The end of the year is an excellent time for businesses to engage in strategic planning. That’s true whether we’re talking about a mom and pop ice cream shop or a large, multinational corporation. Wealth management firms are no exception.

Formulating a strategy begins by clearly defining your vision—what you aspire to be—and your firm’s overall objectives—what you want to accomplish. The next part of the equation, how you get there, is your strategic plan, and it helps to ensure that resources are deployed optimally to achieve your objectives.

Many founders/owners do this every year, and as a result, their businesses are growing. However, keep in mind that every strategic plan should be updated when the landscape changes, an important point given this year’s tumultuous events.

Here are some questions to consider when refining your strategic plan for 2021.

Is Your Strategy Well Defined?
To the extent that some firms have a strategy, it’s merely “to do more” or “to grow.” In other words, “Let’s do what we’re currently doing, only let’s do more of it to make more money.” Few would argue that boosting revenues is a bad thing. However, that’s an objective, not a strategy.

To put a finer point on it, think about a political campaign. If a candidate defines their race in personal terms (i.e., what it means to them or what they get out of it), it’s bound to fail.

Yet if they can create a compelling narrative and a shared sense of purpose around their candidacy, their team may be inspired to work harder, which could breed a more loyal following and a larger number of votes.

The same concept applies to your firm. If adding $100 million in AUM is the objective, half the battle is articulating a compelling reason to your team why they should care about it. (Few are likely to get excited about growth for the sake of growth because it reeks of self-interest.)

To get on board fully, they’ll need to know what’s in it for them. Because of this, how you frame and communicate your strategy is just as crucial as the strategy itself.

Do You Have The Right Strategy?
From there, it’s about making sure the strategy is aligned with your vision. Indeed, it’s not enough to have a strategy. It must be the right one for both your firm and the current environment.

Otherwise, you may waste precious time, money and human capital on an endeavor that was doomed from the start. The metaphor made famous in the book The 7 Habits of Highly Effective People by Stephen Covey comes to mind: “If the ladder is not leaning against the right wall, every step we take just gets us to the wrong place faster.”

Can You Execute The Strategy?
When a strategy is both well-defined and the right one for your firm, there’s still one more question to answer: Can you execute it?

A big part of this is taking into consideration industry trends. Does the legal, regulatory, political and economic environment provide a path to accomplishing your objectives? (Again, “doing more” is not a strategy that will help you overcome these things.)

Meanwhile, another part of your strategy is making sure you have the right people in the right roles, where they can be the best versions of themselves. Naturally, this puts a premium on hiring decisions. But it also raises the stakes when it comes to making promotions.

Simply because someone is a good fit for one role doesn't mean they will perform well in another function with added responsibility. If they falter, it can have a cascading effect, impacting the success of the entire organization.

Additionally, you must be willing to invest in your people to improve the likelihood of future success. Firm founders/owners sometimes believe they can hold off adding head count or improving their tech infrastructure, thinking they can defer doing those things until the signs of growth emerge.

However, if they fail to invest on the front end, their desired growth may never materialize. It becomes a chicken or the egg paradox.

If we’ve learned anything this year, it’s that there is an opportunity in every crisis. And the more profound the crisis, the better the opportunity can be.

That’s why it’s so important to engage in some strategic planning each year. The process enables you to better understand the challenges you face and the market forces that could influence your business. This, in turn, will allow you to plan more effectively for the future and position your firm for sustained success.

If you haven’t begun this process for 2021, there’s still time. Get started today.   

Industry influencer and transition specialist Carolyn Armitage is a managing director with ECHELON Partners, a Los Angeles, Calif.-based firm that provides investment banking, valuation, and consulting services to registered representatives, IBDs, hybrids and RIAs nationwide.