Skip navigation

Building a Playbook

Asset managers-and FAs too-tend to create business strategies in good times but not in bad. Here is the problem with that.

Senior executives in the asset management industry-and financial advisors, too — often tell me that long-term business development initiatives are not a priority. I hear this more frequently during times of market uncertainty and turmoil. Rather, they believe that short-term tactics are what they need. I get that. When the ship is taking on water, don't hold a committee meeting, just grab a bucket and bail.

Short-term tactics — launching new products, doing a national road show, hosting a meeting or event, doing deals — are all quality activities. But if you view putting long-term business strategy development as a boom-time, luxury endeavor, how will you know which tactic (trade) to do, and when?

I agree that multi-day strategy meetings in posh offsite locations are a luxury. And that strategic planning is often process-heavy, squishy and “consultant-y.” Further, market forces are fast, unpredictable, and unforgiving. They don't leave much time to refer to a decision-making manual like a strategic plan. It is also true that creating detailed plans for the unpredictable is simply a waste of time. But here's the rub: If you don't lay some groundwork for alternatives and options, you may find yourself needing to make high-stakes decisions as opportunities present themselves without benefit of a GPS, to mix a metaphor. Strategic planning is key, despite the inherent drawbacks. Let me explain.

In my travels, I've noticed that asset management executives sometimes don't see the strategic impact of tactical decisions until much later. Financial advisors can fall into the same trap. In my view, decisions that have significant impact (financial, human resources, product line, and so forth) are by definition “strategic” and ought to be supported by what I think of as “groundwork.”

Here are some examples of decisions that may seem tactical at first, until their strategic impact becomes clear.

Tactical Decision: Fund company selection of distribution channel and/or advisor business model.

Strategic Impact: Advisors working in different business channels (and with different models) have very different practice “cultures.” Practice culture tends to drive how advisors interact with fund companies, which in turn, influences the cultures of the teams supporting them. This drives bottom-line items including compensation, client-service, investment in technology and tools. All of that is truly “strategic.”

Tactical Decision: Fund company selection of product package (open-end fund, closed-end fund, ETF, etc.).

Strategic Impact: The selection of product packaging often determines what distribution channel will be used and, thus, how an advisor will be compensated (i.e. trail or wrap). In other words, the packaging you choose for your offerings may drive the development of entire functions within your firm.

Tactical Decision: Financial advisor taking over a book or buying a practice from a retiring advisor.

Strategic Impact: Sounds simple enough. Do the financial analysis, and hit the ground running, right? But what about the personalities of the advisor's clients? The asset allocation approach they've been sold? A pal recently fired her FA for “cc:ing her” — and addressing only her ex-husband — on a letter that should have been addressed to both of them, as it concerned funds held jointly for their childrens' eduction. If your acquired client base will expect you to adopt a particular style of interacting, you better know that before you make a faux pas.

Start Making Sense

Herb Kelleher, the charismatic founder and former CEO of Southwest Airlines, was famous for his rejection of formal planning documents and processes. That said, he was, in fact, a proponent of having a framework for decision-making. Asked whether he had developed long-term plans, his reply included the following: “Not long-term plans in the meticulous, detailed sense. What we've had is a strategic plan, which is really a definition of us, what do we think we ought to be, how do we think we ought to function? Our strategy is simple but ironclad. You have to have discipline too to adhere to a strategy.” So we've debunked tedious strategic planning and replaced it with groundwork. Groundwork should include (at least) baseline financial analysis, market analysis, distribution channel impact analysis, competitive analysis, and understanding of brand value or lack thereof, the development of multiple simultaneous alternatives for taking on any one business challenge, and a determination of which of the multiple simultaneous options are preferable under which circumstances. Rather than a plan, we're talking about a playbook. Any sports fan knows that is the best way to maximize the value of your resources.

Writer's BIO:

Lisa Cohen,
CEO of Momentum Partners, is a founding member of the RepThinkTank, a consultancy joint venture with Registered Rep.

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.