Much has been written about the process of building a business plan. As we are approaching the end of 2004, this may be a good time to start thinking about what you want to accomplish in 2005 and beyond. Most written business plans follow a pattern that takes the business from a conceptual level (i.e. vision or mission) to the objectives and steps to reach goals.
One approach to creating a business plan for your practice is to start with the end in mind. This may seem, at first glance, like trying to forecast revenue, and if this is your only goal then so be it. However, the end might be defined as something other than money. It could be the growth of assets under management or the increase in personal time for you. Defining what it is you hope to accomplish in a given year may ultimately take on bigger proportions than just a single year. Many advisors have found it helpful to develop a longer-range plan, say three to five years or more. Then, break down the goals and objectives of that longer-range plan into a year-by-year plan of action.
Some years ago, the concept of "WIDDY WIFFY" was introduced. Widdy Wiffy, or WDYWFY, stands for "What Do You Want For Yourself." The fact is, as financial advisors you probably spend an inordinate amount of time concerning yourself with the goals and needs of your clients. But there is a time when that focus should shift to you. That is when you begin developing a business plan for the coming year. This concept stresses the importance of establishing goals and objectives for yourself as a fundamental step in the planning process. The next step is to translate those goals and objectives into your schedule in a way that takes into account your time efficiency needs. Let's look at a couple of cases in point.
Case #1: Stan is a financial advisor with ten years in the business. He has approximately 300 clients and about $28 million in assets under management. His goal is to add about $8 million in assets in 2005. He knows, from studying his client numbers, that each new client he brings on board will deliver on average about $200,000 of new investable assets. This translates into approximately 40 new clients during the year. If, when planning his schedule for the year, he assumes a 48-week work year, this would mean bringing on roughly one new client per week (given some room for error). Stan also knows from studying his conversion rates that for every prospect that he sits down with, he has about a 75% chance of converting them into a client, so he knows he needs to see around one and a half prospects per week to reach this goal. If he builds his marketing and referral prospecting to deliver at least two per week, he should make this goal easily.
Case #2: Julie has been an advisor for only two years. She has about $2 million in assets under management and has lower conversion rates than Stan. Julie's average new client delivers around $85,000 in assets to be managed. She expects she will only be able to convert about a third of her prospects into clients. However, she has the same asset target as Stan, $8 million for 2005. Her new client acquisition activity must be greater than Stan's in order to reach this goal. In Julie's case, to reach the target she must acquire roughly 94 new clients. And her 33% conversion rate means she would need to see about 282 prospects (or about six per week using the same 48-week year) to hit the target. This might seem like an aggressive goal, but remember Julie is a new advisor; her existing client service work would be a fraction of what a more veteran advisor might have. So her priority is focusing on new clients in building her schedule.
Once you know the numbers for your goals, the next step is to build a schedule template that can incorporate not only the activity blocks needed to support the goals, but also the "me" time blocks; those are the times you do not want to schedule an appointment with a client or prospect. You should also be blocking out time in your schedule template for time efficiency issues, such as making phone calls, answering e-mails, meeting with staff, etc. Above is Julie's schedule template. On Mondays, she wants to see the most clients and/or prospects (potentially up to five). Julie has also made the decision to designate Friday as a work day with no client appointments. Notice that all the "me time" blocks are coded in blue. These are the times in the week that Julie has decided will be for her and cannot be stepped on. Notice also the yellow blocks of time are client and/or prospect appointment blocks. Though it shows 16 potential appointment slots, not all of these are expected to be filled. There will be cases in which an appointment would run longer than the one hour blocks shown. Julie hopes to fill at least six of those slots with prospects, and leave the rest for her existing clients.
The discipline of using a schedule template lies in not violating the schedule blocks. It is very easy to step on your own time when a client tells you that they can only visit with you on a Friday, and you have designated Friday as a work day with no appointments. We all have made exceptions for clients, but consider the efficiency of your time in doing so. Are they bringing in a check or are they stopping by to chat. In other words, measure the importance of the meeting before violating your schedule template.
The beauty of using this type of goal-oriented scheduling is that once you know your business plan target(s), you are merely going through the steps of making sure that each week you are filling your schedule appropriately and monitoring your progress. If you get behind, you should be able to catch it early and make adjustments to your activity and to your schedule template.
David Lawrence owns David Lawrence and Associates, a financial practice consulting firm, based in Lutz, Fla.