How Business Planning Drives Our 20%‑30% Growth Year-Over-Year

Editor’s note: In this edition of What’s Working Now, an AdvisorRADIO feature in which Horsesmouth members tell us about recent success they have had running and growing their businesses, we hear from advisor Chad Henry, who credits his consistent ongoing growth to reliance on his business plan.

The following article includes edited excerpts of Chad’s comments. Or you can listen to the full interview by clicking the audio file below.

I’m in my 17^th year of business, with a team of six people—four assistants plus a junior partner and me. We’re month-over-month, year-over-year setting new records for new assets, and over the last four or five years we’ve transitioned from mostly commission-based to mostly fee-based.

Working smarter

Before I got into serious business planning, there was definitely a time in my business where I didn’t do everything that I should be doing and I focused more on putting the time in rather than quality. Too often I was wrapped up in easier, smaller tasks that didn’t really take me to my goals, and it was a struggle to manage a business and a family and everybody’s schedules. Sure, I’d do a business plan in the last week of the year, but I didn’t follow it in any disciplined way. It would be like a New Year’s resolution that kind of went by the wayside. I knew something had to change.

I looked at other advisors who had great success, and in many cases they weren’t doing some unique, incredible thing. I thought, “I could do that.” It’s similar to when I coached football. If I saw a really good play, I wasn’t too proud to take and implement that play with my team. It’s the same with financial planning. If you see a really good idea, it’s probably re-creatable. That’s when I really started to work smarter, not longer.

Getting serious about business planning

Getting a process in place can set you apart. The main thing with a business plan is that you have to have clarity about what your goals are, and then go after them. Nobody ever fell backwards into being the CEO of a company. I always try to approach my business as a CEO or CFO of a Fortune 500 company would. They have clear vision and they go after their goals every day in a disciplined fashion.

If you’re just hoping you’ll be the top producer at your firm, or you’re just hoping that you have more assets next year, but you’re not taking specific daily steps and it’s not defined how you’ll get there, it’s unlikely that you’ll just run into someone who won the lottery. You have to go after it. There’s a lot of competition in our business, so you have to invest in your business. You have to have good systems and processes, and you have to have a way to get that message out to the masses and be heard more than the other advisor down the street.

Planning for year-over-year improvement

One of the most important steps is looking at the statistics of my business, the month-over-month and year-over-year. I constantly look for improvement. I want to be able to say that this May is better than last May. I really measure and hold my entire team, including myself, accountable even by daily stats and making sure that we’re putting in the numbers to get us closer to that goal. We break it down into short-, medium-, and long-term goals and have daily meetings to make sure that we’re all on the same page, that we’re helping each other, and that we’re eliminating unnecessary tasks.

Learning to work in the 20% zone

I realized I needed to delegate some of the smaller tasks. I’ve always subscribed to the 80/20 rule, that 20% of your clients/work generates 80% of your income. I feel that I always need to be working in the 20% zone. Everything outside of that I can delegate or even eliminate. I realized I was just doing some things because that’s the way it was always done or something we started years ago, but today it doesn’t apply. I’m always trying to reassess why we do what we do as a team and delegate as many of those things that aren’t in the top 20% as I can.

If you can really study where your time went even for a week or a month, you can start to assess whether that was an important task that you spent your time on, whether it took you toward your goals. If it didn’t, then you’ve got to ask, “Why are we doing this?” Could somebody else do that?

Typically the financial advisor is driving the practice and its growth, and everybody else is there to support those efforts. If you’re not working in that 20% zone as a financial advisor always trying to grow the practice, you’re taking away from the entire team’s ability to grow.

Setting goals for growth

During the fourth quarter, I start to look at some of the things that we did really well this year that we can continue to build on, and some of the things that need to get moved away. Every person on the team has a daily, weekly, monthly, and even annual or quarterly goals with metrics they try to achieve. We figure out what those are in the last quarter of the year and start planning for them.

When it comes to goals, I start from a big picture standpoint of asset growth. I’ve strived to get 20–30% growth on an annual basis and work backwards from there. If I’m looking at 25% growth for 2019, then I start looking at what specific tasks I need to do. What has been my past return for different events?

For example, if I do a seminar event that has two nights and we have 25–30 people each night, my goal is to gain about $3 million in assets between those nights—either three $1 million accounts or four to five accounts totaling $3 million. I know if I’m looking for $35 or $40 million in a year, then I know I’ll have to do 12 or 13 seminars. Then I start thinking, well, we don’t just do seminars, and I take into account COI and client referrals sometimes that may be $5–$8 million gain on an annual basis, so I subtract that from the goal.

