{"id":48,"date":"2017-09-13T08:01:28","date_gmt":"2017-09-12T22:01:28","guid":{"rendered":"http:\/\/magazine.riskinfo.com.au\/32\/?p=48"},"modified":"2017-11-06T07:31:36","modified_gmt":"2017-11-05T21:31:36","slug":"crunching-your-numbers-some-hacks-to-help","status":"publish","type":"post","link":"http:\/\/magazine.riskinfo.com.au\/32\/crunching-your-numbers-some-hacks-to-help\/","title":{"rendered":"Crunching Your Numbers \u2013 Some Hacks to Help"},"content":{"rendered":"
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Working out how much your advice is worth is a useful exercise, which has become even more pressing in the lead up to the start of the Life Insurance Framework (LIF).
\nIn doing so, it is important to factor in all those things that go into the advice process, even if they don\u2019t relate to a specific client, says Elixir Consulting\u2019s Sue Viskovic.
\nAs Sue writes, working out what your advice is worth is as crucial as figuring out how to provide that advice.<\/h3>\n<\/div>\n

As we head toward the countdown to January 1st<\/sup>, you\u2019re probably crunching your numbers to minimise the impact of the LIF on your revenues. If you haven\u2019t already done so, an analysis of how much revenue you need to generate to service each \u2018style\u2019 of client you work with is an important step, before deciding how you will generate that revenue (if commissions won\u2019t suffice, likely subsidising them with a fee).\u00a0 I refer to it in my book as determining your \u2018Minimum Recoverable Amount\u2019 (MRA).<\/p>\n

A critical step in working out how you\u2019re going to price your services in future is to analyse your processes \u2013 both your onboarding process AND your ongoing services, in order to determine your MRA.\u00a0 There are a number of tools you can use to do this, and if you\u2019re choosing to use a spreadsheet rather than our full Pricing Advice online program<\/a>, I want to share a few of my hacks to keep in mind while you\u2019re doing it.<\/p>\n

Make sure that when you\u2019re considering how much time you spend with your clients, you also build into your charge-out rate all of those things you do that aren\u2019t attributed to a single client through the advice process.<\/p><\/blockquote>\n

First, recognise the difference between income for effort, i.e for your salary, and profit. Regardless of how you choose to pay yourself for your own tax planning purposes, make sure that you factor in a market-based salary for the advisers who work in the business. If it\u2019s just you, think about what you would have to pay someone to do your job if you weren\u2019t able to \u2026 and then your targeted profit margin sits above that. I\u2019ve seen some calculate their cost to serve as a break-even point \u2013 what would it take just to cover your overheads. The problem with doing that is you may subconsciously revert back to this as your minimum number, and if you\u2019re not making a profit, you\u2019re unlikely to still be in business when your clients need you in future if they need to make a claim. If you\u2019re targeting say 35% profit margin, this should be calculated over and above your salary.<\/p>\n

Make sure that when you\u2019re considering how much time you spend with your clients, you also build into your charge-out rate all of those things you do that aren\u2019t attributed to a single client through the advice process.\u00a0 They\u2019re all necessary for you to do your job, but they\u2019re not one-on-one with your client\u2026<\/p>\n