by Michael Slemmer, CFA
We're now past the year-end 2009 client meetings and the fire drill of tax season, so it is a good time to take stock of your firm's foundation for growth as the economy, hopefully, turns for the better.
Most firm leaders know they need to create their business plans each year, but few firms actually put an emphasis on understanding their "highest gain" issues and creating a specific plan to address them. Why is business planning, and especially business development or growth planning, so important?
Our research shows that the old adage, "failing to plan is planning to fail," is reality for wealth managers. Those who set and implement firm-wide and business development goals outperform those who do not. This past summer, Advisors Trusted Advisor, a business growth consulting and training firm where I serve as a principal, surveyed 354 financial advisers and wealth managers on the state of their business-building efforts.
We asked several questions about business goal setting and planning, and found that only 35 percent of advisers have written business development plans. However, analyzing combinations of questions relating to these activities showed that the more this was done, the higher the firm growth, number of prospects and overall satisfaction with business growth. This higher satisfaction includes confidence that their marketing communications are performing well, they are happier with client and COI referrals and they rate the overall business-building culture of their firm much higher than those respondents who rated themselves much lower on these questions.
What plans should you make to take advantage of a better economy and investing climate? How can you put workable plans in place and what should you focus on?
We see three areas that are foundational to firm growth, but are challenging for many advisers: (1) business development or new client acquisition, (2) improving operational efficiencies and (3) managing human capital-getting the right people in the right roles with the right incentives, and preparing for succession.
New Client Acquisition
Experience tells us that the most successful advisers when it comes to new client acquisition are those who write and stick to a business development plan, have processes and systems (such as CRM) to fully track efforts and are more assertive sellers.
In this area, goal setting and planning could focus on:
1. Revenue and growth goals for the long term-how much and from what target segments or markets? If there are discreet business segments (high net worth, institutional, mutual funds), they should each be identified.
2. Revenue-building activities for the coming year:
- Marketing material development
- Current clients-client communication, events and referrals
- Third-party marketing-relationship marketing (centers of influence)
- Events and public relations opportunities
- New business segments-either through product or type of relationship
3. Marketing strategy-ensuring that positioning is understood and articulated well, understanding the competition and differentiating from it, having a media and brand awareness plan, and marketing tools and communication that align with the sales process.
4. Personnel-who's doing the selling? Determine who's best suited to bring in the business and make sure that the compensation plan incents the person to attain the firm's goals.
5. Tracking:
- Identify technology needs
- Agree on and implement the metrics for success or failure
- Account for changes and mid-course corrections
- Outline the process-who is involved, who is accountable for each piece of the plan?
Improving Operational Efficiencies
In 2009, we surveyed advisers and asked respondents to rank seven areas crucial to the success of an investment advisory business. The top three concerns were: new business development; operations and technology-and its effective deployment; and managing firm growth.
In our experience, operations and technology fall to a lower priority relative to investment process and client service. As your firm grows it's very easy to lose operational efficiency if processes are not regularly reviewed. Goal setting and planning could focus on:
- Determining process flow for all high-impact areas of the firm.
- Remedying those processes that are the most manually done.
- Identifying tasks that are being done by key personnel that take too much time or are outside their key responsibilities.
- Determining the most appropriate help for your firm based on budget and culture-full-time personnel, outsourced technology consultants or your custodian.
Human Capital Management
Human capital management is making sure you have the people who are the right fit for both the role and the firm culture. It also involves ensuring employees know what they need to do, what they are measured on and how they are contributing to overall firm growth. And it means continuing to scan the market for talent with succession planning and the future of the firm in mind.
The kinds of things that human capital goals could look at include:
- Job descriptions-including behavioral components required for each role to ensure they are clearly written and appropriate for any changes that might take place in the business over time.
- Compensation plans that are fair and incent the right behaviors and are aligned with overall firm goals.
- A rigorous hiring and candidate vetting process.
- Ongoing training or coaching to employees to allow them to perform at their highest potential.
- Measuring employee improvement to ensure success.
- Assessing and ensuring benefits are competitive.
- Ensuring compliance with HR regulations and laws.
- Succession planning in the case of retirement or death of key personnel. How would clients respond if someone in a key role left tomorrow?
- Determining how firm growth will impact roles, responsibilities and budget.
- Ensuring career growth and development opportunities.
A financial adviser's life revolves around planning others' lives and helping others realize long-term goals. For most advisers it's rewarding, but it often doesn't leave them time to plan for their own firms. As 2010 progresses, it's important to consider your own plans-whether they are in the three areas outlined here or others. Determining those "highest gain" goals and then creating a plan to meet them with allow you to meet each year's challenges with confidence and focus on the most important areas that define success for you.
Michael Slemmer, CFA, is a principal with Advisors Trusted Advisor (www.AdvisorsTrustedAdvisor.com ), a Medfield, Mass.-based consulting and training firm serving adviser and wealth management firms. The firm's 7 Steps to Effective Business Building for Financial Advisors Program provides tools for growing an investment advisory, planning or wealth management business.
Sidebar
First Stop: Goal Setting and Planning
Goal setting and planning must start with the S.M.A.R.T. foundation. That is, all goals and plans must be specific, measurable, action-oriented, realistic and time and resource bounded.
Many goals suffer from nondescript loftiness, so specific and measurable means that anyone in your firm can understand clearly what the goals are and how success will be measured. There's no room for navel-gazing-each goal should show actions required to get there. Goals and plans should be recognized as realistic by everyone involved, and there should be clear timelines and accountabilities for achieving them.
With a goal outlined, your team must agree on the exact deliverables. A question for each stakeholder should be, "What does success look like to you?" The team should plan the project in discreet steps, planning the who, what, where and when of each. Each step should also identify resources required and potential obstacles. Obstacles are often overlooked in planning, leading to the absence of contingency planning that can kill a goal.
Advisers and their staff members are incredibly busy. Many goals go unattained because after the goal is set and the plan is written, day-to-day responsibilities and unplanned events take over. It's important to remember that each priority or goal agreed upon is someone's project. Each step must define who is accountable, including who owns the success or failure and when delivery is considered completed. There should be full communication about what is reasonable for each person to take on and what other responsibilities will suffer. With all of this established at the outset, your team will be on a firm footing for achievement.
- Michael Slemmer, CFA
Learn More
The research reports mentioned in this article can be ordered at www.advisorstrustedadvisor.com. A free summary of the business-building research is available at www.advisorstrustedadvisor.com/7steps/survey.aspx.