That means I want to get $30 million from seminars, and I start planning events with that in mind. That might be booking venues for the year or lining up materials for compliance or scheduling COI lunches or whatever. We start with our goal number—for your practice that might be $10 million, $15 million, $30 million, whatever—we start with that number and then look at the success we’ve had with different events in the past, and figure that we’ll have as good of success this year, then plug in those events that we think will take us to our goal.

Constantly reviewing progress

We’re constantly going back and revisiting our goals to see our progress. We look at it on a monthly basis, plus every quarter I try to take a half day as a team to work on the business in some way. Quite often that includes an hour or two looking back at our annual goal to see if we’ve made the needed progress for this quarter, or if we need to make adjustments or if something’s not working. Sometimes, and this sounds funny, there are even times when we’re exceeding our goal at such a pace that we don’t want the service or follow-up to suffer so we also have to talk about if we need to cancel an event.

To start, we pull out all the stats and metrics from the previous year regarding new asset growth, number of new households, and asset retention, fee-based and commission income, growth for the team. We build that into what we want for the next year and then go through the process of how we’re going to achieve that growth. We’ve used anywhere from three to eight different channels to achieve the growth depending on the year, so we look at which ones are most efficient and deliver the best return on investment.

I keep an open dialogue with my entire team. I don’t want to dictate the meeting because they come with some great ideas and experience to add, so I think it’s important that we have a roundtable discussion and get everyone’s feedback. For example, we’ve used different companies for marketing seminars and different restaurant locations, so we talk about which companies are easiest to work with and how well a certain invitation or list worked. We make adjustments to the plan based on everyone’s feedback and constantly measure ourselves. We track everything daily.

Maintaining daily accountability and high levels of service

My junior partner and I work on a 25-point system. The tasks we complete have certain point values, and we need to finish 25 points a day to accomplish our goal. If I do an outgoing conversation with a client or prospect that’s one point. A client appointment is five points, and a large prospect appointment is 10 points. So if I do two prospect meetings and a client appointment, I count it as 25 points and I feel like I’ve achieved what I need to that day to move us toward our goals. My partner does the same. I also have a sales assistant who uses a 15-point system since she doesn’t hold any appointments but makes a lot of phone calls. She needs to make 15 true contacts with people.

My assistants on the service side don’t use the point system since they don’t do as much from an outgoing standpoint. But if the three of us are busy on the prospecting or client side, it trickles back and fills up their bucket of stuff to do, so to speak. Every year I get better at delegating some stuff to them. I stay on those A-list, 20% tasks that I think I can do best. But paperwork stuff, I try to keep that off my list so that I can free up more time to do million-dollar client acquisition work. And they focus on other things behind the scenes.

High-touch client service

If you really want to grow and sustain the business, you need to be able to provide a high level of service for your clients. You can have great growth, but if you’re not having the follow-up or follow-through, you’re not going to retain those clients. That’s why I have more support staff than other advisors. I have four full-time assistants, plus a junior partner. We’re good at delegating, so we have a team member doing a 90-day call to check in and make sure clients are getting their statements that they can log into the online portal, to see if they have any upcoming needs or opportunities.

Typically, I meet with clients every four months, and we keep the appointments pretty concise and on track—30–45 minutes, not marathon two-hour sessions. They are very to-the-point, but I have regular face time with all of the top-level clients we’ve been able to gain over the years.

Plus we send out a monthly letter, using material from Horsesmouth and from our home office. We put out a really nice letter to at least let them know that we’re thinking of them, and that we’re in tune with the current market situation.

We also do a couple of client appreciation events every year, and a client education event. We’re constantly staying in touch and staying in front of them. The meetings plus a quarterly phone call, makes seven discussions a year. If they come to the client events, that’s 10. And if you count the newsletters, it makes 20–24 touches a year, depending on if they call with a question or need to touch base with us on something.

Saying ‘No’ leads to bigger accounts

I think we’re on the high side of customer service and touching our clients. That means that the number of new households is decreasing, but the new assets coming in is the same. Last year I added 91 new households, and this year I’m at 26. But I’ve collected accounts that are about three times the size on average as the average account last year. The average account last year was just under $500,000 and this year the average account is about $1.4 million. We’re starting to see that pay off. It’s less stress on my team, and a better level of service for the folks who are coming in.

