“Coach’s Forum” is a place in which you can ask your questions, tell your stories or give your opinions on any aspect of practice management. For each column, George selects the most interesting and relevant comments from readers and offers his advice. Our objective is to build a community of people with a common interest in making their financial advisory practices as effective as possible.
Advisor: I am sitting here late at night after conducting another evening seminar for a small group of people who seemed more interested in the food I had to offer than in my message. I feel as if all my energy has drained from my body, and the thought of going into the office tomorrow to do the same old things in the same old way has very little appeal. Am I alone in this, or do most advisors sometimes ask themselves, “Is it all worth it?”
Coach says: The answer to the question: “Is it all worth it?” is one you’ll have to come up with yourself. Only you can be the judge of that.
What I can tell you, however, is that almost every entrepreneur, including financial advisors, has flashes of despair from time to time that leave him or her questioning the long-term prospects for the business and his or her role in it. It just comes with the territory of managing a business, and it usually signals the need to step back and evaluate your practice.
As I have written in the past, financial advisory practices grow in stages, and most of us are familiar with the S-curve depiction of the growth of a business. At the bottom of the S is the “startup” period. This is where, through trial and error, you find out what works and what doesn’t.
As you sort that out, you move up the S-curve to the next stage, the “growth” phase, where, by repeating the patterns of success you have identified, your business is propelled forward.
As your practice grows, it inevitably becomes more complex because you now have to manage all those systems and resources you put in place, as well as an expanded client base. Eventually, you will reach what is often referred to as the “ceiling of complexity,” where your rate of growth starts to slow as you approach the top of the S-curve – the “plateau” stage of growth.
At this point, it is important to rethink and modify your strategy because those patterns that have led to your success to date no longer work as well as they did. If you do nothing to re-engineer your practice to start a new growth curve when your practice reaches this level, you run the risk of seeing your practice wither and enter a period of decline.
Re-engineering, re-energizing or repositioning your practice for renewed growth requires you to re-evaluate both your strategy and the tactics you have been using to carry out that strategy.
Although sometimes used interchangeably, “strategy” and “tactics” are different. Strategy is what you are trying to achieve; tactics are how you plan to achieve your strategy.
Strategy and tactics are interdependent. A good strategy without effective tactics is wasted; effective tactics, in the absence of a good strategy, are aimless. In your specific case, I suggest you ask yourself if it is your strategy (growth through marketing) that is no longer appropriate or simply that the tactics (seminars) you are using aren’t working as well as you’d like.
It is usually much easier to change tactics than change strategy. In your case, for example, it would be less disruptive to shift tactics from seminars to, say, obtaining referrals from existing clients than to change your strategy from growth through marketing to, say, growth by acquisition.
Clearly, your strategy defines your tactics.
The next question, then, is: “What defines my strategy?”
The beginning point for any strategic plan is the vision you have for your business. I define “vision” as what your business will be like when it is as successful as you want to be.
This is your chance to express your dreams and ambitions as the founder or leader. You want to develop and articulate a vision that is clear and motivating so that everyone affected by it understands what that vision is and can buy into it with passion.
The challenge with defining vision in the way I have is that everyone defines “success” in his or her own way. For some advisors, success means maximizing revenue, assets under management, in-force insurance, number of clients, and so on. For others, it’s more about work/life balance, community involvement, philanthropy and legacy-building.
@page_break@So, a key question to ask yourself, particularly when you are feeling low, is: “What is my definition of success?”
If you are able to answer that question, you also are likely to find the answers to more specific questions, such as:
– How big do I want my practice to become?
– What role/responsibilities will I have personally?
– What will my team be like?
– What’s my value proposition?
– What type of clients will we serve?
– What level of service will we provide?
– What will it feel like for clients to do business with us?
– What brand image will we have in our community?
Based on the answers to these questions, your vision statement might look something like the following statement. (I’m not suggesting you adopt this particular formula; only that it is an example of how you might answer these questions):
“In five years, the ABC team will be the go-to firm for high net-worth [HNW] individuals and their other professional advisors in our community.
“Our reputation as experts in wealth management will allow us to be selective about the clients we accept, adding only a few per year to enable us to focus our specialized knowledge and employ systems that allow us to exceed everyone’s expectations for service.
“Our partnership of two to three specialists will be an ‘ensemble of equal talents’ who combine to manage the financial affairs of no more than 200 clients, generating revenue of $2 million with 70% recurring annually through fee-based compensation.
“Our support team of two to four motivated professionals will share our passion for excellence. In return, they will have great personal latitude in how they handle their responsibilities, enjoy flexible working conditions and share in our profitability.
“My personal role will be as ‘rainmaker’ in the community and client relationship manager for our top 50 clients. My work/life balance will permit me to spend extended time with my family and charitable causes.”
In drafting your vision statement, it is important to bear in mind that all of the decisions you express have consequences or implications associated with them.
For example, consider the first sentence in our sample vision statement: “In five years, the ABC team will be the go-to firm for HNW individuals and their other professional advisors in the community.” The implications of making that claim are that you must be equipped to address the financial issues that typically face HNW clients and also be able to work alongside their lawyers and accountants to implement effective solutions. This obviously requires you to have a great depth of technical knowledge and expertise, which, if you don’t already have it, you must acquire.
The second sentence in our sample vision states that the advisor will be “selective about the clients we accept, adding only a few per year.” The implications here are that new clients must meet some minimum requirements, which may have an impact on who your target market is, which, in turn, will have a bearing on your promotional activities, service levels and even the décor of your office.
A thoughtful and well-articulated vision statement makes all your other decisions easier to make. If something doesn’t take you closer to realizing your vision, it is – at the very least – suspect and, more likely, an unnecessary diversion of resources.
So, back to your question: “Is it all worth it?” In my view, it certainly is – if you have a clear vision that you can pursue with passion, executed through a well-designed strategy that is supported by effective tactics.
That is a powerful combination that will have you looking forward to each new day for the opportunities it presents.
George Hartman is co-founder and managing partner with Accretive Advisor Inc. and president of Market Logics Inc. Send questions, comments and opinions on any aspect of practice management to ghartman@accretiveadvisor.com.
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