From the February 2008 issue of Boomer Market Advisor • Subscribe!

February 1, 2008

Set tough production expectations for yourself

It's the time of year to think about future business. Without revenue it's hard to develop infrastructure -- whether it means hiring staff, marketing or upgrading your software. As more advisors begin to appreciate that they own a business, the need to budget expenditures and forecast revenue becomes all the more critical.

Setting production goals is rooted in uncovering the needs of clients and prospects. For many advisors, having a goal motivates them to uncover more needs and consequently generate more revenue. But, as an independent advisor, setting a goal is a different experience, because there is no obligation to meet the goal (other than to fulfill an obligation to one's self).

With this caveat, there are different approaches for setting -- and sticking to -- a production goal.

  • Set high goals. The concept of "BHAGS" (Big Hairy Audacious Goals) was introduced in Harvard Business Review in September 1996 by James Collins and Jerry Porras. In Building Your Company's Vision, BHAG was a statement of long-term vision made measurable. A BHAG is typically so outrageous that it serves as a focal point and catalyst.

  • Set activity goals. Because success breeds greater success, theorists encourage setting attainable goals. Jerry Randisi of Crossbridge Financial Group in Rochester, N.Y. focuses on an activity goal, with less emphasis on a production number. Randisi reaches his production goal over 90 percent of the time by focusing on an activity, such as setting 10 appointments per week or committing to talk with every client about long-term care.

  • Set realistic goals. Most data suggests that the optimal approach is to set realistic goals. But how do you define realistic? One approach is to estimate high, estimate low, and then zero in on the middle. A second technique is to look at industry literature and project growth based on what you have read. A third technique is to create your own benchmark for growth based on what has been typical for you. Or, get analytical: assess your book to estimate the new money you can predict from existing clients based on their future needs. John Adamczuk also of Crossbridge, sets a percent increase in annual revenue. With most of his business coming from assets under management, it's easy to get comfortable. By establishing a 15 percent increase in production, he challenges himself to grow at a realistic pace.

Setting a goal is one thing. Using it to drive performance throughout the year is another. Several ways to do this include:

  • Create a dashboard. Like the dashboard of a car, revenue is easily measured by a trend line or bar graph. Software purchased from a vendor or supplied by a broker/dealer tracks where you are in relationship to your goal and the sources of your revenue.

  • Create screensavers and passwords that reinforce the goal. It's difficult to forget a goal if you enter it as a password daily.

  • Touch bases regularly with peers who can help you stay focused.

A common characteristic of successful advisors is that they are highly focused. Setting goals is a valuable skill to learn and apply, not just for production or business, but for life.

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