Another year is coming to a close and, with the holidays upon us, we will have the opportunity to share some special moments with family and friends. For business owners, this is also an especially important time to reflect on the past year and make strategic plans for next year. Some of us will have achieved our goals for 2011 and many of us will have missed our goals, especially in light of the difficult investment climate. Regardless, I think we can all agree that setting goals is critical to our success. And with that said, I think we can also agree that with time in short supply, we often short change the strategic planning process by making minor tweaks to last year’s goals rather than stepping back and thinking out of the box about the necessary steps for our firm’s success. Goals should be a lot more than a number. They should be big exciting thoughts that make you stretch your talents to the max. I find it quite unfortunate that some very talented people have become complacent or worse yet apathetic about what could otherwise be a very promising future.
I recently sat down with a sole practitioner advisor in his mid-50s. He owns a reasonably successful lifestyle practice, but he is in a rut. Like so many advisors to whom we speak, this advisor is so busy with the day-to-day delivery of financial advice that he is devoting too little time to building his business. As a consequence, he is less satisfied with his work and business income is declining. Do you think the two are correlated? I do.
So I asked him about his business goals? He said he did not spend much time thinking about his practice anymore. He said he would just keep “going through the motions” until he cut back and eventually retired. Then I asked him what he thought his firm would be worth at retirement? He answered my question with another question: who is going to want to buy my practice? I am my practice and when I go there will be very little or no value. I couldn’t help myself, so I challenged him: Why do you feel that way with all of the options available to you today?
So we delved further into his practice. His firm has a RIA affiliation with a tradition broker-dealer. His revenues are split about 50% / 50% between fees and commissions. The fee business employs a fairly strategic investment strategy using separate account managers, even though his clients have become much less tolerant of volatility and he believes he ought to pursue a more risk-managed tactical investment strategy. The problem, however, is that he does not feel comfortable making adjustments to the portfolio on his own and the practical logistics of moving funds between separate account managers made it difficult anyway.
So I asked him if he had considered restructuring the business to become more tactical? He explained that he should have made the change years ago, but that it was too late now. Apart from the revenues he is leaving on the table by avoiding the change he knows he needs to make, he may be putting his client base and therefore his business at risk. If he cannot find a way to protect his clients in these difficult markets, retirement may come sooner than he plans. And for his own peace of mind as he eventually enters retirement, he ought to consider the substantial opportunity to create enterprise value by making the changes he knows he needs to make.
This advisor clearly needs to take a step back and evaluate his options and this is exactly the right time of year for that kind of reflection. My guess is that he could end up with a whole new outlook for the last phase of his career. It is simply amazing how having a mentor or a strategic partner can create a whole new enthusiasm and a new perspective on opportunities. Plus, life and work are a whole lot more fun when you are working with an enthusiastic partner.
We created Pinnacle Advisor Solutions to provide the insight and solutions for advisors just like the one I met. We believe our investment and back office solutions can free as much as 20-40% of your time and our strategic business consulting can help you leverage that time to grow your business profitably. Sometimes it just takes the right tools, a little push and a little enthusiam to see what could be instead of what is. Let us help you realize your full potential … the full potential that you deserve. Perhaps it’s time we talked. Click < here > to schedule a time to talk.
