The Planning Pyramid

Each year program managers at banks and credit unions ask their advisors for a written plan illustrating how they're going to reach their goals for the next year. And practice management consultants constantly proclaim the importance of executing a solid business plan. But in institutions where the mission, vision and values of the organization are typically set by upper management, how important is a sophisticated plan for each rep?

In reality, there are so many different business models for investment programs in banks and credit unions, that the importance of a full-scale business plan depends largely on how much autonomy the rep has.

Matt Fryar, a senior financial consultant with Wells Fargo Advisors in Des Moines, Iowa, has had relative freedom to grow his practice as he sees fit. "I adopted a financial planning, fee-based model fairly early in my career," he says. That led to a fast-growing client list that quickly became overwhelming for one advisor. In a more restrictive sales management model, such growth could lead to the institution splitting up the rep's territory. But Fryar was allowed to grow his practice by adding staff to support his client service. "Wells Fargo has always been supportive of what I want to do," he says. "They allowed me to bring on assistants and another advisor as part of my team."

When the advisor's vision is in sync with the institution, program managers will often try to accommodate their advisors' vision. "The advantage is it gives the advisor a sense of control in building their own practice under the structure and framework of an institution," says Rich Narez, the national sales manager for Addison Avenue Federal Credit Union's Investment Services program.

But not all advisors have a well thought out vision for their practices that is compatible with the institution. Especially where there are platform programs, a strong investment management team must execute the mission of the institution. But then where does an advisor's business plan plug in?

It helps to understand the business planning process. In my consulting work, I typically ask advisors and managers to imagine that process as a three-step inverted pyramid. The top and broadest overlying component is your vision plan; the middle defines your strategic plan; and the bottom forms your specific tactical plan.

THE Three-Step Pyramid

The vision plan is the values and long-term mission of the organization: What are we here to do? How will we improve our customers' lives? Every institution has its own reasons for offering investment services, but David Weaver, a consultant in Atlanta, says that each advisor should be able to answer those questions. "Advisors need to make sure the organization's values support why they get up and go to work each day," he says.

Admittedly, this is not high on most bank rep's radar screens, but it provides the foundation for success, Weaver says. "Core values tell us about our unique culture. In financial services, that is largely created by the advisor. It impacts your relationships with clients and other bank professionals." It's also important to have a long-term vision of where you want to go. "The long-term view reflects both a direction and destination. Without those, what is one working toward and for what purpose?" Weaver asks.

Those values are so ingrained in Fryar's team and his bank partners that he doesn't spend much time consciously thinking about them. "Our mission is to take care of the client through a financial planning model that ensures that the management of their money is aligned with their plan," he says. This altruistic vision is often allowed when the advisor is financially successful. When advisors struggle to implement a vision, management often has to limit the business plan to a strategic or tactical level.

The strategic plan is setting specific goals and operating initiatives that guide how to achieve the vision. Advisors may have goals for a specific production level, asset mix, number of households served or penetration rate of the bank's customer base. Strategic initiatives may also focus on specific target markets, such as retirees or business owners. Others may include getting added credentials or focusing on different revenue streams. Operating initiatives may include adding staff, upgrading technology, implementing new software or other operational efficiencies.

The final step is the tactical plan, or specific activities necessary to execute the strategic and operational initiatives. It also identifies who is responsible for them. For example, if a strategic initiative is to pursue retirees, a tactical component may be to hold monthly seminars on retirement investing, to lay out the details of those seminars and to identify who will execute each task.

This pyramid structure helps advisors and managers figure out where to plug into their institutions' processes. "We have a clear vision as to what we want our program to be," says Narez. "But we've got a great group of seasoned reps with their own ideas about how to grow their businesses. When a rep asks to make an idea work, as long as it supports our vision, we'll do everything we can to make it work."

Case in point, Addison currently has several different variations of the team concept at different locations. Some teams include multiple senior advisors; some, junior advisors; and others, licensed sales assistants. How the commission pot is split depends on either combined or individual productivity. These variations were requested by specific advisors.

It's easiest for advisors to plug into the strategic planning stage, where they reconcile their GDC goals, service expectations and number of households against the hours in the week. If an advisor can handle 20 to 25 appointments per week, how many will be new prospects, second or third visits or reviews with existing clients?

Advisors tend to forget how many households they can effectively serve. Especially when growing fee-based business, advisors need to account for added time to develop and maintain relationships. In an institution that expects advisors to meet with and serve every customer, this can be a problem. The solution may be a strategic plan to include an associate or junior rep. "The whole time I was growing my business I was cascading clients who weren't right for me to other advisors, which frees my time and helps them grow," says Friar.

Sometimes it's best for advisors to plug in at the tactical level, with a specific number of daily phone calls to clients or prospects, specific time allotted to branch staff or centers of influence or planning marketing activities, such as seminars or lobby days.

Only advisors who operate more independently will also have a vision plan. But Weaver says that some sort of plan is necessary to move forward. "Each of us probably has what I call a b-hag-a big, hairy, audacious goal. A business plan of some kind will help you keep moving toward that goal."

Keith J. Weber founded the Weber Consulting Group, an advisor training, coaching and practice management firm in Fort Collins, Colo.. He is the author of Rethinking Retirement and the creator of retirement2020.com.

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