Ninety-five percent of the reason the account size has jumped up is that I’ve gotten better about saying “No.” All of us want to advise people, and we take on whatever assets they bring. But there’s a lot of power in scalability. If you don’t say no to one person, you’re losing capacity for larger accounts that could come in the door. Whether the person has $200,000, $2 million, or $20 million, the work isn’t all that much different, but the amount that you get paid for that work is astronomically different.

And quite frankly, sometimes people have accounts they are not telling you about. When you say “No,” that gets those people energized, because now it’s an exclusive club that they want to be a part of. They say, “Well, I’ve got this other account I didn’t tell you about, so I could give you half a million or I could give you a million.” Other times, it’s unfortunate, but I can’t help everybody. If you don’t say no, eventually you’re going to give really bad service or not give the follow-up you need to, or lose out on a big opportunity because you are servicing a smaller opportunity.

I’ve been more selective. I tell people that it’s a two-way interview. There are certain personalities that need more follow-up—asking more questions and taking up our time. Some of those people may not be the best match for us, because you can have someone with a few hundred thousand dollars who wants twice as much time as the person with five million dollars. You have to be selective about who you allow into your practice.

And by me passing up some of the ones who are $300,000 or so, it’s led us to have a few that are $3 million. Also, some high-net-worth people have a mentality that they want a more exclusive club. They don’t want a financial advisor who will work with every single person who walks though the door. They want exclusivity with you, and they want concierge service.

Looking ahead

I would say about 77% of my clients are either in retirement or approaching it, say within five years. That’s because 75–80% of my growth comes from presenting Horsesmouth’s Social Security and Medicare presentations over and over again. Of course, that means some of my calculations have to include a number of assets leaving because of required minimum distributions or unfortunately, a client passing. We figure somewhere between seven and 10 million dollars will go out of our practice every year for these reasons.

In general, I think we do a good job of retaining assets when they go to the next generation, even if the son or daughter lives out of state. If we lost it, it’s most often because they want to pay off the mortgage or something like that. Even with this rapid growth over the last five years, adding 50–90 clients a year, I can truly say there’s only one client we’ve lost due to a personality conflict.

Keep doing what works well

In planning for 2019, I’ve looked at the average age of my book. Mine is in a good place because it bounces between 59–62, so it’s not like an 85-year-old average. At the same time, I’m not well-represented with younger business owners. I wouldn’t mind adding some higher-income 40 year olds to my book over the next year. I’m not entirely sure how I’m going to do it or where I’ll make the time, because I don’t want to deviate from what works.

I learned five or six years ago that anytime you find something that works well, never stop doing it. So often you ask at Horsesmouth workshops, “Have you ever done something that worked really well, don’t do it today, and are not sure why you stopped?” And so many hands go up. My team tries to improve ourselves, but not stop doing the things that work well.

If I add something new, it’ll be a game plan for a few events to pick up some younger high earners who need our help. Horsesmouth has some good stuff with college planning, cybersecurity, and IRA planning that I might add in.

I think in 2019, one of the things I will focus on is advanced charitable gifting strategies for high-net-worth people. It’s something people are receptive to. And with the new tax law, there’s a lot of things that used to work but don’t anymore. I’m excited to start educating some of the donor bases for charities on how to better gift and use that money.

Advice: Don’t make it complex

For someone who is looking to get better at business planning, I would say first and foremost that you don’t have to make it complex. Just get clarity and figure out a daily measurement of what you need to do to get where you want to go. You’re not going to accidentally fall into super success.

You’re going to have to have clarity as to what you want to do in 2019. That can be personal too, like more time with kids or a workout goal. Whatever it is, you’re not accidentally going to get in good shape, and you’re not going to accidentally get a really good practice. So just make it simple. Figure out two or three things that you want to achieve in 2019. Make a goal and figure out how to measure yourself daily, and hold yourself accountable.

A fun way that I have held myself accountable is giving a good friend $2500 in escrow, and telling him my goals for the next six months. If I don’t hit those goals, he donates to a political fund that I oppose. That works for anybody. It doesn’t matter what party you are or what beliefs you hold, we all have a cause that we really don’t care for. Put money up in good faith that you can achieve your goals, and if you don’t, that cause will get the money. The number you put up is whatever is big for you. I’ve done that a couple of times, and it’s a good motivator. It’s all in good fun and I’ve never lost the money.