And notably, this problem isn’t unique to new advisors; many established advisors ultimately hit a wall in their business, in part because it’s so time-consuming trying to be everything to everyone, that they reach their personal capacity in serving clients earlier than they ‘should’.Focusing on a particular clientele – to the point that you can anticipate all of their problems and issues in advance – allows the business to be radically more efficient.
Yet the reality is that crafting a business plan is about more than just setting some business goals to pursue.
Like financial planning, the of thinking through the plan is still valuable, regardless of whether the final document at the end gets put to use.
In today’s competitive world, it’s not enough to just launch a firm, hang your (virtual) shingle, and wait for people to walk in off the street or call your office.
You need to have a plan about how you will get out there to get started! Once you’ve set a goal for who you want to serve, what you want to do for them, and how you will reach them, it’s time to figure out how to measure whether it’s working.
In fact, for many advisory firms, a simple “one-page” financial advisor business plan may be the best output of the business planning process – a single-page document with concrete goals to which the advisor can hold himself/herself accountable.
So what should the (one-page) financial advisor business plan actually cover?The easy answer is “anyone who will pay me”, but in practice I find that one of the most common reasons a new advisor fails is that their initial outreach is unfocused, there’s absolutely no possibility to gain any momentum over time.In the past, when you could cold-call your way to success by just trying to pump your products on every person who answered the phone until you found a buyer, this might have been feasible.As the famous military saying goes, “no battle plan ever survives contact with the enemy”, because the outcomes of battle contact itself change the context, and it’s almost impossible to predict what exactly will come next.Nonetheless, crafting a battle plan in advance is a standard for military leadership.Given that the overwhelming majority of financial advisors essentially operate as solo practitioners or small partnerships, this perhaps isn’t entirely surprising – when you can keep track of the entire business in your head in the first place, is there really much value to going through a formal process of crafting a financial advisor business plan?Having been a part of the creation and growth of numerous businesses, I have to admit that my answer to “does a[n individual] financial advisor really need a business plan? But not because you’re just trying to figure out what the basics of your business will be, which you may well have “figured out” in your head (or as the business grows, perhaps figured out in conversations with your partner).In a world where most advisory firms are relatively small businesses, having a formal business plan is a remarkably rare occurrence.For most advisors, they can “keep track” of the business in their head, making the process of creating a formal business plan on paper to seem unnecessary.For instance, if you’re really serious about targeting retirees, you might not only provide comprehensive financial planning, but investment management services (for their retirement portfolios), a specific retirement income distribution strategy, assistance with long-term care insurance, and guidance on enrolling in Medicare and making decisions about the timing of when to start Social Security benefits. What publications do they read, where you could write?On the other hand, if you hope to work with entrepreneurs, you might need to form relationships with attorneys and accountants who can help facilitate creating new business entities, and your business model should probably be on a retainer basis, as charging for assets under management may be difficult (as entrepreneurs tend to plow their dollars back into their businesses! If your goal is to work with new doctors, on the other hand, your advice will probably focus more on career guidance, working down a potential mountain of student debt, and cash flow/budgeting strategies. What conferences do they attend, where you might speak?