL CLIENT
CHARACTERISTICS OF
THE NOT-SO-GREAT REFERRAL
1. $500K minimum
investable assets
2. Analytically focused
Does Not Meet Target Profile
3. Looking for wealth
management
4.Broader technical industry
employed
5. Firm advocate
COI Relationships
You Would Like To
Have
Not understanding of
Quantitative Investing
Not invested in long term
relationship
CHARACTERISTICS OF
THE IDEAL COI
CHARACTERISTICS OF
THE NOT-SO-GREAT COI
1.Knows target client profile
Not Collaborative
2.Reciprocates with referrals
Can not articulate our
offering and value proposition
Sends referrals that are not a
fit with the firm culture or do
not meet target profile
3.Knows firm story
4.Relationship oriented
5.Engaged
Initiatives and Notes
Initiatives for Improvement
Write down and agree on Growth initiatives in your firm and elect a “champion” for
each initiative.
Improvement Opportunity
Who Will Complete
1. Inroads to other tech firms
Tami
2. Define roles & responsibilities
Craig
3. Create career trajectory &
compensation plan
James
4. Define referral process for COIs &
clients
Robin
5. Define growth goals to double firm
by 2020 and breakaway/tuck-in strategy
Rich
Notes
• Tami - Broaden high net worth client base to other Technology Firms in the area beyond Motorola
that will be a fit for our model and define prospecting strategy. Incorporate engagement and
event strategy with our Marketing Plan. Determine radius and targets through Referral Edge &
Linked-In contacts of present clients.
•
Craig - Define each role and responsibility from the Org Chart.
• James - Determine timeframe and tasks associated to advance to next level in the firm - Partner,
Advisor, Junior Advisor, Client Service, Operations Manager, Senior Operations Rep, Junior
Operations Rep.
• Robin-Define who our COIs should be, which ones are a cultural fit. Affirm the firm’s outreach
and engagement strategy with them to solidify a Referral Process and develop a mutually
rewarding relationship . Incorporate messaging for Referrals with current client base and
formalize follow up and “thank you” process with clients that are referring.
• Rich-Remaining contacts at Morgan Stanley Smith Barney for Breakaway outreach to join firm
MODULE THREE
Staffing and Compensation
Attracting, Retaining and Organizing Talent
Organizational Chart
Draw your firm’s organizational chart. Label the positions.
Compensation Philosophy
What is your compensation philosophy?
At Butterfly, we will compensate our employees based on
experience, job responsibilities, and individual contributions
toward the firm’s success. Our firm success is measured by : client
satisfaction, retention, and referrals; achievement of individual
and company-wide goals; a shared vision; and adherence to a
defined business model all resulting in profitability and growth in
assets under management. Our goal is to reward employees that
contribute to achieving success in those categories.
Initiatives and Notes
Initiatives for Improvement
Write down and agree on Human Capital initiatives in your firm and elect a
“champion” for each initiative.
Improvement Opportunity
Who Will Complete
1. Define job descriptions/roles
Craig
2. Align compensation to roles
James
3. Develop Career paths
James
4. Path to partnership
Rich & James
5. Succession planning
Rich, James, Tami
Notes
1) Review and rewrite job descriptions for Department Heads, clearly outlining responsibilities and
expectations
2) Review compensation plan to ensure we are incenting the appropriate behaviors
3) Have clearly defined and communicated career paths for the Junior people of the firm
4) Discuss long term partnership and conditions for expansion of ownership
5) By having clearly defined career paths, we will ensure next generation leadership
Handouts in the Appendix
•
•
Advisor HR Solutions
Sample Compensation Profiles
MODULE FOUR
Operations and Technology
Role of Operations
Service and Deliverables
•
Oversee technology outsourcing to continually validate efficiency/scalability
(CRM, Portfolio Management & Reporting, Billing, Financial Planning)
•
Trade support – confirmation/clearing/settlement of trades (Export/confirming
proper reconciliation)
•
Servicing client accounts – New account opening, TOA, cashiering, money
movement, cost basis. Included in this is responsibility of new client onboarding
packages with necessary paperwork and forms
•
Appropriately maintain/update Butterfly’s Policy & Procedures manual
•
•
•
Generate formal client communications and client billing.
