There’s some talk these days about short-term goals being more important than long-term goals, and I tend to be a short-term advocate myself. But I still come across many firm owners who are doggedly focused on creating and attaining their long-term plan and goals.
To make sure I’m not missing something, I recently reviewed advisory clients I’ve had over the past 16 years with an eye toward the characteristics of the most successful firms, compared to the firms that haven’t done as well.
In this kind of analysis, it’s important to remember that, as a business consultant, I give advice to my owner-advisor clients, and they make the decisions about what they want to do in their businesses. Some owners take my suggestions, and others not so much.
Of the firms that grew substantially and quickly, most based their business decisions on short-term goals. This made sense to me, and here are the major reasons why short-term goals make a better roadmap for independent advisory firms.
Why Short Is Best
For one thing, while long-term goals can provide some guidance, short-term goals are more pragmatic: they tell you what do next.
Think about it. Deciding that you want to grow your AUM to $1 billion in client assets in five years can be very exciting — but it does very little about helping you to decide what to do differently tomorrow.
Short-term goals, on the other hand, are all about what do next. Whether it’s hiring another advisor, upgrading your technology, adding a new service, or attracting new clients, you could start working on accomplishing any of them right now.
Equally important, almost all short-term goals are doable: that is, they are clearly, tangible, and attainable. And at the same time, they aren’t overwhelming.
Don’t believe me? Try this quick test: Quickly write down the steps you would take to get to $1 billion in AUM. Got a brain cramp yet?
Now, stop torturing yourself and write down what you would do to bring in 20 more clients. A bit easier, isn’t it?
The point of this exercise is that big goals in the future can be so overwhelming that they create a psychological paralysis. Whereas short-term goals —taken one at a time — usually seem so easy that they become easy.
What’s more, because they are doable, reaching short-term goals give you a sense of accomplishment and the confidence to keep on going to the next goal. We’ve all heard that nothing breeds success like success.
One More Point
Finally, we almost always learn from either accomplishing — or not accomplishing — our short-term goals. And what we learn often affects our long-term goals.
For instance, one of your goals might be to add a new client service, hire another advisor or two, attract a new set of clients, or open a satellite office in another town.
But in the process of working toward or reaching one of these goals, you might realize that you’re happy with the kind of clients you have now, the services that you already provide, the staff that you have, or simply the current size of your business.
Or, maybe that reaching your “long-term goal” isn’t really all that important at all.
This doesn’t mean you shouldn’t have long-term goals, especially as they can be helpful in determining your next steps. That said, it’s almost always a mistake to get too attached to your long-term goal.
To build a successful independent advisory business, the most important question is: What do we do now? Focusing on your short-term goals — one at a time — is the surest way I know to reach your objectives, whatever they may be.