“If you don’t know where you are going, you might wind up someplace else.”
—Yogi Berra

“The best laid plans of mice and men often go awry.”
—Robert Burns

“If wishes were horses then beggars would ride,

If turnips were swords I’d have one by my side.

If ‘ifs’ and ‘ands’ were pots and pans,

There would be no need for tinkers’ hands!”
—English proverb, 16th century

“If you know where you are going, you might get there.”
—Bill Good

The statements above are everything you need to know about why you should plan. Naturally, you don’t want to wind up someplace else. You don’t want your plans going awry, and wishing won’t make it so.

Good solid planning won’t necessarily get you there. But it’s your best shot.

So I’m not going to lecture on “why plan.” Instead we’ll talk “how to.”

Our time horizon is two years. In my opinion, much longer than this is just hope, and hope is neither a strategy nor a plan.

As usual, I have more to say than space here permits. I have therefore continued in my white paper, “Two Year Marketing Plan.” You can find it as well as some templates, spreadsheets, and other planning resources at www.billgood.com/2yearplan.

Case Study

Let me introduce you to Justin Case. He had a solid, growing business with $45 million AUM, most of it fee-based. Now, not so solid.

A competitor copied his seminar, invitation and all. That cut response rate in half. The attorney who sent him $5 million last year decided to become a priest. And his best client died. Her kids took her $5 million fortune and invested with the same guy who borrowed his seminar idea. His $45 million is now $40 million.

Justin has decided that a $40 million AUM business is fragile. He wants $80 million AUM. “Bigger is better,” he reasons. And he wants it in two years. His best shot to get there is a plan.

The first two steps of the planning process go hand-in-glove: (1) Get an idea of where you want to go; and (2) figure out if it’s possible to get there. Frequently, you have to work these together. You set a goal, then realize you can’t make it in the time you want. Review the goal or revise the time. It’s a thinking process.

We know where Justin wants to go. $80 million. Is it possible in today’s era of lowered expectations, when 10 net new households per year puts you in the top 1% of FAs in your firm?

Maybe it’s not possible. If Justin thinks it’s not, for certain it’s not possible. But just for the heck of it, let’s see if it is possible.

Let’s break $40 million down to a monthly goal. Assuming no help from investment performance, Justin needs $1.66 million per month on average for 24 months.

Before he throws up his hands and says “No way!” take another look at step 2: Figure out if it’s possible to get there.

How do we know? We plan it out, piece by piece. If the pieces don’t add up, then you can’t get there from here. So let’s take Justin’s goal and plan it out.

Justin’s first question to himself is, “Self, where can I get $40 million in two years?” “Self” replies: (1) Investment performance. (2) New assets from existing clients. (These break down into three sources: assets held with other brokers, lump sums and retirement funds. Obviously there is overlap. But this is a useful way to analyze.) And finally: (3) Assets from new clients.

If you have another source, Justin is all ears.

Investment Performance

For the sake of simplicity, I’m going to assume Justin’s assets are all in equity. If he were 50-50, equity to debt, you would run the calculations that follow on the equity portion of the portfolio.

Based on investment performance, Justin needs to raise between $725,000 per month (assuming two spectacular performance years) and $1.6 million per month assuming 0% growth. Here are the numbers (rounded):

Tank Defense

What if the market tanks? It’s done that three times already this century:

  • Tech wreck, –43%, 30 months to recover;

  • 2008–09, –51%, 16 months to recover,

  • 2011, –7%, seven months to break even.

Another tech wreck or 08–09 would blow your plan out of the water, wouldn’t it? Therefore, part of your plan needs to include an investment strategy to protect client assets from the next tech wreck, tulip bubble or whatever.

Whether that plan involves learning the Dorsey Wright technical analysis system, finding managers who use technical analysis, using annuities, options or whatever, it is vital your investment strategy include a defensive component. (If you have not read “Point and Figure Charting” by Tom Dorsey, start there. Buy the 4th edition. It’s on Amazon.)

Justin’s Forecast

Justin (like you) has to make a forecast. He can make a best case/worst case forecast and do two sets of calculations. Or he can just make a forecast, then gear his actions to that.

Justin decides: “OK, 10% average for the next two years.” How accurate is it?

Probably as accurate as your own retirement or education funding plans.

His 10% investment performance for the next two years will add about $400,000 a month in new assets.

But he’s not there yet. He still needs channels for $1.2 million/month. If he can’t find it, he will have to modify the goal. Perhaps it becomes a 3-year double. (To calculate your own numbers, go to my Two Year Marketing Plan page and download the Asset Growth Planning spreadsheet.)

Finding Assets

Let’s see how many assets we can raise from current clients.

Justin is always getting new assets from clients. He’s just never had a disciplined approach.

He knows, on average, an FA controls about 40% of his clients’ liquid net worth. He thinks he is a bit above average. So he guesses he controls 50%.

That means that his clients have $40 million—with other advisors, some tied in in their 401(k) and some coming from lump sums.

Here’s Justin’s thought process: “In the next two years, I ought to be able to find half of that. That’s $20 million. If I break it down per month, it’s about $830,000. Call it $800,000 or $200,000/week.”

Let’s further assume, he brings in half of that, or $10 million, over the next two years. That’s an average of $400,000 month.

Achievable? Justin looks over his new asset log (you keep one, right?) and sees that he has done that nine out of the last 24 months.

With more discipline applied to finding money, he thinks it can be done.

This item now goes into his plan: Every week, find $200,000 in client assets. Some weeks it will be more, some less.

Justin adjusts his log so it will show how much he is over/under. If he is ahead one week, he’s banked some assets for holiday weeks. If he falls behind, he has to make up for it next week.

On my Two Year Plan website, I have included a Find the Money strategy for you. This is the disciplined process Justin has adopted. Out of space here. Sorry.

Justin has now accounted for about $900,000 per month of the $1.7 million he needs. So we are left with needing to round up $800,000, obviously from prospects.

To see the rest of the plan, just go to my Two Year Plan website and download “The Two Year Marketing Plan.”