Institute New Hire training program(s).
Support client-facing staff by providing relevant client information/data
Component-level Role
Financial Planning
•
Maintain relationship with client to
create/communicate/maintain plan
•
Gather detailed information from
client/prospect(goals, income,
accounts, mortgages, insurance, etc.)
•
Confer with Investment
Management team to confirm that
appropriate models are utilized
Investment Management
•
Maintaining/updating asset
allocation models that encompass
options and ETFs
•
Monitoring performance of models
using continual quantitative analysis
to confirm validity
•
Create/maintain Investment Policy
List and Documents
Services
Process
Financial Planning
Purpose
Outline client goals, align goals with investment approach and deepen the overall
client experience and commitment
Budget
$7,500 - $10,000 – depending on the depth of software we determine is needed.
5 licenses @ approximately $1,500/ license
Resources Evaluate how well resource components are satisfied.
Currently, we have two lead advisors and 4 Junior
advisors. Available resources are solid and capacity is
there to expand. With our current staffing, we should
be in a fair position to be able to attain our goal of
providing financial planning and have scalability moving
forward.
Available
Scalable
Attainable
Sustainable
List and Documents
Services
Process
Investment Management
Purpose
Process by which we can implement our portfolios in an effort to achieve our client’s
financial goals
Budget
$35,000 - $40,000/year
6 licenses at approximately $6,000/license
Resources Evaluate how well resource components are satisfied.
Currently, our investment team is two people deep. If
we migrate to a more model ETF portfolio, we may be
able to scale the business going forward. We need to
determine if the current people in Ops and Investments
can sustain our portfolio management operations during
our intended expansion and growth. People are
available, but we need to determine if they are the right
people.
Available
Scalable
Attainable
Sustainable
Initiatives and Notes
Initiatives for Improvement
Write down and agree on Operations initiatives in your firm and elect a “champion”
for each initiative.
Improvement Opportunity
Who Will Complete
1.Review current outsourcing
Tami
2. Workflow analysis –Internal versus
External
Robin
3.Efficiency & staffing
James & Rich
4.
5.
Notes
• Tami – Determine cost of top providers for Portfolio Accounting, CRM, Financial Planning, Cloud
Hosting and Rebalancing. Analysis of what is done in house today and externally with current
staffing & budget presently and determine what will stay and what will be outsourced going
forward to align with future growth goals. Compare platforms with bundled solutions and
outsource providers that are fully hosted including billing.
• Robin- Flows determined for Prospecting, Discovery, On Boarding of Clients, Reporting, On Going
Meeting and Engagement with Segmentation strategy.
• James & Rich-Determine who is in place now and who will be doing what role in the future after
Technology and Outsourcing is determined to align with growth goals.
Handouts in the Appendix
•
Six Tell-Tale Signs That Your Business Processes May Need Attention
MODULE FIVE
Financial Management
Making the Numbers Work
Initiatives and Notes
Initiatives for Improvement
Write down and agree on Financial initiatives in your firm and elect a “champion” for
each initiative.
Improvement Opportunity
Who Will Complete
1. Increase revenue/profitability by 15%
as an indicator of proper distribution of
professional utilization and proper
servicing of clients
Rich
2. Double marketing budget to expand
COI network, referrals, and client
appreciation efforts
Craig
3. Increase revenue per client by 10%
through evaluation of investment
offering based on client size and life
stage, pricing, and share of wallet.
Darren
4. Develop path to partnership through
next generation talent program . Create
a shared equity ownership track beyond
current partners.
Tami
Notes
Handouts in the Appendix
•
Key Drivers of Firm Valuation