As we approach the end of one decade and the beginning of another, it’s good to reflect on past goals as well as take the first steps toward establishing new ones.
Let’s begin by differentiating between two very different types of goals and the importance of each.
Results goals represent the outcomes you want to see at the end of a specific period of time but over which you have minimal or no direct control.
Annual revenue is the most important goal for most advisors and planners. Revenue is typically the result of several factors. Assuming you charge a fee for assets under management, your revenue is dependent on the level of assets you’re able to accumulate plus market growth (or decline) times the fee percentage you’ve established.
Although you have a measure of control over your fee schedule, you can’t directly impact the value of assets under management, another important goal for most advisors. Those numbers are dependent on what your clients bring in, the amounts delivered or paid out, and the ups and downs of the financial markets.
Nor is the number of client households under your control. If you’ve ever landed a big referral or lost a client who moved away or died, you realize how little control you have over the number of your client households.
Activity goals are the ones you set over which you have a lot of control or even complete control because you manage whether the activity is accomplished or not.
Let’s look at the activity goal of promoting referrals, as distinguished from gaining referred clients which is a results goal.
If your results goal is to increase the amount of new referral business by a specific percentage versus the prior year or to increase the level of new assets from referred clients by a defined dollar amount, you can establish activity goals of developing stories that describe your ability to serve specific client needs and then sharing those stories with 10 (or 15 or 20) clients per month. You control developing your stories, selecting specific clients with whom you want to share the stories and then having that referral promotion conversation with those clients.
Note that these are activity goals from which you expect to achieve certain results. If you can achieve your goal for the number of referral promotion conversations you have in a given month and do it well, the result is likely to be more referral business.
Which Goals Should You Have?
You may wonder what difference it makes whether you have results goals or activity goals. I suggest having both.
Since results goals are usually quantitative, they will help you determine whether it’s been a good or not-so-good year. Did the activities or strategies you chose to implement create the results you expected?
When you consider the activities you implemented, it’s important to consider how well they enabled you to reach your results goals. Were your activities the right ones, were they executed well, and did you complete enough of them to yield your desired results?
If so, congratulations! If not, perhaps it would be time well spent to reevaluate your plans for next year.