The calendar has officially shifted to the fourth quarter of 2022, meaning many regional investment agencies will be holding strategic planning meetings in the coming weeks and months with an eye toward 2023.
One of the seemingly simple components of strategic planning that is often overlooked is the definition of "what?" What kind of business are you building? What kind of customers do you want to attract? What special service offerings do you create for the customer segment you serve? We've all read articles and watched TED Talks that extol the benefits of knowing your "why" and clearly identifying what motivates you to run the business you are in. If you ask a consultant, "Why do you like working with clients?" or "Why do you want to become a business owner?" Most will happily respond with well-prepared speeches about how they got out of bed, how they prepared for daily challenges, and how fulfilled they felt in their lives. But if you ask, "What are your goals for the coming year?" They looked at me honestly and simply said, "One more."
They need more clients, more assets under management, more consultants and more employees, but little attention is paid to the types of clients, the specific roles and responsibilities they employ, and the type of talent or customer focus they want from consultants they join.. When leadership teams gather in office meeting rooms or hotel conference centers for year-end events, I encourage everyone to start the session by writing on the white board, "What are we building?" In my experience, each member of the room would describe a completely different company with a completely different focus. Conversations can't revolve around "How are we going to get more?" Essentially, "What do we want more?"
Find the most suitable customers for your company. Ask yourself which clients you would most like to work with and find more of these clients in the coming year. Ask what characteristics your best employees have and use this list to hire new employees next year so you're not inundated with constantly changing employees who don't fit your culture. Set specific targets for revenue or assets under management by the end of 2023 and work backwards to determine what initiatives need to be taken at the start of the year to ensure targets are met by December. A blind search for "more" won't get you there - use your strategy sessions this quarter to keep everyone focused on the end goal so they know exactly what to aim for in 2023 .You don't know where you're going, you won't end up anywhere else! "
Speaking recently at DeVoe & Company's M&A + Succession Summit, Mark Thebergen said that a successful RIA is not only defined by size, but by "a company that dominates a certain demographic, a certain type of customer and maybe even a specific area." geographic. These "what" companies. Thybergen continued: "It is important for an RIA with plans for sustainable growth to stand out in their chosen market in order to become one of the three most recognized brands in this market, however they understood and said: “The chances of achieving market dominance are high, but you have to be clear about the market you are talking about.
Looking at the M&A strategies used by many regional investment agencies, there is little in their strategy that goes beyond "more, more, more". Some companies think not only about the size of the assets they manage, but also about the purpose of their acquisition. They forget to focus on the types of customers the vendor serves or whether the vendor's service aligns with their company's larger vision. Unfortunately, most RIAs looking for organic growth haven't even specified the "what." Do we want more pensioners by 2023? More business owners? More divorces? "Should we put our marketing money into advertising our focused equity diversification strategy, or should we focus on the new international ETFs we've created?" Since this quarter's strategy session focuses on the "what," the leadership team must coordinate and prepare for the first quarter of 2023, focusing on the market they are trying to lead.
Matt Sonnen is the founder and CEO of PFI Advisors , and founder of The COO Society , a digital consulting platform that educates RIA owners and operations professionals on how to build more efficient and profitable businesses. He is also the host of the popular COO Roundtable podcast . Follow him on Twitter: mattsonnen_pfi
