Business plans for financial planners: Low-cost options

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A business plan can help you launch your new financial advisory or investment management business so it’s destined for success. Or it can help you ratchet up the growth of a business that’s lagging.

Gwen Moran, co-author of The Complete Idiot’s Guide to Business Plans, said, “The process of mapping out a business plan can save time and money while helping financial planners identify potential opportunities or pitfalls. The process of running a business can be a frenetic experience. It is only when we take ourselves out of the day-to-day and look at the direction and needs of the business that we get a clearer vision of the best next steps.”

Here are some low-cost resources for business plans.

1. “Two Page Mini Business Plan”

Brian Plain (@oakparkplanner) said, “Check out @ProsperousCoach Mini Business Plan template. I used it for my 2011 plan &… liked it.” The formal name of this plan is the Two-Page Mini Business Plan. It’s offered by Suzanne Muusers of Prosperity Coaching. Suzanne coaches financial advisors and has guest blogged for me about “The Lost Art of the Thank You Card.”

2. Financial marketer Kristen Luke’s blog

Kristen Luke’s blog, Wealth Management Marketing, doesn’t offer a formal business plan. But you’ll find a wealth of practical advice on her site, including some useful worksheets.

3. “Professional’s Planning Procedure”

A Twitter friend recommended Professional’s Planning Procedure from Kinder Brothers International (KBI). The KBI website describes this 20-page publication as “An extremely practical and positive, step-by-step guide for the Sales Professional’s annual goal setting along with an action plan for attaining those goals.”

4. Complete Idiot’s Guide to Business Plans

Writing about The Complete Idiot’s Guide to Business Plans, Moran told me, “While writing this book, my co-author and I were very careful to include key questions and points that are relevant to any business–even those not seeking external loans or investment. We believe a business plan can be a very important management tool, providing a way to monitor growth, evaluate personnel needs, track sales and marketing results, and generally ‘take the temperature’ of the business.”

Gwen is a writer whom I’ve gotten to know through some professional writers’ organizations.

Have you written your 2011 business plan?

How to get a white paper written on a budget

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White papers. They’re a great marketing tool for investment and wealth managers. But what if you’re too busy to write and you lack the money to hire someone to craft your white paper from start to finish?

Three strategies suggested by Steve Slaunwhite in his chapter on “Create Your Amazing Buzz Piece” in The Wealthy Freelancer can help.

1.  “Write a very rough draft, no matter how awful.” Then, hire someone to shape up your draft.

2.  Record yourself speaking out loud about your white paper topic. Then hire someone to transcribe your thoughts, which means the person types up word-by-word what you spoke. Another option, which I’ve mentioned in “Investment manager’s secret of regular blogging,” is to use transcription software. Once you have your words in a file, you can edit them yourself or hire an editor.

3.  “Get a freelance writer to interview you.” I’m guessing that Slaunwhite is suggesting that you use the writer’s probing questions to tighten your white paper’s focus before you get the interview transcribed.

Those three approaches get your ideas out of your head and into writing. This is the hardest part for some financial advisors.

Have you tried these techniques? How have they worked for you?

Guest bloggers: 2010 in review

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I’m thankful for the knowledgeable and talented professionals who have contributed guest posts to my blog this year.

Here’s a list of guest posts sorted by topic, including client communications, marketing, social media, and writing.

Client communications

Five Tips for Delivering Bad News to Clients by Kathleen Burns Kingsbury
Talking to clients about social investing by Annie Logue

Marketing

Adding Video into the Communications Mix by Samantha Allen
The Lost Art of the Thank You Card by Suzanne Muusers
My Six Best Marketing Tips for Independent Advisors by Steve Lyons
What’s a tomato got to do with getting your fund discovered? by Dan Sondhelm
Would you like to know how financial advisors are choosing products and making investment decisions in this market? by Lisa Cohen

Social media

Be Compliant When Using LinkedIn Messages by Bill Winterberg
Financial Advisors and Twitter by Roger Wohlner
Generate Quality, Low Cost Leads with Facebook Ads by Kristin Harad
How Seeking Alpha Can Build Your Professional Reputation by Geoff Considine
Investment analysts and social media by Pat Allen

Writing

Correct Grammar Errors in Your Writing Quickly and Easily by Linda Aragoni
Making Research Readable by Joe Polidoro

How do you define outperformance by stock funds?

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Portfolio managers want to outperform their benchmarks. There’s no question in my mind about this. But how much of an advantage do you need before you can claim outperformance?

