Implementing Best Practices

Bill Good

May 01 2010

Implementing Best Practices:

A Solution


I’ve just finished reading a wonderful book. It’s really helped me pull together my thinking on “best practices.”

Before I tell you about it, let’s talk for a moment about this fabled treasure, “best practices.”

According to an article in Wikipedia®:

 “A best practice is a technique, method, process, activity, incentive, or reward that is believed to be more effective at delivering a particular outcome than any other technique, method, process, etc. when applied to a particular condition or circumstance. The idea is that with proper processes, checks, and testing, a desired outcome can be delivered with fewer problems and unforeseen complications. Best practices can also be defined as the most efficient (least amount of effort) and effective (best results) way of accomplishing a task, based on repeatable procedures that have proven themselves over time for large numbers of people.”

So I went in search of “best practices.”

I searched the website of this magazine. I found 209 references.

I then searched Registered Rep (235), Financial Planning (396), and Investment News (120). I’m sure the number for the other magazines is similar.

But I found precious few actual “best practices.”

The term “best practices” gets batted around. Many writers seem to mean “good ideas.” Just as one encounters “style drift” in monitoring investment managers, one sees, especially here, “word drift.” Consider:

 “The Vanguard Target Retirement target date funds employ best practices with low fees, a high level of transparency, and prudent investor-oriented management, according to Morningstar's research.” (Investment News, September 9, 2009) 

Other references refer to best practices but don’t specify them.

 “More than 90% of wealth managers today make it their priority to learn and implement best practices of leading advisors. Once again, however, too many financial institutions do not understand the importance of providing these best practices—only 64% said that it was very important to provide best practices to their advisory clients.” John Bowen writing in Financial Planning.

In still other cases, one would have no clue how to implement a “best practice.”

 “A common element of best practice advisors is their ability to self-actualize their practices. In essence, this means making the conscious decision to craft a business model that serves longevity clients, rather than simply accommodating the needs of retirees as part of a more generalized practice. As noted in the chart below, more advisors anticipate making this deliberate shift in emphasis to retirement clients as the boomer wave continues.”  Dennis Gallant, Research Magazine 2/1/2009.

My question about best practices is simple: But where’s the beef?

Where is the “technique, method, process, activity, incentive, or reward?”

Are we dealing here with a case of the “Emperor’s New Clothes?” 


The Checklist Manifesto

With this as background, let me now introduce you to one of the best books I’ve read in a while, “The Checklist Manifesto” by Atul Gawande, a general, and endocrine surgeon at Brigham Young Women’s Hospital. A terrific writer too.

First let me address a likely question: Why read a book about checklists by a doctor? Answer: because his discoveries have a lot to do with any complicated industry.

In his book, Dr. Gawande tells the gripping story of the development a checklist used to save lives and slash infection rates world-wide. In the process, he introduces people in any industry to a concept unlikely at the outset to bring gasps of realization, but likely, when implemented, to save lives and perhaps businesses.

The lowly checklist.

Best Practices and Failure

Consider the story of just this one checklist developed by a Dr. Peter Pronovost.

He became concerned about infection rates when a surgical team inserts a central line into a patient’s body. He came up with this checklist.

1) Wash your hands with soap.

2) Clean the patient’s skin with chlorhexidine antiseptic.

3) Put sterile drapes over the entire patient.

4) Wear a mask, hat, sterile gown, and gloves.

5) Place sterile dressing over the insertion site once the line is in.


Silly, right? We’re talking operating rooms in one of the great hospitals, Johns Hopkins. But here's what's stunning.

Dr. Pronovost asked the nurses to observe the doctors. In more than a third of the cases, they skipped at least one step.

Over the course of the year, the hospital administration empowered the nurses to ensure the checklist was done. The results were stunning. So-called “line infection” rates went from 11% to zero.

Hmmm. That checklist looks like a “best practice” to me. It meets the test that “a desired outcome can be delivered with fewer problems and unforeseen complications.”

According to Dr. Gawande, here’s why a simple checklist is vital in any complicated activity.

