28 PRACTICE MADE PERFECT
this, you need to break down the process into its essential components.
For example, your client process may look something like this:

! Initial promotion

! Prospect responds

! First meeting

! Relationship defined

! Information gathered

! Analysis performed

! Recommendations developed

! Internal quality control review done on the recommendations

! Recommendations made to the client

! Recommendations implemented by the adviser

! Actions confirmed to the client

! Follow-up meetings held
Of course, this process has countless variations, depending
entirely on your philosophy and approach. Over time, you find the
way that works best for you. For example, if all of your new business
comes from referrals, it’s possible you would include a step about

organization. Some of the functions are clerical, others are mid-level
professional, and some are senior-level professional. We’ll discuss the
development of roles, responsibilities, and organizational models
further in later sections.
3. Evaluate the Gaps
A strategy projects a vision of where you want to be, not where you
are. The goal might be to sell the business, to provide a more stable
income driver, or to leave a legacy. By definition, goals are long
range; objectives are short range.
It’s common in small businesses to think of the SWOT—
strengths, weaknesses, opportunities, and threats—analysis as strate-
gic planning, and too many planning processes begin and end there.
The mistake with this approach is that when firms evaluate their
SWOT, it’s often done in the context of the current conditions of the
business—where the business is—without the perspective of where
they want the business to be. Done properly, and at the appropriate
point in the comprehensive strategic-planning process, the SWOT
analysis becomes a crucial part of the process, because it allows you
to evaluate the barriers to achieving your goals and the strengths and
opportunities on which to leverage.
When doing a SWOT analysis, ask these questions:

! What internal strengths can we build on to achieve our vision
and reinforce our differentiation?

! What weaknesses exist inside the firm that could undermine our
vision and differentiation?
30 PRACTICE MADE PERFECT
! What external opportunities can we capitalize on to achieve our
vision and leverage our differentiation?


! Comprehensive nature of advice
Internal weaknesses
! Organizational design

! Client satisfaction

! Practice management

! Time management

! Fear of growth

! Staff turnover
STRATEGIC BUSINESS PLANNING: DEFINING THE DIRECTION 31
! Lacking tools to serve certain markets

! Internal communication

! Firm profitability

! Dependency on owner

! Morale

! Compensation alignment

! Capacity to grow the business

! Time-consuming processes (inefficiency)


! Media

! Scandals

! An attorney general

! Sensitivity to fees
Following the SWOT discussion, the planning team considered
the question: What goals can we accomplish over the next five years
to build on our strengths, shore up our weaknesses, capitalize on our
opportunities, and protect against any threats? The team brainstormed
a number of goals to achieve in the next five years, including:
32 PRACTICE MADE PERFECT
1. Implement a compensation policy that aligns with business,
team, and individual goals
2. Create an environment that allows people to grow and
flourish
3. Develop and deliver financial plans efficiently and effectively
4. Increase the ratio of optimal clients
5. Increase the number of optimal-client referrals from clients
6. Minimize the labor element of planning and investment
process
7. Maintain an operating profit of >25 percent, gross profit mar-
gin of >60 percent
8. Develop a team-based organization
9. Create a career path for staff
10. Improve staff-satisfaction evaluations
11. Improve compliance evaluation from broker-dealer
12. Improve client-satisfaction scores

! responding to the needs of retirees
The challenge at this point is to develop an implementation plan
that will move the firm incrementally closer to achieving its goals.
4. Execute Your Plan
When implementing a strategic plan, it’s most important to make
incremental progress. The temptation is to take giant steps when
baby steps will do. If you’re like most financial advisers, too many
things are competing for your attention, not the least of which are
your current clients. Incremental progress means taking on tasks that
move you closer to the goal.
After you have narrowed down your long-term goals to a list of
five to seven, consider what needs to be done over the next twelve
months to move incrementally closer to each one. Identify the
resources you’ll require to complete those objectives, assign account-
ability, and establish a timeline.
It’s best to put these tasks into a matrix to see if any one person is
overwhelmed, or any one task will require more attention to be com-
pleted. For example, if all of the tasks on your list are scheduled for
completion in the first quarter, and only one person is made account-
able to complete these tasks, you’re likely to fail. A task that doesn’t
make your list this first quarter or first year can be rolled over into the
second quarter or year. Effective business management requires that
you continually address the issues that require attention, but it also
requires that you recognize that not every action carries equal weight.
Effective execution of a plan requires that you plan specific, mea-
surable steps, a timeline, and accountability. As you develop the tasks
to support the goals, make sure you’re clear on the following:

! What outcome do we want?


directly relate to producing more revenue. That may be a by-product,
but in this case, the owners of the advisory firm were more interested
STRATEGIC BUSINESS PLANNING: DEFINING THE DIRECTION 35
in growing the firm’s capacity, enhancing its team approach, and
providing an environment attractive to top talent in the business.
The supporting tactic is very specific—create benchmarks. The stra-
tegic-planning team recognized that it needed to develop targets to
define career advancement. With a target, the firm will know what
to coach to. But this is an important first step to take even before it
begins recruiting new people, and it will help in evaluating how well
people are advancing. The tactic has a short-term orientation (March
31); somebody accountable to get it done (Hillary); and a prescribed
means of tracking progress (semiannual reviews).
The second goal in this example is related to client service. The
strategic-planning team had been frustrated that the firm was spend-
ing less time on its most valued clients than it knew it should, and so
it created a specific goal to address this issue.
Once you set out each of these tasks and tactics into a matrix and
organize them by both timeline and accountability, you’ll be able to
observe whether they’re too much to take on at this time. The point of
incremental progress is to move forward. Overreaching is like overex-
ercising—you wind up sore and paralyzed and eventually lose interest
in the pursuit of your goal. Outlining realistic goals and individual
accountability and moving the business incrementally closer to where
you want it to be are key to successfully executing your plan.
5. Monitor and Measure Results
To track the progress of a plan, you must have both a means to
measure success and a metric. The measure should be results ori-
ented, not process oriented, meaning that there’s a specific outcome
expected. For example:


! Operating profit per professional staff member

! Active clients per staff member

! Active clients per professional staff member
Each of these measures is a leading indicator, especially when
observed over time. From an operating perspective, they give you
insight as to whether you’re achieving your practice-management
goals. In general, other areas to observe when measuring the effec-
tiveness of your strategy should include:

! Client satisfaction

! Client turnover

! Staff turnover

! Turnaround time on the delivery of plans

! Execution of transactions

! Timeliness of reports

! Growth
Although the list of possible measures is endless, the key is to
employ those that support your goals and tactics and to establish
meaningful metrics that prompt you to reach for those goals but not
to overextend.
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