From the May 2004 issue of Investment Advisor • Subscribe!

Strategic Thinking

Every advisory practice is faced with conflicts and pressures, opportunities and choices. To focus on providing advice to 401(k) plans, however, it's important that you consider four critical perspectives:

1) Where are you strong? For many, those strengths would include good sales skills; happy clients; reputation; and product and service knowledge. So which strategies for this market would allow you to capitalize on these strengths?

2) Who is your optimal client in this market, and what are your expectations for them? We've identified several critical issues above, such as increasing demands for both advice and education and low participation and rising expectations for plan participants. Based on these issues, which strategies could you deploy that would allow you to better respond to your market?

3) Who are your competitors for your optimal client? Are they direct providers like Fidelity, MFS, or T. Rowe Price? Are they other local advisors, banks, or insurance agencies? What is your strategy to differentiate your firm from them?

4) What is your definition of success, and can you implement a plan that will bring you closer to fulfillment of that definition with this business? Are there strategies that you could deploy that would allow you to increase your income, provide opportunities for growth, and still keep your life in balance? Naturally, everybody has a different definition of success, but these three tend to arise the most.

By evaluating your strategic choices from these perspectives, your vision of how to build a viable practice in the changing 401(k) market should become clearer. If it remains muddled, perhaps that is telling you something about the business, or about your capability to compete.

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