Creating an effective organisational structure is crucial for the success of any financial planning business. A well-defined structure helps streamline operations, ensure compliance, and enhance client engagement. In this blog, we explore a functional structure that categorises activities into distinct areas, laying the foundation for defining roles and responsibilities within the business.
The Functional Areas
1. Governing Body
The Governing Body is at the helm of the business, responsible for setting the vision and strategy. This function ensures that all people and processes align with the strategic goals of the organisation. Beyond strategy, the Governing Body also establishes the company culture and maintains a governance structure that upholds the company's values and adheres to relevant legislation. Effective governance is vital for creating a sustainable and ethical business environment.
2. Operations
Operations encompass the day-to-day activities required to keep the business running smoothly. Unlike tasks related to the function of financial planning, operational activities support the overall functioning of the business. This area covers these key responsibilities:
Finance and Accounting: Managing financial records, budgeting, and financial reporting.
Information Technology: Maintaining IT infrastructure, ensuring cybersecurity, and supporting technology needs.
Human Resources: Recruiting, training, and supporting managers with managing employees.
Marketing and Business Development: Promoting the business, developing new opportunities, and driving growth.
3. Compliance
Compliance is a critical function that ensures the business adheres to all relevant laws and regulations. There are two principal areas of compliance:
Financial Planning Compliance: This includes adhering to regulations such as the Financial Intelligence Centre Act (FICA), Financial Advisory and Intermediary Services (FAIS) Act, and Protection of Personal Information (POPI) Act.
Operational Compliance: Ensuring compliance with the Companies and Intellectual Property Commission (CIPC), South African Revenue Service (SARS), Occupational Health and Safety (OSH), and other such laws and regulations. The compliance function helps manage and mitigate risks associated with non-compliance.
4. Client Engagement
Client Engagement is the front-facing part of the business, responsible for managing client relationships and delivering financial planning services. This area focuses on understanding client needs, providing tailored advice, and ensuring a high level of client satisfaction. Effective client engagement is essential for building trust and maintaining long-term relationships with clients.
Activity Categorisation
Understanding the functional structure is the first step in developing roles for the business. The next step is to determine the daily, weekly, and monthly activities within the business. This involves documenting each person's activities and categorising them into one of the four functional areas. Additionally, activities are assigned a level of complexity to help determine the appropriate roles.
Levels of Complexity
Entrepreneur: The highest level of complexity, involving activities that drive the business forward. This includes setting budgets, designing, and reviewing policies, and other strategic tasks.
Manager: Activities focused on the management and control of the business. Examples include compliance reporting, management accounts, and financial plan reviews.
Technician: Tasks necessary for the day-to-day functioning of the business. These include client meetings, service updates, and recording accounting transactions.
Documenting and Analysing Activities
In many small businesses, roles are often not clearly defined, leading to confusion and inefficiency. It is common for everyone to pitch in and do a bit of everything, which can cause two main problems:
Lack of Clarity: Without clear role definitions, tasks may be overlooked, leading to a reliance on the owner to step in and manage everything. This can result in overwhelming workloads and burnout.
Delegation Issues: Solving the problem of undefined roles might involve hiring new staff or implementing new resources. However, without clear responsibilities, these new additions may not be used optimally, leading to inefficiencies.
To address these issues, it is crucial to document and analyse all activities, their frequency, functional area, and complexity level. This data is then used to create well-defined roles that include specific activities and areas of responsibility. Importantly, these roles should be designed based on the needs of the business, rather than the existing personnel.
Creating Roles for Business Growth
A well-structured business can have up to 15 defined roles. In a growing business, one person might initially fill multiple roles. However, having clearly defined roles means that when the business is ready to hire new staff or implement new resources, there is a clear understanding of what is needed and what responsibilities can be delegated.
Conclusion
Developing a functional structure for a financial planning business is a crucial step in creating a sustainable and efficient organisation. By categorising activities into distinct functional areas and analysing their complexity, the business can define roles that enhance clarity, improve delegation, and support growth. This structured approach ensures that the business operates smoothly, complies with regulations, and maintains strong client relationships
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