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Business Planning for Financial Advisory Firms

Here are questions that advisers might consider in developing their firm’s business plan for success in 2021.

A financial adviser’s clients value the planning that helps them achieve their financial goals. It's important that advisers themselves do business planning for their advisory firm to ensure that it remains a viable business that allows them to continue servicing their client’s needs, and that helps advisers meet their own personal financial goals.

Here are some questions that advisers might consider in developing their firm’s business plan.

Who do you serve and what services do you offer?

Over time it's not uncommon for an advisory firm to accumulate a number of clients with widely different situations and needs. Does your firm have a niche or are you trying to develop one? Are there clients the firm serves who don’t fit with the direction that you are trying to move your firm? It's important to identify the types of clients you want to focus on going forward and to be sure your firm is set up to serve those clients in the best manner possible.

Along with who you serve, what services do you offer? This might include comprehensive financial planning and wealth management services, investment management, tax planning and other services. It's important to periodically review the services you offer to be sure they are consistent with the needs of your client base. Are there services you might outsource like investment management for example?

Why do clients do business with you?

Hopefully you’ve received feedback from your clients over the years about why they chose you and why they stay on as clients. Also take a step back and put yourself in their shoes. Would you do business with your firm if you needed the services of a financial adviser? Overall, do your clients understand your firm’s value proposition?

Be sure to focus on what you do well in terms of providing a great client experience and also on where you can improve in this area.

What did we learn in 2020?

Certainly 2020 has been a year like no other for many types of businesses, financial advisers among them. Much of what you do and how you do it has been upended. Client meetings have gone virtual out of necessity. Technology is front and center.

These trends were already in process before the onset of COVID-19. Many advisers are gearing up for a future of increased virtual interactions with their clients. Having the right technology in place to allow your clients to access their information safely from your website is critical. Is your firm ready to embrace these trends?

How does my firm look financially?

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Any business plan should include a financial review. What are the trends in revenues and expenses? Are you growing your client base and your firm’s revenues? Are your expenses under control and reasonable for the size of your firm? Are you able to generate the type of personal compensation from the firm that you seek in order to meet your own personal financial goals?

How will you reach new prospects?

How will you find new business, how will you reach new prospects? Do you have a robust online presence including an informative, easy to navigate website? Do you produce compelling content on financial topics that prospects want to read? Are you active on the appropriate social networks?

Marketing is different that it was just a few years ago and it continues to evolve. The reality is that people look for their adviser online and if you are not findable, or if what prospects find online isn’t compelling, you are likely missing out on a lot of new business.

Are there best practices of successful firms that I can emulate?

Take a look at competitors that you deem to be successful and look at how they run their business. Are there best practices that you might emulate? These may include marketing, their use of technology or the types of clients they focus on.

Do I have the right employees in place?

Based on where you want to take your business, it's important to look at your employees to determine if you have the right people in place. This includes looking at the roles these employees fill and the performance of your staff. Having the right staff in place is key to helping your firm achieve its goals for the future.

Does it make sense to stay independent?

Many firms are merging or being acquired in the industry. Does this path make sense for you? Is there another firm that might be a good fit for a merger? Will 1+1 equal a number greater than 2?

Have you received overtures from larger firms looking to acquire your practice? Will this offer a chance to expand the services you can offer to clients and a chance for growth for you personally and professionally? Are you open to an exit strategy?

The answers to these and other questions will serve as a good start to the process of doing a business plan for your firm. This is a process that every business needs to go through periodically, financial advisory firms are no different.