"If you don't know where you are going, you might wind up someplace else."
—Yogi Berra
"The best laid plans of mice and men often go awry."
—Robert Burns
"If wishes were horses then beggars would ride,
If turnips were swords I'd have one by my side.
If 'ifs' and 'ands' were pots and pans,
There would be no need for tinkers' hands!"
—English proverb, 16th century
"If you know where you are going, you might get there."
—Bill Good
The statements above are everything you need to know about why you should plan. Naturally, you don't want to wind up someplace else. You don't want your plans going awry, and wishing won't make it so.
Good solid planning won't necessarily get you there. But it's your best shot.
So I'm not going to lecture on "why plan." Instead we'll talk "how to."
Our time horizon is two years. In my opinion, much longer than this is just hope, and hope is neither a strategy nor a plan.
As usual, I have more to say than space here permits. I have therefore continued in my white paper, "Two Year Marketing Plan." You can find it as well as some templates, spreadsheets, and other planning resources at www.billgood.com/2yearplan.
Case Study
Let me introduce you to Justin Case. He had a solid, growing business with $45 million AUM, most of it fee-based. Now, not so solid.
A competitor copied his seminar, invitation and all. That cut response rate in half. The attorney who sent him $5 million last year decided to become a priest. And his best client died. Her kids took her $5 million fortune and invested with the same guy who borrowed his seminar idea. His $45 million is now $40 million.
Justin has decided that a $40 million AUM business is fragile. He wants $80 million AUM. "Bigger is better," he reasons. And he wants it in two years. His best shot to get there is a plan.
The first two steps of the planning process go hand-in-glove: (1) Get an idea of where you want to go; and (2) figure out if it's possible to get there. Frequently, you have to work these together. You set a goal, then realize you can't make it in the time you want. Review the goal or revise the time. It's a thinking process.
We know where Justin wants to go. $80 million. Is it possible in today's era of lowered expectations, when 10 net new households per year puts you in the top 1% of FAs in your firm?
Maybe it's not possible. If Justin thinks it's not, for certain it's not possible. But just for the heck of it, let's see if it is possible.
Let's break $40 million down to a monthly goal. Assuming no help from investment performance, Justin needs $1.66 million per month on average for 24 months.
Before he throws up his hands and says "No way!" take another look at step 2: Figure out if it's possible to get there.
How do we know? We plan it out, piece by piece. If the pieces don't add up, then you can't get there from here. So let's take Justin's goal and plan it out.
Justin's first question to himself is, "Self, where can I get $40 million in two years?" "Self" replies: (1) Investment performance. (2) New assets from existing clients. (These break down into three sources: assets held with other brokers, lump sums and retirement funds. Obviously there is overlap. But this is a useful way to analyze.) And finally: (3) Assets from new clients.
If you have another source, Justin is all ears.
Investment Performance
For the sake of simplicity, I'm going to assume Justin's assets are all in equity. If he were 50-50, equity to debt, you would run the calculations that follow on the equity portion of the portfolio.