Outperformance for stocks

To keep things simple, let’s focus on portfolios investing in stocks.

Is it okay to claim outperformance if your return exceeds the benchmark’s by more than 1 basis point (0.01%), 25 bps, 50 bps, or 100 bps?

Or should the margin be calculated relative to the benchmark’s return? After all, exceeding the benchmark’s return by 26 basis points (0.26%) looks better when the benchmark returns 0.01% than when it returns 45%.

Please answer the poll in the right-hand column of this blog. I’ll report on the results in my February e-newsletter.

Diverse opinions on “outperform”

I’m literal-minded. To me, a fund “outperforms” when it beats its index by the tiniest margin, though I doubt that I’d crow about that. However, asset management companies often report such returns as “in line with” or “closely tracking” the benchmark. The concerns of their legal or compliance departments probably influence this decision.

Here’s one example:

…the Wasatch Heritage Fund posted a return of 6.22% for the quarter. These results closely tracked those of the Fund’s benchmark, the Russell 1000 Value Index, which returned 6.78% over the same period.

Meanwhile, some managers–including the manager of the Wasatch Global Science & Technology Fund–question whether their returns should be compared to benchmarks.

Typically, the first paragraph of our quarterly letter to shareholders includes a statement regarding the Fund’s performance relative to its benchmark. We intend to move away from this approach beginning with this letter, as
we think the industry norm of tracking performance versus a broad index on a quarter-by-quarter basis distracts from the Fund’s long-term investment strategy. Our new mantra, forged by the pressure of the 2008–2009 credit crunch, is that we must invest “away from the market” as we attempt to deliver exceptional long-term returns.

I’m looking forward to learning what YOU think.

Dec. 27. Oops. I made a miscalculation in discussing the Heritage example, so I’m deleting the offending sentence thanks to David Lufkin.


Forget your spell checker!

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You can’t rely on automated spell checkers. They won’t catch all of your typos.

I remember a beautiful institutional investment pitch book shared by a senior portfolio manager. I’ll call him George Miller. The front cover billed him as “George Miller, Portfolio Manger.”

Yes, that’s “manger” not “manager.”

You can use the proofreading methods in “Six ways to stop sending emails with errors” to complement your spell checker.

Financial advisor prospecting: Not all non-clients are the same

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Getting new clients for your investment or wealth management business is always on your mind. But there are so many prospects and so little time. One way to narrow your scope is to focus on a target market, as I described in “First pick your target market and niche.” A next step is to distinguish between prospects, leads, and opportunities as defined in The Wealthy Freelancer: 12 Secrets to Great Income and an Enviable Lifestyle by Steve Slaunwhite, Pete Savage, and Ed Gandia.

“Don’t confuse prospects with leads,” says the book. “Prospects are individuals you believe may be interested in your services. Leads, on the other hand, are prospects who have already indicated a certain level of interest in what you have to offer.” Moving along the continuum from prospect to client, an opportunity is “a lead who has given you a chance to present your services, discuss a project, or quote a job.”

Action step: Look at your universe of potential clients. How many fall into each of these categories? If you’re short on prospects, do research to build their numbers. Once you’ve got enough prospects, focus on moving your prospects, leads, and opportunities through your funnel.

Follow-up will be the key to your success.

Disclosure: I received a free press copy of this book.

Should you go bold?

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Bold type, which is thicker than regular type, can make it easier for readers to grasp your meaning. This happens only if you bold wisely. Go overboard with bold, and you may lose readers.

When to bold

Here are three ways I’d use bold in a blog post:

1.  Bold your headings or the first part of your numbered lists. I’m a big fan of headings as visual indicators of your main points as well as your shifts from one point to another. This goes for bolding new points on your list, but only when the bolded text is followed by plain text. A whole block of bold text is hard to read.

2.  Bold the key sentence in one or more paragraphs. Michael Katz of Blue Penguin does this well in his newsletter.

3.  Use bold for one key sentence. It could be the eye-catching content that draws readers to your blog post. Or the “call to action” that invites your readers to contact you.

Bold vs. heading format

Your choice of how to highlight your text may affect how well it is picked up by online search engines.

Some folks have told me that any bolded words are given more weight by search engines. On the other hand, Beth Graddon-Hodgson of WriteSourcing told me this only applies to text that is emphasized by a heading tag, so the text is treated as a title. However, this “subject is highly debated,” said Graddon-Hodgson. “Some people believe that ANY changes to text make a difference with SEO since they incorporate different coding.” Check with your SEO expert for the latest opinions on this debate.

