Defining Your Practice

The following is based on one of The Covenant Group’s clients. All of the names and telling details have been changed.

There is a derivation of an old adage that goes something like “If you don’t know where you are going – how will you know when you’ve arrived?” In your world, what personal dreams and professional ambitions would have to be realized to say that you (and your practice) have “arrived”? What would you notice? Don’t be surprised if you can’t verbalize them; many people haven’t really thought about what it is they are building. They don’t have a clear vision for the future – a mental picture of what they want their world to ultimately look like and as a consequence, they can’t determine an appropriate long-term strategy or articulate that strategy in a comprehensive business plan that will get them where they want to go. These advisors need to start working “on” their business as well as “in” their business. That means defining their practice in terms of vision, values, mission, ideal client and target market, current situation (strengths, weakness, opportunities and threats), and objectives.

Vision is not only the functional starting point; it also sets the tone, pace and standard of excellence sought and should be widely known, shared, and believed by everyone who will contribute to or be affected by its achievement. It also ought to be so compelling that others (clients, associates, staff, your family) will be anxious to come along for the ride. An example of a vision statement might be:

“In 10 years, ABC Financial will be the “go to” firm for High Network Worth individuals and their other professional advisors. Our reputation as experts in financial, tax, and estate planning will allow us to be selective about the clients we accept, adding only a few per year to enable us to continue to exceed everyone’s expectations for service and personal attention.

Our partnership of 4-6 specialists will be an “ensemble of equal talents”, who combine to fully manage the financial affairs of no more than 200 clients having collective AUM of $200 million generating revenue of at least $2 million, with 70% of that amount recurring annually. Our support team will share our passion for excellence in every aspect of our business and in return, they will participate in our profitability as well as enjoying great personal latitude in how they handle their responsibilities. Everything we do, say, present or in which we participate will reflect the highest standard of quality and professionalism.”

Having a clear vision is essential to developing a long-term strategy but if someone sidles up next to you at a cocktail party and asks “What do you do for a living?” you’ll hardly want to launch into a narrative such as the one above to describe your business. In those instances, you need a Mission Statement - a concise expression of what you do, designed to capture interest and, if you choose, lead to a broader discussion. Great mission statements convey benefits from the client’s perspective and as such, describe some aspiration that clients might have. Secondly, they have an element of intrigue that often results in the listener asking for more information. Compare “We provide investments and financial planning to professionals, senior executives and small-business owners” to “We help our clients achieve financial peace of mind, regardless of what happens in an uncertain world”. Obviously, the second example combines client aspirations with “permission marketing”, whereby the listener is more likely to say “Tell me more”.

Another key component in the definition of your business is embodied in both your vision and mission statement, that is, a set of values by which you will operate and want to be recognized in your community. The obvious ones are ethics, honesty, integrity, putting the client first and professionalism. Many successful advisors extend their value list to include such things as a sense of community, faith, charity, and personal development. Having a good sense of your own values enables you to match them with those of potential new clients. Wouldn’t we all rather do business with people who share our values?

Defining our vision, values, and mission is done with a view to our ideal client and target market. To whom do we want to offer our services? As we evolve our practices, from a sales to a marketing paradigm, we typically narrow our focus from doing business with essentially anyone who has a need and some money to those with whom we would truly like to have a long-term relationship. Ideal clients can be described demographically in terms of age, income, occupation, net worth, life stage, etc. and, as importantly, psycho-graphically, according to their sense of responsibility to others, willingness to accept our advice and readiness to provide referrals, among other things.

Selecting a target market has two significant qualifications — it must be sizeable and approachable by you.  There is no sense in targeting doctors as the main marketing strategy, for example, if your community only has a handful working there. Emphasizing the second point, we once coached a young woman who left nursing to become an advisor. She initially thought the two hundred or so physicians in her city would be her primary market because they measured up well in terms of her ideal client profile. Regrettably, many doctors have traditionally not held nurses in high regard and she had very little success in her early efforts. It was a target market that was basically unapproachable by her. So we changed her strategy to target non-physician members of the medical community – technicians, administrators, nursing supervisors, nurses and began a series of marketing efforts that included conducting “lunch and learn” seminars in hospitals. Guess what? It didn’t take long for the word to spread and doctors started showing up at the sessions. Over the past few months, she has developed six doctors as clients along with others in the medical profession.

As the picture develops of the where we want to take our business, the next question to ask ourselves is “How high?” Setting objectives means more than simply estimating the revenue we’ll need to maintain the lifestyle we visualize for ourselves down the road. Objectives must be S.M.A.R.T. – Specific, Measurable, Attainable, Relevant, Time-based. An example for an advisor currently earning $200,000/year might be “to generate $400,000 Gross ($300,000 Net) Income from financial planning and investment management activities by December 31, 2008. Half of the revenue is to come from fees and half from commissions. Alternatively, they might be “to increase AUM by 20% per year over the next three years with 8% annually on average coming from market increases and the balance as the result of implementing 6-8 promotional activities”.

So now we have a good definition of our practice; the final step before setting out our long-term strategy and short-term tactics are to benchmark where we are today. A S.W.O.T. (Strengths, Weaknesses, Opportunities and Threats) analysis is a very useful method for taking stock. What personal and professional strengths do you bring to the table? What are the areas for improvement? What unique opportunities exist for you as a result of your special talents, circumstances in your community or your target market? What could get in the way – competition, regulation, market conditions, changes in the law, personal issues, etc.?

Stephen Covey of 7 Best Habits of Highly Effective People fame said: “Personal leadership is the process of keeping your vision and values before you and aligning your life to be congruent with them.” For professional financial advisors, that means defining your practice to a depth of detail likely not done previously. It requires that you have the intent to make your world different than it is today and a strategic process to make it happen. Work “on” your business as well as “in” it.

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The Covenant Group is referred to by many as where entrepreneurs go to become Business Builders. They are considered to be thought leaders and authors of the best-selling books, The 8 Best Practices of High-Performing Salespeople, The Entrepreneurial Journey, and The Business Builder.