Improving the Monthly Closing Process

The month-end close process for wealth management firms is anything but simple. Intricate commissions and incentive compensation plans, plus regulatory oversight add to the already complicated, tedious process. Poorly executed procedures can be detrimental to a firm. Making sure advisors are paid accurately and on time plays a crucial role in retaining top advisor talent. Additionally, ensuring compliance with FINRA and other industry regulators is of paramount importance. On top of all that, the back office and accounting teams are expected to meet non-negotiable deadlines and execute each task as efficiently as possible. Below are four key ways to improve your firm’s month-end close process.

1. Document Your Month-end Close Process

Documenting business processes is an often ignored aspect of many organizations. Staff members may feel documentation is unneeded and would rather just do their work instead of writing about it. It is critical that no steps are overlooked, therefore documenting your month-end close will ensure that all runs smoothly, and no steps are overlooked, especially for those times when staff are on vacation or worse yet, unexpectedly leave your firm.

When documenting your monthly closing procedures, consider the following:

  • Identify process owners and backups.
  • Notate key dates and frequency of tasks.
  • Map task sequences and dependencies.
  • Create a list of external business contacts.
  • Develop and maintain reusable checklists.

2. Focus on Process Improvement

After documentation is complete, turn your attention to process improvement. Having these procedures documented will help identify potential areas for improvement. Are there bottlenecks? Gaps? Wasteful activities? Redundancies?

Fostering a culture of continuous improvement will help improve your month-end close and boost your bottom line. At the end of each monthly close, with the prior events in mind, meet with your team members to conduct a retrospective. Discuss what went well / what didn’t go well. Concentrate on the potential areas that can be improved. Involving your staff by asking them to provide recommendations for improvement will give them a sense of ownership and continually refine and streamline each subsequent month-end close. According to Ray Leathers, President of Roll Forming Corporation, a company that experienced a 400% increase in revenue to $125 million in 15 years,

“continuous improvement can’t work unless every team member, every front-line leader, is closely engaged in the process.”

3. Communicate Well and Often

Frequent and clear communication throughout the entire month is essential. Consider holding daily stand-up meetings in the final phase of month-end close. These stand-up meetings ought to be brief, approximately 15 minutes, and the discussions should be focused. Allow each team member to share the progress they have made since the last meeting, what they are tackling next and potential roadblocks.

Another critical communication point is to send reminders to other departments regarding hard dates, including your advisor teams.

4. Implement Automation Tools

Using spreadsheet formulas and pivot tables will only go so far. Managing your entire month-end close via spreadsheets that are manually updated, reused, and shared between departments is a recipe for disaster. Such practices are error-prone, time-consuming, and impede strategic decision making.

Automation tools bring speed and efficiency to your month-end close. Automating manual processes help mitigate risk by decreasing the potential of human error. Additionally, technology will boost your ability to make strategic decisions quickly by providing access to real-time data throughout the month.

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