From the May 2009 issue of Investment Advisor • Subscribe!

Danger & Oppoprtunity: Why Set Goals?

Setting goals, and carefully measuring your progress toward them, is more important than ever

Years ago, I got my private pilot's license. Nothing can beat the experience of viewing the horizon while feeling the exhilaration of making constant decisions and then adjustments based on wind, weather, and air traffic--all while keeping an eye on the altimeter, gyro compass, attitude indicator, and a whole panel of other instruments. But at the end of every flight, you have to put the wheels on the runway. It's the most dangerous part of flying and when most accidents occur. Every pilot must perfect the skill to land the plane if he or she wants to reach the destination.

Landing a plane is a little like setting goals. You need vision, mission, and strategy for both. You also need practice. When learning to fly, the student pilot devotes time to touch and gos--circling round and round in the landing pattern of an airport--to practice landing and taking off. In these volatile, stress-inducing times, it can become easy to get distracted from your priorities. To help, here are a few suggestions to help you practice goal setting in your business, even now.

First, Get SMART

The better you get at goal setting, the more likely you are to transition from verbal goals, to written goals, to SMART goals, which are Specific, Measurable, Attainable, Relevant, and Time-bounded. By way of illustration, in the chart below, each vague statement has been rewritten into a SMART goal.

You might take issue with a particular goal, but that merely demonstrates why goals should be explicitly stated--especially in larger firms with multiple advisors and staff working together to achieve them.

Now, Get Beyond Smart

We can all continually improve our goal-setting skills. Here are a few tips, garnered from SMART Goals, Massive Results (a series of CDs) by Raymond Aaron, to help the experienced goal setter get even better.

o To test whether your goals are measurable, have someone else measure them. It's useful to beta-test a measurement system. Whether it's by means of a spreadsheet, data taken from contact management software, or simply tally marks noting each time a task has been completed, measurement tests how well goals are written. (Documenting and reporting progress on a goal to a team can also serve as a motivational tool.)

o Be sure goals are measurable at the deadline. What does this mean? Here's an example: A production goal--aiming to generate $300,000 of revenue by December 31, 2009--is an easy one to understand. But let's say that you are paid by a broker/dealer. You may not know if all of your business has cleared through your B/D until you get your first check, which you will receive on January 15, 2010. This check will cover the last business you wrote in 2009; therefore, instead of using December 31, 2009, as your end-date, write the goal so that the deadline for achieving it is January 15, 2010, when the goal can actually be measured. In that case, it would read, "Generate $300,000 in revenue measured on January 15, 2010." This approach will help you visualize that final moment when you know you will have achieved your goal.

o Remember that a goal measures only one thing at a time. The words "and/or" in a goal statement are red flags because they add ambiguity (the last thing you want when defining a goal!).

For example, if a goal is to bring in 20 new clients and $20 million in investable assets this year, will it mean that you have failed if you bring in 20 clients with only $19 million in investable assets? A cleaner approach would be to create two goals:

To bring on 20 new clients this year

To bring on $20 million new investable assets this year

o You will need energy, enthusiasm, and momentum to attain a goal. That's likely to dissipate if your goals are set for someone else's benefit. For instance, if you are the boss, don't expect wild enthusiasm if you force goals on your staff. Goal setting requires participative management, which in turn can lead to well-oiled, high-performing teams.

o Keep goals positive. Goals that start with words like avoid generate little momentum.

How Audacious Should Your Goals Be?

The level of reasonableness or realism in setting business goals has become a subject of controversy. Collins and Porras introduced the concept of BHAGS (i.e., Big, Hairy, Audacious Goals) in their 1990s Harvard Business Review article, "Building Your Company's Vision."

A BHAG is exciting and can rally energy to achieve something that at first glance appears outrageous. For example, "XYZ company will be acknowledged by Barron's as the #1 financial advisory firm in the United States this year," may seem a ridiculous stretch for a small, independent firm that has never been recognized. Yet it might actually prove to stimulate excitement and energy in some firms. Or, if you are grossing $750,000 in revenue, a BHAG might be: "To become a billion-dollar firm."

Most data, however, suggests that the optimal approach is to set realistic goals. The underlying connection is that achieving reasonable goals actually enhances the likelihood of setting and attaining other goals in the future. Setting goals too low can be boring. Setting goals too high can result in frustration and giving up on the process.

For those who enjoy the stimulation that a BHAG can provide, the approach is best applied to perhaps one goal rather than to all goals set for a year.

Getting carried away by enthusiasm for the process, you might want to set a SMART goal for improving everything you can think of. But a good rule of thumb is to select five to seven goals a year. It may be useful to brainstorm many potential goals and then to funnel down using selection criteria to decide on the critical few.

Having fewer goals increases focus. Remember that each goal needs to be monitored and measured. Don't waste energy on measuring goals unless they are truly crucial to the success of your firm.

Most important, use goals throughout the year to manage team workflow and to make changes throughout the organization. In the 1960s, the concept of management by objectives (MBO) was introduced. The key word is management. Setting solid, well-written goals is important, but applying them throughout the year is one of those management tools that turn a practice into a business. Whether that means tracking progress with goals on a spreadsheet, or talking with a colleague or coach about goal progress, the value of a goal is that it helps you get from where you are now, to where you want to go.

Goal setting fosters excitement for staff and correlates with achieving results. Goal achievement correlates with success. Practicing goal setting--just like practicing touch and gos--can help you reach your destination.

Joni Youngwirth is the managing principal of practice management at Commonwealth Financial Network in Waltham, Massachusetts. She can be reached at
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