Pt 1. Elevate Your Financial Advisor Business Plan

You spend your days counseling clients as to the critical importance of careful and proper planning. Yet a great many of you either don’t have a business plan, or haven’t revised and updated it since you first started practicing. So ask yourselves a few questions: Does your firm today look identical to how it looked on Day One? Do you have the exact same service offering, same team members and same assets under management? More importantly, do you expect and desire the firm to evolve over the next five years?

Commit to making a fresh start to 2016 by dusting off your old business plan, meaningfully revising it, and actually using it for its intended purpose – a roadmap for your business. If you never actually wrote a business plan for your practice, it’s not too late to start. And it can be a tremendous opportunity to actively engage your team members in helping to shape your future firm. 

Measurement beyond the basics

Most advisors are inherent “measurers.” You analyze and measure markets and securities. You continually measure client goals and their progress towards those goals and you measure the core metrics of your business on an ongoing basis: assets under management, number of clients, revenue and EBITDA.

As you revisit (or begin) your business plan, however, there are far more meaningful metrics that you should focus on – measures that will have a far greater impact on shaping the course and direction of your practice over the coming years. Consider setting aside two hours between now and the end of the year for a business planning “offsite” with your team to focus on the following five often overlooked but critical metrics. 

1. Client Data: How well do you really KNOW your clients? How deeply connected are you? Beyond their assets and stated investment goals, do you truly understand their underlying motivations? Knowing how many grandchildren they have, where they plan to retire, and how they spend their free time can be far more important than knowing their tax bracket. Commit to making better use of your CRM software this year by capturing more personal client information during meetings and phone calls. Work with your team to identify the handful of key data points you want to know for each and every client, and then divide and conquer.

2. Relationship Satisfaction: Client retention, share of wallet growth and referrals directly correlate to relationship satisfaction, yet very few advisors actively seek to measure it for fear of opening Pandora’s Box. But by not uncovering and addressing potential dissatisfiers, you’re doing your business a great disservice. Work with your team to craft a short 5-minute client questionnaire that focuses on key aspects of your mission, vision and values to ensure that expectations are being met. Look particularly close at any common issues and concerns, and most importantly, follow-up with remedial action steps.

3. Return on Behavior: Which is better, a $5MM client who’s difficult and demanding or four $1MM clients who require minimal effort? While the latter generates a little less revenue for the firm, it may be a more profitable scenario given the comparative time and effort required to effectively manage those relationships. Just as you would calculate a ROI for a specific investment, work with your team to analyze and assess your firm’s return for individual clients. It will not only help you model your acquisition efforts, but may help you walk away from relationships that are holding you back. 

4. Return on Performance: Are the day-to-day duties, responsibilities and tasks of your team members (and you) optimally aligned to make the best use of each individual’s time and skill sets? Far too many advisor CEOs continue to function like individual contributors, wasting time on administrative tasks that could easily be delegated to others. Create a list containing all the responsibilities you could potentially share with your team. The success of this re-allocation will show up not only in the increased number of relationships you can personally handle, but in an increased amount of client and prospect face time.

5. COI Effectiveness: You may have a clear idea of the types of assets you’ve generated from your separate centers of influence, but when was the last time you sat down and measured the types of relationships you've generated through them? Which of your COIs are sending you the most ideal clients, and how can you work with them to increase this in the New Year? Meet with each of your centers of influence early in the year and compare the relationships you share and the relationships you would like to see more of. How can you set measurable goals that are mutually beneficial for both parties?

Your financial advisor business plan should ultimately be comprised of measurements that do more than consider what you’re bringing in from a monetary standpoint. You’ll find that your relationships (with team members, clients and COIs) all improve with more meaningful and focused measurement. 

Be sure to check back next week as we continue to delve into possible aspects of your fresh, new business plan!