“We have accumulated stupendous know-how. We put it in the hands of some of the most highly trained, highly skilled, and hard-working people in our society. And, with it, they have indeed accomplished extraordinary things. Nonetheless, that know-how is often unmanageable. Avoidable failures are common and persistent, not to mention demoralizing and frustrating, across many fields—from medicine to finance, business to government. And the reason is increasingly evident: the volume and complexity of what we know has exceeded our individual ability to deliver its benefits correctly, safely, or reliably. Knowledge has both saved us and burdened us.”

Does this sound like another industry you are familiar with? Then you will enjoy Chapter 8, “The Hero in the Age of Checklists.” In this chapter, Dr. Gawande details how three investment managers use checklists to achieve superior performance.

Hmmm. Could the checklist concept possibly apply to financial advisors?

Benefits of Checklists for Financial Advisors

My experience with checklists goes back to my days in grad school when I scrounged together some money to take flying lessons. My flight instructor pounded into my head, “Do your pre-flight checklist or you might die.” I got the message. In many respects the entire marketing system I built has a series of checklists as its foundation. These checklists enable team members to:

1)   Avoid mistakes due to interruptions. You can pick up where you left off.

2)   Give a uniform standard of good service.

3)   Ensure new team members follow the same procedure.

4)   Perhaps most importantly, using a checklist you should be able to capture, and then implement, a best practice you read or hear about.

Where do you start developing a checklist?

You pick one thing.

What would a Checklist look like?

First of all, you don’t have to call it a checklist. You could call it, as does Ritz Carlton, “The Three Steps of Service.”

1.   A warm and sincere greeting. Use the guest's name.

2.   Anticipation and fulfillment of each guest's needs.

3.   Fond farewell. Give a warm good-bye and use the guest's name.

Few would argue that the Ritz Carlton “Three Steps of Service” constitutes a best practice. Perhaps the best practice for implementing a best practice is: embed it in a checklist.

So a best practice could, or even should be in checklist form.

Let’s consider some other characteristics of a checklist.

A checklist would ideally be simple.

It would be thorough.

It would provide the best way to handle a recurring problem or opportunity.

Creating a Checklist from a “Best Practice”

Consider something you do every day: talk to clients. Do you always get the information you need? Are you prepared?

Here is a VITAL best practice.

I call it “The Law”—“Every contact and contact attempt with a client or prospect produces an updated record in the computer.”

“The Law” will save you. It is THE FOUNDATION of the marketing system I created. Hardly a month goes by that I don’t get an email or call thanking me for teaching the discipline inherent in “The Law.”

Just consider: You can be right. Your investments can be suitable. Your service can be impeccable. But all it takes is one bad-apple client alleging unsuitability to destroy a career built over a lifetime. Unless you can prove you followed the four principles for suitability in FINRA 2310, you could have followed them and still have your goose cooked.

To implement “The Law” you need a checklist. To implement FINRA 2310, you need a checklist.

For years, I’ve called it a RUF-(Record Update Form.) As a matter of fact, I have written several checklists for you. I’ve put them at One of them is the RUF.

Let’s pose the questions:

1)      Should you be prepared for a call?

2)      Should you have an agenda of what you want to cover?

3)      Do you have a standard procedure after each call?

Let’s start out and prepare for each call.

___ Review client account.

___ Review last few notes. Outstanding issues?

___ Review profile. Am I up-to-date on __financial status __tax status __investment objectives __other reasonable information needed.
(FINRA 2310)

___ Decide on an objective for the call ___________


Check how their family is doing

Ask the client what’s on their mind

Agree on an agenda

Check for additional funds

Check for outside investments

Promote referrals

Then you should have a place to write:

Notes (What did happen)

Actions (What will happen)

Opportunities (investments or events that will result in cash available in the future)

Outside investments discovered

Service issues

Referrals received

Message to send 

At the end of the call, your notes are done. Hopefully you have someone who can properly process them. If not, you’re it. Our recommendation is: you set aside time each day to process your notes—part of yet another checklist, the Model Day.


I’ve gone back through some past articles I’ve written for Research. Based on those articles, I’ve created these “Best Practices Checklists.” You will find them at

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