Used wisely, bold can boost the impact of your writing. Give it a try!

Poll: Which high-impact prospecting technique works best for you?

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Some marketing techniques work better than others for financial advisors.

The five most effective techniques for freelancers (who share key characteristics with financial advisors) include the following, as described in The Wealthy Freelancer:

 

  1. Tapping your network
  2. Getting more out of existing clients
  3. Investing in smart local networking
  4. Leveraging social media as a networking tool
  5. Employing direct mail

My network has always worked best for me, but the other four techniques help, too.

My referrals come mostly from current and past clients, many of whom subscribe to my monthly e-newsletter, another big contributor to my marketing successes. Although my clients typically work for large companies that aren’t big on social media, they seem impressed by my social media visibility. Social media has expanded my network to include some great professional colleagues, referral sources, and an occasional client.

Smart local networking inspired me to launch my business. Many Bostonians have been generous with their time, advice, and connections. The Boston Security Analysts Society became one of my first clients and its timely presentations have provided the topics for many of my blog posts.

Direct mail has been the least effective technique for me. But I probably haven’t given the U.S. mail a fair chance because I’ve been so lucky with referrals from my network.

Thank you, all of my colleagues and referral sources, who have encouraged me! Every little bit helps.

What works best for you? Please answer the poll in the right-hand column of this blog. Feel free to leave a comment, too. I’ll report on the results in my January 2011 e-newsletter.

Guest post: “Be Compliant When Using LinkedIn Messages”

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Social media compliance is a big worry for financial advisors, so I was delighted when Bill Winterberg offered to write a guest post on three easy steps to be compliant using LinkedIn messages. I’ve quoted Bill in numerous blog posts and tweets on technology, social media, and tweets because he’s a great resource.

Be Compliant When Using LinkedIn Messages

By Bill Winterberg, CFP®

An earlier post on InvestmentWriting.com highlighted a “whopping flaw” in LinkedIn’s messaging system that poses compliance issues for financial advisors. The concern is that no viable solution exists to archive and retain messages using settings on LinkedIn.

I believe that advisors can use LinkedIn messages without violating regulatory requirements, provided they follow the three steps below. The key in all three steps is to leverage an existing e-mail archiving service to capture and retain messages sent via LinkedIn.

Here are three steps advisors can follow to demonstrate proactive compliance when using LinkedIn messages.

1.      Use an e-mail archiving service and use the e-mail address being archived with all LinkedIn messages. If you’re not archiving e-mails today, you’re going to have a challenging time responding to audit requests by examiners. They almost always ask for e-mail communication in one form or another.

2.      Configure your LinkedIn E-mail Notification settings to control how you receive e-mails and notifications. All of your General options should be set to deliver Individual E-mail, as shown below. This will feed all LinkedIn messages sent to you into your e-mail system, so they will subsequently get archived by the service you established in Step 1.

3.      Here is the only part that requires you to do something manually. When you compose new LinkedIn messages−or reply to messages received−you must click the “Send me a copy” check box under your message window. Again, the copy of the message will be sent to your e-mail address that is subject to archiving through your archiving provider.

These three steps will leverage an e-mail archiving service to capture and retain message sent through the LinkedIn messaging system. Upon examination by a regulator, advisors will be able to quickly produce all messages sent using LinkedIn.

Bill Winterberg, CFP®, is a technology consultant to financial advisors in Dallas, Texas. His comments on technology and financial planning can be viewed on his blog at www.fppad.com.

Poll: Is the SEC’s plain language requirement for Form ADV Part 2 a good idea?

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SEC-registered advisors must rewrite Part 2 of their Form ADV using plain language. The requirement takes effect in 2011.

You won’t be surprised to learn that I favor plain language, but I’m curious to know what you think of the new requirement.

Please answer the poll in the right-hand column of my blog, asking  “What do you think of the plain language requirement for Form ADV Part 2?”

  • Bad idea
  • Okay, but will cost too much time and money
  • Good idea, but I’m not sure if it’ll be implemented effectively
  • Great idea, I’m looking forward to it
  • None of the above (please leave a comment)

By the way, the SEC’s plain English handbook is a great resource for your Form ADV rewrite, as Deborah Bosley and Libby Dubick point out in “Lemonade from legislative lemons: New ‘plain language’ rules for Form ADV give advisors a chance to stand out.” Investment News (Oct. 4, 2010, registration required).