“Practice management” could be the greatest buzzword of the decade in the financial planning industry. It has become a catch-all phrase that product providers and broker-dealers use to promote their “value-added services” to advisors, who are urged on an almost daily basis to follow the latest piece of advice on how to run their businesses. These firms would like advisors to believe there is a magic system that will make them more efficient, productive and personally satisfied than ever before—all in six easy steps.
If only it were that simple. The truth is, there is no one-size-fits-all solution that can meet every advisor’s needs, because no two advisors are the same. However, if there is one practice management trap that virtually all advisors fall into, it’s making things too complicated.
A prime example of this trap is the long-revered business plan. Our firm surveyed the advisors we work with and found that 64% have a business plan, but only 26% are actually following it. Most of these advisors have formal business plans that exceed 50 or 60 pages, and the vast majority of these tomes are sitting on bookshelves, collecting dust. One advisor paid $12,000 to an outside consulting firm to write a 60-page plan for him. When I asked to see it, curious what a $12,000 business plan might look like (gold-leaf pages, perhaps?), he admitted he didn’t even know where it was.
The point I’m trying to make is that even the most detailed, well-organized and handsomely bound business plan is useless if it isn’t being referenced and utilized often. A one-page plan that is implemented and executed is better than a 20-page plan that is being used to stabilize a wobbly desk. The problem is advisors often place so much importance on the form, content and even format of the business plan itself that the document ends up being overwhelming, impenetrable and ultimately ignored.
I am by no means suggesting that advisors scrap their business plans altogether. After all, any smart business owner needs a strategic plan that serves as a guide for accomplishing short- and long-term goals. What I am proposing is that advisors pare their plans down to the bare minimum, until they reflect only the most critical elements of their overall strategy. Ideally, the key points of an advisor’s business plan should fit on a 3×5 index card.
Clearly, no two cards will contain the same points. But the process for creating the “note card plan” is essentially the same for every advisor. The process is a continuum that starts with examining the current state of your business. From there, you can define future goals, build a strategy, implement changes, and execute specific tactics. You then monitor the process consistently and adjust accordingly, repeating the entire cycle as necessary.
Within the context of this cycle, there are certain guiding principles that should always factor into the creation of a note card plan. The following attributes will help keep your plan focused, relevant and effective.
The first guiding principle of the note card plan is action, which is a term I use to capture the tangible, actionable and real-time nature of the plan. One problem with many traditional business plans is they are too forward-looking. Certainly advisors need to have a strategic focus and long-term objectives, but many of them tend to look five years out and ignore today. The world can change dramatically in the space of five years—just compare 2005 to 2010. As such, shortening the timeframe of your strategic outlook can help you better prepare for unforeseen events.
Traditional plans can also be filled with sophisticated-sounding goals or mission statements that are ultimately too abstract or vague to be actionable on a day-to-day basis. It’s often said that knowledge is power, but in the context of creating a business plan, that theory doesn’t always hold water. Knowledge without action is useless, and a business plan brimming with brilliant ideas that are never implemented is equally worthless.
The best way to make your business plan more actionable is to ask yourself, “What actually needs to be done?” Build your goals, strategies and tactics around the answer to that question, and you will have a plan that is designed to help you accomplish the tasks that will have an immediate impact on your practice. While every advisor has different goals, maximizing results always involves three common elements: time, energy and money. These elements should all be viewed as investments, each with three possible outcomes—a positive, negative or neutral return. The key is to focus as much of these investible assets as possible in areas that produce positive returns.
Keep in mind that what constitutes a positive return for one advisor may not be the same for another. For example, I had one individual tell me that he is perfectly content with the revenue he’s generating, but if he can’t find a way to stop working 80 hours a week, he’ll eventually go crazy. For him, time is his most valuable investible asset, and he is working to determine how to maximize his return on it. His note card plan includes his goal of making sure he’s spending time with the right clients, and on the right tasks, in order to systematically reduce the number of hours he needs to work each week.