Plotting Your Course

As I write these words, I’m filled with excitement. Excitement about the new journey I am taking–one that many of you have already traveled and some of you are contemplating. You see, after 25 years of being an employee, of having someone else control my time, my business model, my software, even the color of the paint on my office walls, I am now my own boss. This day, I have become an independent advisor. I invite you to join me on this journey over the course of this year in the pages of Investment Advisor and in a blog at www.investmentadvisor.com/blogs. I know there may be times when I’ll struggle. There may even be times when I’ll look back wistfully on the security of a steady paycheck. But in the end, I am convinced that I’ll find great satisfaction in serving my clients in the way I know best, without conflicts of interest, based on my belief in doing things the right way–exactly the way I’d expect to be treated if I were the client. I’d be happy to hear the stories of your journeys to independence, too, especially in responses to that blog I mentioned. But first, I’ll set the stage by explaining why I approached this new path, and the questions that anyone setting out on this journey would need to address. Before going independent, use all your planning skills to carefully plot your course, understanding that there may be detours and unexpected obstacles along the way. I know there are wise consultants who can guide you along this path, but my hope is that our shared backgrounds and my first-hand experiences, presented to you in real time in this article, the ones to come, and online, will prove valuable.

Where I’ve Come From

During my career I’ve worked for one of the largest wirehouses, a smaller regional boutique firm, an insurance company, and the second largest bank and wealth management firm in the world. I believe there are four main players competing in the wealth management space. In addition to the independent advisor, they are the banks, brokerage firms, and insurance companies, each of which has their own strengths and weaknesses. With the exception of the independent advisor, they share a common inner conflict between serving the stockholders and serving the client. The exhortation to sell, sell, sell, remains the pervasive mantra emanating from these companies, instead of setting out to meet the client’s needs and using whatever products are best suited to do so. While working for a large company, I’ve witnessed, on numerous occasions, decisions made by upper management that have hindered my ability to perform my job. I have found it fruitless at times to think outside the box. Also, if you work for a large corporation you are building the corporation. When you own your own business you are building equity for yourself–a business that one day should have resale value. These are just some of the issues that have prompted me to head down the road to independence. Before starting the journey, I first had to ask myself whether I had the right personality and temperament to run my own business.

Some of the best business owners I’ve observed over the years possess a combination of a driver/analytical personality. They can analyze well but don’t get stuck there. When it comes time to implement a strategy, they have the resolve to carry out their plan. If you’re too analytical and seem to get bogged down in the details, you might consider finding a partner who can complement your style. Conversely, if you’re too much of a driver, you may need a partner to balance your unbridled exuberance and help you make well-thought-out decisions. I would suggest taking a personality assessment. There are a number of tests available, some online, and some can be taken for free (such as DISC and Myers-Briggs.).

I’m not suggesting only specific personality types can be good business owners. I am suggesting that you should understand your own strengths and weaknesses so you will be prepared to handle the challenges ahead. Your temperament is also critical. If you’re a person who gives up easily when you encounter resistance, independence may not be for you. After all, there will be times when you encounter bumps in the road. You’ll also need to address the following questions during startup.

Will You Be a Specialist or Generalist?

Examine your background. What do you enjoy doing? Do you like repetition or do you become easily bored with the same old thing? Life as a generalist can be slightly more exciting and more difficult at the same time, since no one can be an expert on everything. Being a generalist also requires knowledge on a wide range of topics, while a specialist can remain focused in one or two areas. Whatever your answer, remember that the market will always need specialists such as portfolio managers, providers of retirement services, and insurance salespeople.

Who Is Your Target Market?

To get started on this issue, ask yourself more questions. What are you naturally good at? What types of people do you like to work with? Does your background provide a particular knowledge base you can leverage? Who will you target as clients and what are their needs? Will your target be a specific niche based on age and wealth, geography, a certain industry, or a broader segment like the mass affluent or the ultra-high-net-worth? Whatever your choice, learn as much as you can about your targeted audience, including the publications they read, their likes and dislikes, and their hobbies. Learn what types of services and products they need.

What Is Your Marketing Plan?

To borrow a line from Steven Covey’s The Seven Habits of Highly Effective People, begin with the end in mind. Ask yourself what you want the business to look like in one, three, and five years. How many clients do you want? How many can you service?

Your marketing plan should take a multi-pronged approach that could include inviting centers of influence to lunch, buying radio ads, conducting seminars, using direct mail, speaking to local organizations, hosting client events, or sponsoring local events. Whatever methods you choose, do your homework and conduct a cost/benefit analysis on each, then prioritize them, selecting the ones you feel can be accomplished well. Studies have shown that it’s not the company with the best marketing plan that succeeds but the one that executes its plan best. It’s better to have an average plan with great execution than a great plan with poor execution. Finally, assess the market and look for opportunities. If there’s an underserved segment that appears profitable, consider tailoring your business to serve it.

It’s important to note that some marketing strategies are designed to bring in clients immediately while others take effect over the long term. So why use a strategy if it doesn’t bring in clients right away, especially in a startup business? Because you want to separate yourself from the competition by gaining share of mind. You do not want prospects to see you as just another provider of financial services., but to stand out from the crowd. A good book on the subject is The Brand Called You, by Peter Montoya and Tim Vandehey (Personal Branding Press, 1999).

Which Products & Services?