Analyze Your Year-End Commission Statement
Now that I've determined the profitability threshold for my practice, I'm able to make informed decisions about the clients I choose to work with. --Cynthia Keithley
To close the gap between what you feel your time is worth and what you're actually earning, analyze your year-end commission statement to determine which clients are generating the most revenue. If you have 250 clients and 25 of them are generating 70% of your total revenue, those top 25 clients should be getting 70% of your time.
Cynthia Keithley, a CFP with Investment Centers of America in Council Bluffs, Iowa, had a strategic plan in place that she revised every year, but she was finding it difficult to predict the firm's growth rate with any level of accuracy. By pinpointing the account size that is most profitable for her practice, she is now able to allocate her time and resources accordingly. "I was struggling to reconcile all the different ad hoc reports, back-office feeds and commissions statements with my own accounting records in order to benchmark the true profitability of my business," she says. "Now that I've determined the profitability threshold for my practice, I'm able to make informed decisions about the clients I choose to work with. Going through this process has definitely helped me become more strategic in setting realistic goals."
-Cynthia Keithley, a CFP with Investment Centers of America in Council Bluffs, Iowa, in Action Strategies to Improve Profitability
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