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Technology > Investment Platforms > Turnkey Asset Management

Staying On Track

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As of May 5, 1954, no human being had ever run a mile in less than four minutes. Everyone said it couldn’t be done–everyone, that is, except Roger Bannister, a medical student at Oxford. “The four-minute mile had become rather like Everest,” Bannister later wrote in his autobiography. “A challenge to the human spirit, it was a barrier that seemed to defy all attempts to break it.” But in the weeks prior to the race, Bannister increased the intensity of his workouts until he was running 10 quarter-miles in 59 seconds, with only two minutes rest in between. His mental and physical strength grew. And on May 6, 1954, as Bannister dashed through the tape at the finish line, the roar of the crowd nearly drowned out the announcer’s words, “Roger Bannister. Time: Three minutes, 59.4 seconds.” He had broken the unbreakable record.

Lots of people talk about setting goals and achieving them, but there’s more to it than simply dreaming big, vague dreams. I’ve developed a six-step process for effective goal-setting. Let’s look at each of these steps in the hopes that they will help you with your planning for next year.

1. Set SMART Goals

SMART is an acronym that means Specific, Measurable, Achievable, Relevant, and Time-bound. If you’re building a fee-based business, one of the key SMART goals you need to establish is assets under management. It’s best to do this based on a three-year time horizon. How many dollars do you want to have under management in three years, and what do you expect the average fee to be?

A simple model is a 1% annual fee. Establishing your assets under management and your annual fee will tell you how much recurring revenue your business will generate. Next, if you take the assets and divide that by your average assets per household, that will tell you how many clients you need.

Let’s say that your goal is $62.5 million under management. If your average household has $250,000, you’ll need a total of 250 accounts.

Next, you should create goals for your net income in three years. Develop a simple income and expense spreadsheet that shows income from all sources and all of your expenses. You will probably net out somewhere around 40% to 60% of your gross revenue, depending on your business model.

It’s critical to clarify your gross and net incomes. Many advisors simply work hard during the year and hope everything works out, but it’s much better if you start with a very specific goal for income and expenses and then work toward your goal.

There are a couple of other key numbers that are critical for you to identify. What percentage of your income is recurring? How many households will you be serving? How many new dollars for fee-based money management will you gather each year? Another important question is what percentage of the assets is controlled by the top 10% of your clients, and what amount of revenue is generated by these top clients.

Another good goal to establish is revenue per employee. It should be at least $100,000. If it’s not, you should be able to increase your efficiency. If it’s over $100,000, you’re doing well, but it could be as high as $400,000 to $500,000.

2. Get Emotional

So far, these goals are just numbers, but they can become compelling drivers of your behavior when the payoffs are important to you on an emotional level. So list three to five of your top business goals–probably your gross revenue, dollars under management, and so on. Write a paragraph or two explaining why each one is important to you and what the achievement of the goal will mean to you personally. This exercise will help you to stay focused, and tap into your subconscious motivators.

3. Create Activity Goals

When I was a wholesaler, I typically made between 15 and 25 office meetings every week. I made more than 125 phone calls and typically presented my offerings to more 200 people. Because I was so focused and consistently maintained a high level of activity, I was able to take my territory from last place to third place very quickly.

The best way to establish your activity goals is to determine how many new assets you want to gather and the average assets per household. Then divide the number of new assets by the number of new households, and you’ll know how many new relationships you need to establish each year. One to two new relationships a month in the $250,000 to $1,000,000 range is fairly normal. If you can open one new fee-based account per week, you’re really cooking.

Next determine the number of leads that it takes to generate one initial meeting with a qualified prospect. You typically must generate two or three leads to get one such appointment. Then, how many initial meetings with qualified prospects do you need in order to start one new fee-based relationship? Ideally this would be a one-to-one ratio: For each initial interview, you’d generate one new client.

In reality, you will probably have to see at least two prospects to get one new client. If you’re having to do three data-gathering interviews for one new client, there’s probably something wrong with your process, your service offering, or the way you’ve gone about choosing who to talk to.

Finally, multiply the number of leads by the number of initial interviews to generate one new relationship. That will tell you how many leads you have to generate to get one new client. For instance, if you have to generate two leads to get one appointment, and you have to have two appointments to get one client, you would have to generate four leads for every new client.

This type of information is extremely important in marketing because you can track your progress based on the activities that will generate your ultimate sales. The lead generation activity is critical to the ultimate achievement of more dollars under management. If you multiply the number of leads needed per new client times the number of new clients you want per year, that will tell you how many leads you have to generate each year to achieve your goals.

4. Track Weekly Results

Once you know what level of activity it takes to achieve your goals, you need to track your activities and results every week. Track how many appointments you have, how many proposals you make, and how much money you close. This is often called your sales pipeline. In our coaching program our advisors track research interviews with potential clients and centers of influence, lead-generating activities like group presentations, public relations efforts, referrals, introductions, and strategic alliances. You should also track new relationships started with prospects, clients, and centers of influence.

5. Anticipate Obstacles

Aiming high is all very nice, of course, but obstacles and setbacks must also be identified and planned for so that they can be overcome. Some typical obstacles and setbacks are competition, declining margins, a difficult stock market, your level of energy, your resources, your staff, and your time management skills. What other issues will slow you down? Make a list.

Next, identify the current skills and knowledge you can use to tackle these setbacks, and identify new competencies you must develop to overcome obstacles. Useful abilities will include strong skills in sales and marketing, investment management, business management, and time management. You’ll need effective communications processes and materials. You’ll need the ability to set up systems.

Once you have established your goals, connected with them emotionally, turned them into specific activities that you’ll do weekly, and have a tracking system, you’re pretty well set. The only thing you need to do is take action on a daily basis to make your goals become reality.

6. Think Positively

Your mind is a very powerful tool for problem solving and for goal achievement. Once you have established a goal, you have established a problem for your mind to solve. This creates cognitive dissonance, which means that there’s a gap between your “mental model” of the ideal world and the real world as your senses perceive it.

How can you use this to your advantage? Write your goals on 3 x 5 cards. Then review those 3 x 5 cards every morning and every evening for about 10 minutes. Say your goals to yourself as if they’ve actually occurred. Instead of “I will have $100 million under management within three years,” say “I have $100 million under management, and I feel happy and successful.”

Visualize yourself celebrating the achievement of your goals. This creates a powerful mental image in your mind of the reality you want to create. When your senses experience what you haven’t achieved yet, your brain has two choices: Your mind will either change its vision of reality (not likely!), or you will go to work and change reality itself.

A classic example of this is if you’re a very neat person, and you come home to find that your invited guests have trashed the place. Probably without even thinking about it, you will clean up your messy house to bring it into alignment with your vision of your house.

Your mind works at a subconscious level to constantly bring reality into alignment with your thinking. This is why people tend to get not what they want, but what they expect. By visualizing your success daily, you reinforce what you want to have happen rather than what is actually happening.

You will find that resources, opportunities, and people show up in your life to help you achieve your goals. And the harder you work, the luckier you get. Once you have identified a goal, you’ll start to see opportunities to accomplish it–opportunities that in the past, you might not have noticed.

Setting goals is a critical step in achieving total success and genuine happiness. This has been a very difficult year for the markets and for our industry. By setting goals and putting processes in place to achieve them, you can make 2002 your best year ever.


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