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April 30, 2018 at 12:20 PM
Nearly all firm owners I speak with say their main focus is on growing the business. For many, hitting that $1 billion mark in client assets is the goal.
It also seems that to get to this goal, most firm owners are convinced (either by the trade press or business consultants) that they need a “strategy” or a “strategic plan.” And they do.
The problem is that advisor owners often don’t have any idea what a strategic plan is or what one entails. As result, they can do more harm than good to their businesses.
Many firm owners seem to believe that “implementation” of their strategic plan is the key to success, and it is. However, you can have the best strategic plan in the industry, but if you don’t turn it into reality, it’s not going to help your business grow.
Still, in their haste to start “implementing,” many firm owners spend far too little time and effort on creating their strategy. And implementing a bad and/or poorly conceived strategy is going to do your business more harm than good.
As with financial advice, the strategic plan for your business and the implementation of it are important. In fact, the first step on the path to growth is to understand that there are three stages in the growth curve of an independent advisory firm: strategy, implementation, and maintenance. These stages are equally important to the growth and success of your firm.
Yet, because your strategy is the foundation on which the other two stages depend, it’s helpful to think of it as the first among equals. Here are the steps for creating a sound strategic plan:
1. Simplicity. Strategic plans are almost always based on an idea. Of course, they usually are based on the general theme of “growing your business.” But that’s an overarching goal. You also need a more specific idea about how to grow your business: target a new group of clients, add new services, increase your marketing presence, start hosting investor seminars, etc.
Whatever your ideas are, it’s important to keep them simple. A good litmus test for simplicity is whether you can explain them to other people (your employees, partners, spouse, friends, etc.) clearly and concisely. Some people call this an “elevator pitch,” which is an explanation you can deliver in one minute or less.
“Our client base is aging rapidly, so we’re adding advisors and services to attract the younger generation of clients.” Or, “Many of our clients are doctors at a larger regional medical center, so we’re going to do quarterly financial seminars at that hospital.”
If your new strategy can’t be easily explained, that usually means you’re too focused on one of the other two phases: how you’re going to implement your strategy and/or how you’re going to maintain it once it’s in place. When it comes to strategy, staying in the present is a major key to success. Don’t get ahead of yourself, and don’t worry about the past.
2. Put your strategic plan in writing. Pretty basic, right? Yet, many firm owners are inclined to keep their plan mostly in their heads. Perhaps this secrecy psychologically reduces their fear of failure. Of course, it also reduces their level of commitment to the plan, and prevents everyone else in the firm from fully understanding the plan.
For any strategic plan to work, the people involved in implementing it must know what the plan is and be committed to making it work, especially the firm owner. That doesn’t mean that a plan can’t change or be modified in light of new ideas or information. It should — and usually must be to succeed.
At the same time, plans that are constantly changing and being modified will lose both momentum and commitment by the folks who are trying to implement them. And one of the best ways to ensure this doesn’t happen is to put the plan in writing so everybody can see what you have in mind.
