“An idiot with a plan can beat a genius without a plan.” – Warren Buffet
The biggest difference between successful financial advisors and those that fail is their individual willingness to plan. For financial advisors pressed for time, it’s reasonable to ask questions such as “Why do I need to create annual business plans?” or “Is writing an annual business plan the best use of my time? “The answer to these questions, however, is always a resounding yes. Annual business plans are a powerful, proactive step that replaces guesswork with a strategic blueprint for your success.
Skipping the creation of a written structure of your business may seem to work in the short term, but it’s a choice that leaves your professional peers, teammates, and employees in the dark. Your business plan contains information these stakeholders need to act in your best interests as well as their own: that means omitting it can have lasting negative impacts.
Need more convincing? Here are some important reasons that savvy financial advisors create annual business plans.
Getting On The Same Wavelength
The strength of professional collaboration depends directly on an annual business plan: without it, it’s nearly impossible to be on the same wavelength as your team. Even the most talented, hard-working people can fail without a plan of action. When these key individuals are only focused on executing daily tasks and “putting out fires,” the big picture ceases to be a part of the big picture. On the other end of the working spectrum, a business plan also helps rein in the dreamers and rabbit-chasers in your group, keeping them focused on what matters instead of a dozen side projects. While their imagination and diligence is an important contribution to success, they will also need plan-provided guidance to prevent the rest of the team from going astray.
Successful financial advisors agree on one thing, no matter what their advising approach: planning their goals each year is the single greatest return on investment they can make. Similarly, when you set goals, you can focus on high-value, low-effort projects, rather than the ones that drain your wallet and your will in equal measure. Well-balanced planning will always follow the SMART goal template for decision-making. The SMART acronym stands for specific, measurable, achievable, relevant, and time-specific – all valuable and necessary attributes for successful goal achievement. Making a broad declaration such as “I want to grow my business” is not a SMART goal, either acronym or logic-wise. Conversely, a statement such as “I will bring in 10 new clients this year. Each new client will have over $1M in investable assets” hits all of the key attributes and provides a clear path to follow.
Outlining Your Marketing Plan
If you want this year to be a breakout year, then a solid marketing plan – as part of your overall business plan, of course – is a must. The best way to harness all of the marketing ideas that race through your mind is to put them on paper. When you transform your marketing ideas into a written marketing plan, you are making a conscious, accountable choice to achieve your marketing goals. It also promotes definition in a way that will later become a roadmap, with those same written goals acting as milestones along the way. Achieving one automatically orients your momentum for achieving the others.
Your marketing plan should outline the following:
- Client persona(s)
- Your unique selling proposition (USP)
- Competitor research
- Pricing and positioning business strategy
- Metric-driven goals
- Key baselines
- Actionable overall marketing strategy
- Key performance indicators (KPIs)
Ideal Customer Persona
A customer persona is one of the most effective ways to grow your business and differentiate your brand. A deep, nuanced understanding of your customer is critical to your sales and marketing efforts, as is everything connected to customer acquisition and retention. Customer personas allow you to create content and marketing communications that appeal to your target market.
Financial advisors should create customer personas that include the following:
- Marital status
- Job title
- Profession or industry
- Social media channels and habits
- Preferred content, websites, blogs, and publications
- Popular content type – video, audio, text
Relevant questions to create customer personas:
- What motivates them?
- What are their fears and pain points?
- What are their retirement goals?
- How does your service fulfill those desires?
- What characteristics do they value in a financial advisor?
- What barriers prevent them from using your services?
Determine Your Niche
Financial advisors need a niche because it helps them highlight their USP in what is inevitably a crowded marketplace. A niche helps you find the ideal customer and prevents you from chasing after everyone, exhausting resources and time in pursuit of inevitably poor conversion. It’s impossible to become an expert for every buyer persona, which is why your niche helps you maximize opportunity while minimizing time investment. From clients in the music industry to doctors to financial advisors, people are interested in hiring experts, not generalists.
Strategic Growth Plan
Growing a business is the dream and goal of every financial advisor, yet many fail to implement a strategy to make it happen. Without a strategic growth plan, any current clients that peel away are not replaced, and business slowly erodes by moving to your competition. Successful growth strategies are the result of annual business planning, marketing, leadership, and successful management. Whether you are a sole practitioner or in charge of a building full of employees, the only way to achieve stratospheric success is through strategic growth hacking.
The following are the most common growth strategies:
- Service development strategy – increasing your market share by adding new services or modifying existing services for your customers.
- Diversification strategy – entering a new market that contains little to no competitors, boosting your potential client pool while creating a new service for that new market.
- Market development strategy – offering your existing service in new geographical markets or new sales channels.
- Market penetration strategy – increasing your current sales volume and marketing reach to penetrate an existing market more deeply – widely considered the lowest risk on the list.
Tracking Your Progress
Key performance indicators (KPIs) are measurable elements of your annual business plan. They are used to assess factors critical to the success of your financial advisor business. KPIs can help you understand if your company is on the right track for success – and if it isn’t, where your attention should be focused instead.
Here are some of the most important KPIs for financial planning practices:
- Profit margins
- Gross profit – sales minus cost of goods sold.
- Net profit – sales minus all expenses.
- Growth rate
- New revenue from new clients.
- New revenue from current clients.
- Revenue per client
- Recurring revenue – % of revenue recurring year-to-year.
- Customer retention rate
- Time spent per client
Planning is one of the most important things you can do to build a successful financial advisory firm. While preparing an annual business plan takes time, it’s critical if you want to achieve lasting positive results. If your business doesn’t already have a plan, it’s time to start writing.