Published July 19, 2017
Every Financial Advisor Should Have a Business Plan
It is a proven fact that financial advisors who create a business plan and execute against that plan are more profitable and more efficient than those who do not. And yet, according to a variety of different industry research, between 30- 55% of advisors actually have a business plan. And while we all know the adage “If you fail to plan, you are planning to fail,” many financial advisors ignore this basic tenet. I surveyed a few advisors in our office about why they had not yet taken initiative, and their reasons for not having a business plan varied:
“I don’t have the time to create a business plan or the knowledge to do so.”
“(Rolling the eyes) I know I need a plan, I just never get around to it!”
“I had completed a five-year plan three years ago but never kept up with it.”
A Business Plan Helps Financial Advisors Document and Track Goals
The reality is that a business plan need not be too in depth or take up much time. A simple business plan can be just two pages long, provided that it’s focused on specific goals. The strength in the plan is not the plan itself, but the process and the practice of documenting goals and then revisiting them. Financial advisors should check in on their goals at least twice a year: once at the end of the calendar year to assess what they have achieved, then again at mid-year (now) to ensure they are on track to meet their goals. And while there is never a guarantee that the goals set for the firm are appropriate or achievable, advisors typically know what they can achieve based on historical performance. The secret sauce here is not to be right, but to get into the practice of documenting goals and tracking their progress.
A Business Plan Also Creates Accountability
By creating a business plan that includes measurable goals, you are holding yourself and your staff members accountable for achieving those goals. By tying goals into performance-based compensation, you can be assured the goals will be met. An advisor I know saw his practice blossom once he implemented business planning functionality in his office. Once a year, he creates a business plan that outlines the goals for his firm. Under each goal, he outlines the specific activities that must be executed to achieve that goal. He then assigns a staff member in the firm to be the “owner” of those activities, essentially creating accountability and an easier method of tracking results.
How to Measure Success When Tracking Goals
Ways to measure business goals vary. If it is simple math like 10 new clients averaging 1M each, then that is a pretty measurable goal. A financial advisor can break that down into quarters and then track the success of that goal. A client satisfaction goal could be to have at least 90% of your A and B clients respond in a survey that they are “very satisfied” or “extremely satisfied.” Here are some common metrics that financial advisors use to measure success:
- Growth from new client acquisitions and the tactics used to attract new clients: This could be marketing campaigns like direct mail, seminars, advertising or radio shows.
- Growth from existing clients and the tactics used to achieve these goals: This includes client satisfaction surveys, referral strategies, reviewing outside portfolios and next generation events.
- Employee satisfaction: One of the keys to success is keeping your existing employees engaged and satisfied, especially if they hold critical roles in the office like client servicing or operations. Making sure you understand what drives each employee and then delivering on their needs helps with continuity and keeps your employees happy.
- Technology adoption: Licensing technology that could help with efficiencies is awesome only if it is implemented and adopted. Measuring the usage of technology can make a big impact on the bottom line of your business.
Business Planning Tools Can Help Financial Advisors Measure Success
If you are uncertain on how to put a business plan in place, there are many tools available to help. From blogs and articles, even YouTube videos, there is no shortage of help for financial advisors who seek to adopt this time-tested practice. Services like ActiFi and ClientWise provide automated methods to execute client engagement surveys and uncover growth. At Private Advisor Group, we have leveraged ActiFi’s Client Engagement Program with our advisors. PAG advisors who have adopted this methodology and technology have seen a growth opportunity of 35% uncovered. These tools offer financial advisors valuable insights that enable them to further define and measure KPIs: gross revenue, acquisition growth, organic growth, client satisfaction and retention and employee satisfaction.
Get Started on Your Business Plan Today
Now is the time to revisit your business plan. If you find you are off track on any of your goals, there is still time to right the ship. The beauty of the business plan is that it can be fluid. You can adjust as needed to incorporate new tactics and new activities to help you achieve your goals, but you cannot do that if you are not paying attention to the status of your plan.
Private Advisor Group believes in the power of business planning and has established relationships with many trusted third-party alliances to help our advisors achieve their goals no matter what they may be. We work closely with our firms to understand their needs and direct them to resources that have the expertise and the skills to help them achieve their own unique business goals. To hear how we have helped some of our advisors, visit with them here.