Manufacturing Efficiency Meets Financial Advice Delivery

Imagine a manufacturing plant where every part moves seamlessly down the production line, each stage carefully optimised to minimise bottlenecks and waste. 

Now picture a financial advice process operating with the same precision. Client information flows effortlessly through a streamlined process, from initial consultation to the final recommendation and implementation, with no unnecessary delays. 

Just as manufacturers fine-tune their assembly lines to maximise output, financial advisers can adopt similar strategies to cut down on inefficiencies and reduce the time it takes to deliver personalised advice.

In the world of manufacturing, bottlenecks—points in the process where work slows down or comes to a halt—are the enemy of efficiency. Eliyahu Goldratt’s Theory of Constraints (TOC), first introduced in his 1984 book ‘The Goal’, addresses this by identifying and systematically eliminating these bottlenecks, allowing businesses to achieve higher output and better overall performance.

This article will explore how TOC, traditionally used in industries like manufacturing, can be a powerful framework for financial advisers. The goal? To streamline the advice delivery process, reduce turnaround times, and ultimately provide clients with a more seamless experience.

What is the Theory of Constraints?

At its core, Theory of Constraints (TOC) asserts that in any process, there is always at least one constraint (or bottleneck) that limits the entire system’s output. This constraint dictates the pace at which work can be completed. TOC emphasises that improving performance and efficiency doesn't require overhauling an entire system—rather, it starts with identifying and managing these constraints effectively.

In a financial advice business, this constraint could be anything from waiting on client documents to administrative delays in obtaining product research or over-reliance on manual processes. By recognizing and addressing these constraints, financial advisers can dramatically reduce inefficiencies, shorten the time it takes to deliver advice, and ultimately serve more clients with the same resources.

TOC helps businesses focus their attention on the most critical element in their workflow that is slowing down productivity. By improving that constraint, the entire process flows more smoothly. 

Goldratt formulated a systematic approach to resolving these issues, which he called the Five Focusing Steps. These steps provide a clear roadmap for identifying, managing, and eliminating constraints, and they can be applied to any system—including financial advice delivery.

The Five Focusing Steps
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The Five Focusing Steps comprise a structured process that ensures continuous improvement and maximisation of output by targeting the system's weakest point. 

Let’s take a closer look at these steps and how they can be applied to streamline the financial advice process:

1. Identify the Constraint

The first and most critical step is identifying the constraint—the bottleneck that is limiting the flow of work. In a manufacturing setting, this might be a machine that can't keep up with the rest of the production line. In financial advice, the constraint could be delays in gathering client information, a bottleneck in preparing Statements of Advice (SOA), or manual data entry tasks that slow down the process. Pinpointing this bottleneck is crucial because all improvements should start by addressing it.

2. Exploit the Constraint

Once the constraint is identified, the next step is to maximise its efficiency. Exploiting the constraint means ensuring that this limiting factor is used as effectively as possible. For instance, if the bottleneck in a financial advice firm is the time it takes to gather client information, advisers could focus on standardising data collection, introducing digital forms, or simplifying the process for clients. The goal is to ensure the constraint is not wasted or slowed down by inefficiencies elsewhere.

3. Subordinate Everything Else

In this step, all other parts of the process must align with the constraint. This means that every other stage in the workflow should operate in a way that supports the efficient functioning of the constraint. 

For example, if the bottleneck is the preparation of the Statement of Advice (SOA), all tasks before and after should be optimised to ensure that SOA preparation proceeds smoothly and without delay. Client data gathering, for instance, should be completed thoroughly and on time, so that the Paraplanner isn't waiting for missing information. Once the SOA is prepared, any compliance or quality checks should be scheduled to move forward quickly, reducing delays after the SOA is finalised.  

The aim is to keep the SOA preparation running at peak efficiency, with no unnecessary waiting times or additional bottlenecks at any other point in the process. By organizing everything around the constraint, the entire system can work to enhance the flow and reduce overall delays.

4. Elevate the Constraint

If, after exploiting and subordinating, the constraint is still limiting the system's performance, the next step is to elevate it. This could involve adding resources, investing in new technology, or rethinking how work is done. In the context of financial advice, this might mean hiring additional staff for administrative tasks, implementing AI-powered solutions, or adopting workflow automation tools to speed up the bottleneck stage.

5. Repeat the Process

Once a constraint has been addressed, it's important to start the process over again. In any system, after one constraint is resolved, another will likely emerge as the new limiting factor. The process of continuous improvement requires constantly identifying, exploiting, subordinating, and elevating constraints to ensure maximum efficiency. In the financial advice business, this might mean addressing bottlenecks in client onboarding today and then moving on to streamlining the SOA preparation process tomorrow.

Conclusion

The Theory of Constraints offers a powerful framework for financial advisers looking to improve their workflow, reduce inefficiencies, and deliver advice more efficiently. By identifying bottlenecks and applying the Five Focusing Steps, advisers can begin to treat their businesses like well-tuned machines, where each part works in harmony to deliver the best possible output.

Whether it’s improving the client onboarding process, streamlining data gathering, or speeding up Statement of Advice delivery, the TOC provides a systematic approach to tackling inefficiencies that may otherwise go unnoticed. The focus shifts from trying to overhaul an entire system to making targeted improvements that have a real impact on the speed and quality of advice delivery.

In an industry where time is money—and personalised advice is increasingly sought after—embracing TOC could be a game-changer. Advisers who adopt this mindset will find themselves better equipped to handle the complexities of financial advice delivery, while also freeing up valuable time to focus on building deeper, more meaningful relationships with their clients.

By continuously identifying, exploiting, and elevating constraints, financial advisers can keep their businesses running at peak performance, just like a well-oiled manufacturing line. The result? Faster service, higher client satisfaction, and a more scalable business model.

David Deegan

David Deegan

David has over 20 years experience in the financial advice industry in Australia.

Starting as a financial adviser David spent 12 years assisting clients in navigating their financial options.

Identifying the need for more efficient back office support for advisers, David co-founded Vital Business Partners (VBP), an offshore solution that has reshaped the way financial advisers manage administrative and paraplanning work. With ten years at VBP David combined operations, business process management and technology to streamline and enhance the productivity of financial advice businesses.

David is now developing Planorate, an innovative platform aimed at further simplifying the advice delivery process.