Schwab Institutional Releases Report on the Link Between Effective Time Management and the Bottom Line for Advisory Firms

Time Management Seen as Essential as Advisory Firms Continue to Grow

SAN FRANCISCO--()--Across the independent advisor industry, firms are growing at an increasingly rapid pace, making time a valuable resource. The best-managed independent investment advisory firms typically work the same number of hours as their peers, but are more profitable and more productive because of effective management of principal and staff time, according to a new report published by Schwab Institutional. The white paper, Best-Managed Firms: It's About Time, examines the role that time management plays in the overall success of a firm and offers effective management techniques from top firms.

Schwab Institutional, in conjunction with Moss Adams LLP, the 12th largest accounting and consulting firm in the United States, developed the report, which was compiled from interviews with the principals of 45 "Best-Managed Firms." These firms represent the top 15 percent of independent, fee-based advisory firms surveyed in the 2006 Moss Adams Financial Performance Study of Advisory Firms, based on a composite score of firm profitability, productivity and leverage.

"What we have found in talking with advisors is that the most successful firms are tenacious about time management in the face of accelerating growth," said Deborah Doyle McWhinney, president of Schwab Institutional. "Both principals and staff at the advisory firms included in the report are not necessarily working harder; they are working smarter."

According to the report, staff time is usually the most significant cost for an advisory firm, averaging about 70 percent of all expenditures. The best-managed firms cited in the report have a clear understanding of their firm and staff capacity, whereas other firms can get caught in the trap of planning solely based on revenue growth without analyzing the costs attached to things like customer service and administrative activities. The growth leaders in the report allocate staff and principal time appropriately, scale and structure the firm so that it runs efficiently, institutionalize processes, and plan and measure results.

"Principals of best-managed firms are constantly working on and reshaping their business, as opposed to just working in their business day to day," said Dave Welling, vice president of strategic marketing programs at Schwab Institutional. "The firms that take the time to pause, plan and prioritize business and time management tend to avoid facing the dilemma of either working longer hours or sacrificing a high level of client service."

Time is on Your Side

According to Best-Managed Firms: It's About Time, the most successful firms in the industry recognize that time management is a business management issue, and deploy their resources accordingly. These firms use tactics ranging from strategic staffing, technology and outsourcing, to streamlining internal communication and workflow solutions in order to achieve maximum profitability. And it generally starts with the firm's principal. On average, owners of the best-managed firms, spend an additional 180 hours annually on client-facing activity and 24 percent less time on operations and portfolio management. The report found several key time management strategies that were common to principals of best-managed firms. These firm owners:

  • Spend less time on operations and portfolio management and more on client service and business development
  • Measure capacity accurately and use streamlined, efficient processes to take full advantage of capacity
  • Hire more support and managerial staff per professional than do principals at other firms
  • Offer only what clients value
  • Standardize their service delivery
  • Automate or outsource routine tasks

Overcoming Common Time Management Myths

The report also offers strategies for overcoming common myths regarding time management. For example, the report identifies the myth that every problem can be solved by simply working longer hours. In reality, according to the report's findings, the opposite can be true when employees reach or exceed their capacity limits and firms see decreasing returns on each additional hour worked. In addition, the report dispels the myth that every firm problem can be solved by the principal, explaining that owners should know when to delegate tasks and issues to their staff in order to make the best use of their time.

On average, owners who worked 60-hours per week, or 33 percent more than the industry average of 50-hours per week, only generated an 18 percent greater pretax income per owner. The conclusion: longer-working owners generated less income on an hourly basis, a median of $83 per hour, compared to $93 per hour for the others.

"If there is one key takeaway in the report, it is that advisor firms need to plan ahead and make business and time management a core part of their routine," notes Welling. "Busy advisors should be relieved to learn that achieving profitability, productivity and efficiency is not simply a matter of working longer hours, but without a solid commitment to consistently reevaluating time allocation as it relates to clearly defined business goals, it is just too easy to put it on the backburner."

This report is the latest in a series of Schwab Market Knowledge Tools(TM) (MKT) reports, an ongoing program of industry research reports, white papers and how-to guides from Schwab Institutional designed to keep investment advisors on the forefront of trends and competitive challenges facing the industry. Offered exclusively to Schwab Institutional clients, the MKT program delivers relevant and timely information for future business planning. The MKT reports are a part of Schwab Institutional's GrowthPoint(TM), a program that builds on Schwab's existing practice management solutions and takes a uniquely tailored, strategic approach to helping advisors build their businesses. GrowthPoint consists of three distinct service offerings: Marketing/Business Development, Business Strategy/Planning and Transition Services.

About Schwab Institutional

Schwab Institutional is a leading provider of custodial, operational and trading support for independent fee-based investment advisors. This year marks Schwab Institutional's 20th anniversary serving the independent investment advisor industry. Since 1987, Schwab Institutional has supported independent investment advisors by offering support and services to help grow their businesses and help their clients reach their financial goals. As of December 31, 2006, client assets custodied with Schwab Institutional stood at $502 billion. These assets, managed by the approximately 5,000 independent advisor firms Schwab Institutional currently serves, represent approximately one-third of total client assets custodied with The Charles Schwab Corporation. Brokerage products offered by Schwab Institutional are not FDIC insured, are not guaranteed deposits, and are subject to investment risk, including the possible loss of principle invested. Schwab Institutional is a division of Charles Schwab & Co., Inc.

About Moss Adams

Moss Adams LLP provides accounting and management consulting services to advisory firms throughout the US, Canada and Australia. With a particular expertise in the financial services industry, Moss Adams has provided consulting services to more than 1,200 investment management firms, broker-dealers and financial advisors on matters related to compensation, organizational design, valuation, mergers and acquisitions, financial management, strategic planning and leadership development. Moss Adams is the twelfth largest accounting and consulting firm in the U.S., with a staff of over 1,800, including more than 225 partners. For more information on Moss Adams, visit .

About Charles Schwab

The Charles Schwab Corporation (Nasdaq: SCHW) is a leading provider of financial services, with more than 300 offices and 6.8 million client brokerage accounts, more than one million corporate retirement plan participants, 150,000 banking accounts, and $1.3 trillion in client assets. Through its operating subsidiaries, the company provides a full range of securities brokerage, banking, money management and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC,, and affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; referrals to independent fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through its Schwab Institutional division. The Charles Schwab Bank, N.A. (member FDIC) provides banking and mortgage services and products. CyberTrader(R), Inc. (member SIPC, is an electronic trading technology and brokerage firm providing services to highly active, online traders. More information is available at (0407-0560)


Charles Schwab
Michael Cianfrocca, +1-415-667-3252


Charles Schwab
Michael Cianfrocca, +1-415-667-3252