How to develop your action plan

> Getting Back On Track

Advisor: I am organizing a day-long “retreat” with my support team to complete our planning for the coming year. We have been doing this for three years now and it has helped us focus on results in a way we hadn’t been able to for a while. What has really pleased me about this process is that not only are our revenue projections going up each year, but we keep exceeding them and are continuing on a steady path of growth.

I am concerned, however, that in our efforts to set challenging objectives, we have turned the day into more of a number-crunching exercise than a strategic planning process. In other words, we know “how high” to reach, but we don’t always know “how” to get there. How would you get us back on track?

 

Coach says: First, you should be commended on creating a discipline around your planning process. I am a big advocate of getting off-site at least once a year with the whole team to review what has taken place in the preceding period and to plan for the one coming up.

Targets have to be backed up by an action plan — and that action plan has to be based on a broad-based strategy for achieving where you want your practice to be at some point down the road.

Here are 10 questions you might pose to the group to think about in advance of the off-site session. You can then use the time together to discuss them and, hopefully, come to a consensus in the form of an action plan to implement your strategy:

1. What is the “right size” for our business?

Not every financial advisor wants to build a practice to the sky — and bigger isn’t necessarily better. Increasingly, advisors are considering issues such as work/life balance and succession planning in determining how large they want their practices to become. One question that will help you determine the appropriate scale for your business is: “How do I personally want to be spending my time X years from now?”

2. Are we at the stage at which we need to change our approach from building our business to sustaining it?

You indicate that your practice is growing at a steady rate, which, of course, is wonderful. At some point, however, your focus has to switch from obtaining growth to managing it.

It might be hard to believe, after spending years building your practice, that letting it grow too far too fast can be almost as bad as not growing it all. So, you need to look at your systems, procedures and technology, and ask: “Are we prepared to handle more clients, assets, markets, etc.?”

You also need to ask: “What must we do to ensure our reputation for service and strong client relationships are preserved?”

3. Do we require more specialized resources?

In the early years of building your practice, there were many hats to be worn and everyone was a generalist doing whatever has to be done. I am willing to bet that, as your business has grown, it has become more complex and you now find yourself spending more and more time on management and administration.

Ask yourself: “Should we consider hiring or outsourcing to someone to manage the office, complete financial plans, implement our marketing, rebalance portfolios, etc.?”

4. Should we define more narrowly our “preferred” client profile and target market?

In the initial years of your business, you probably had accepted just about anyone as a client. Consequently, there is a high degree of customization in the work you do as a result of having a variety of client types. By narrowing your choice of clients, you will encounter similar problems that consistently call for similar solutions.

This selectivity presents two opportunities: one, to become an “expert” in a particular field; the other, to become very efficient at implementation.

5. How can we differentiate ourselves in the marketplace?

Granted, it is hard to stand above the crowd when everyone touts a similar value proposition: great service, expert advice, full range of products, etc. Interestingly, it takes only a small point of differentiation to gain marketing advantage.

So, ask your team: “What is unique about our people, processes, products, etc., that we can promote as a reason for potential clients to choose us over other advisors?”

Another way to answer this is to ask current clients why they do business with you rather than with someone else.

6. What are the right levels of service for us to provide?

In the practical world, it’s pretty much impossible to manage a growing practice with unlimited service delivery and still have a profitable business.

Clients have long accepted that higher-value clients receive higher levels of service and recognition. (Think of airline or hotel loyalty programs, credit cards, etc.) And financial advisory practices should be no different. Segmenting your client base by both quantitative and qualitative measures and aligning your service to those tiers simply makes sound business sense.

7. What is the career-development plan for our people?

One of the emerging issues for advisors is the growing shortage of qualified support staff. With the increasing sophistication of technology, for example, it is no longer sufficient to hire someone who is familiar with Microsoft Office; now, you may need someone with knowledge of the processes and tools for financial planning, asset allocation, rebalancing, quote systems, customer relationship-management software, etc.

Add to this the greater willingness of younger employees to “jump ship” to a competitor for what they perceive to be better career and personal-development opportunities, and it becomes apparent it is essential that you be willing to invest in staff training and career-path planning.

8. How do we build long-term stability in our revenue?

Most financial advisory practices operate almost exclusively on a “variable cash flow” model — as revenue fluctuates, so does advisor income and reinvestment in the business. There are several ways to smooth out revenue — for example, by converting to fee-based compensation, expanding your product mix and, dare I say it, not spending all the money when revenue is high — so there is a cushion for times when revenue falls.

9. How do we regain our business-development skills?

Chances are that as your practice has grown, an increasingly large percentage of new business is coming from referrals. Consequently, there probably isn’t as much “selling” going on in your business today.

That can be a problem down the road, as clients convert investments into retirement income, transfer assets to children with whom you have no relationship or die, etc.

Relying solely on existing client relationships for new business is a slippery slope. And unless you start to re-employ good business-development skills, you may find revenue falling off faster than you can replace it.

10. If we did not exist today, how would we invent ourselves?

This question allows everyone to dream and visualize the perfect practice. Several advisors with whom I have worked have learned a lot about themselves and their team through brainstorming around this question.

Ideas for new approaches, new markets, new revenue models, new resources and new possibilities have all emerged from this free-ranging exercise. IE

George Hartman is president of Market Logics Inc. Send questions, comments and opinions on any aspect of practice management to george@marketlogics.ca.