The Recovery Plan

Bill Good

Mar 01 2010

The Recovery Plan

Part 1 of 2




Hopefully, 2010 ends the punishment, not only the beating administered in 2008, but the sound thrashing delivered to this industry and the investing public in the first decade of the new millennium. As I am sure you know, the decade that was produced an average annualized loss on the S&P 500® of about 1%, far below its 84-year average return of 9.8%. It has been said “The beatings will continue until morale has improved.” Let’s assume this is a true statement. Therefore, all yell in unison, “We’re doing great!!  Morale is terrific.”

Whew. OK. We’re done with the beatings. Now let’s do some planning so that 2010 completes the recovery of your business.


Planning Process

Of course, planning is thinking through how to get where you want to go and taking precautions to ensure you don’t wind up where you don’t want to go. If you want to go to Las Vegas, you surely don’t want to wind up in Salt Lake City.

This gives you the concept of an offensive, and defensive plan.

Your offensive plan could be “Double my AUM in the next two years.”

Your defensive plan could be, “In case the market tanks, have enough assets coming in so I don’t participate in an income reduction plan.”

I will tell you this: in every downturn I’ve witnessed, starting with 1987, advisors who did not have systems in place to raise new money participated in the hated income reduction plan. Your systems need to go in place when you don’t need them. It’s like a backup system for your data. Hopefully you won’t need it. History tells us otherwise.

Both of your plans, offensive and defensive, should start with a number. You need a number for your offensive goal, and for your defensive goal. Double my assets becomes “On average, add $1.6 million in new assets per month for the next two years.”  Think monthly, or even weekly.

To hit your numbers, you need more than a goal scribbled on a piece of paper and taped to your bathroom mirror.  You do need a plan of how to make it happen. To develop that plan, you need a planning process.

The process I’m going to recommend has some faint resemblance to planning a trip.

You live in Salt Lake City. You want to go to Vegas for the weekend. Your plan is: Leave work at 3:00. Get on I-15. Show up in Vegas around midnight. The plan is done. Now just execute the plan.

Sadly, the process of crafting and executing a business plan, especially in this industry, is more complicated than planning a trip.

It’s more like heading for Vegas, learning that the roads have been torn up. You head for the airport. The planes have been grounded and now you need to take a bus. And then you hear that Vegas has moved to Reno.

A better analogy than trip planning might be the kind of plan a heat-seeking missile follows in pursuing a bobbing, weaving target.

Think “Top Gun.”

Your target might be: add $40 million in new assets in the next two years. But the means to achieve it are subject to immediate change without notice. Seminars that used to work now flop. The attorney who sent you $15 million in new assets a year decides to become a priest. Your best client dies and her kids, who you nearly raised, take her fortune and invest in ant farms. Your offensive plan to double your business now needs serious re-thinking. You started with Plan A. Now you are scrambling to come up with Plan D.

Despite the fact that the plan which will get you there is not the plan you start with, planning is vital. As some sage noted, “Without a plan, you wind up somewhere.”  You might wind up somewhere anyway, but at least with a well-crafted plan well executed, you have a decent chance to make it to the end of your rainbow.

The planning process I’m going to recommend to you needs two goals: offensive and defensive. Offensive is the plan that states: I’m going to Vegas, hell or high water. Defensive states: worst case, I’ll stay in Salt Lake. I’m not going to Boise.


Offensive Plan

The first two steps of the planning process go hand-in-glove.

1)   Get an idea of where you want to go, and 2) Figure out if it’s possible to get there. 3) Now figure out your defensive plan. 4) With offensive and defensive plans penciled in, figure out how to get there.

In this article, I will focus on 1, 2 and 3. Next month, with your offensive and defensive goals penciled in, we’ll figure out how to pull it off.


Where Do I Want to Go? Can I Get There?

Let’s say you have an equity portfolio of $40 million. You want $80 million. And you’d like to have it in two years. Is it possible?

In assessing whether this goal can be achieved, let’s take a look at where the assets can come from. You have three choices:

1)   Investment performance.

2)   New assets from existing clients. These break down into three sources: assets held with other brokers, lump sums, and retirement funds. Obviously there is overlap. But this is a useful way to analyze.

3)   New assets from new clients. This source breaks down into funds, relationship marketing, and mass marketing.

Let’s take these one at a time.

Investment Performance

I’m not much interested in using the term “market performance.”  So let’s put the responsibility for this component of your success where it belongs: squarely on your shoulders.

To hit your double, factoring in positive performance, you need to rise between $363,000 to $1.6 million per month. Looks like a lot.

Here are the numbers:



New Assets per month










If I were in your shoes, my best case assumption would be: performance neither giveth nor taketh away. So I need to raise $1.6 million per month. If I’m getting help from the market, I can ease off a bit.

But we also need to know worst case. We need a defensive plan.


Defensive Plan

What if our investment performance over the next couple of years is bad? Our defensive plan is the minimum we need to be raising on a monthly basis in case the beatings resume.



New Assets / mo to stay even










Suppose your portfolios drop 5 or 10% annually for two years? Can you survive that? Probably, as long as your relationship-management skills are top drawer. What if it’s down 20% for a couple of years running? Probably not.

“The 2008 Shuffle,” which you and most other FAs sang as 2008 collapsed into 2009, won’t bear an encore.

I realize we’re down 35%.

But the index was so much worse.

It was down 40, 42, even 50%.

The index was so much worse.


We were up!

We were up!

Oh yes, we were up.

I know it looks down.

But we were really up.


Sorry, clients have heard that sad song. It’s not on their play list anymore. Your planning for this worst-case eventuality is: figure out how to manage your portfolios so it doesn’t happen again on your watch.

For your defensive plan, I would say you need to assume a 10% downdraft, two years in a row. So to stay even, you need to raise $316,667 per month.

These calculations are not hard. Just a bit tedious. I built a spreadsheet to make them. You’re welcome to it. You can get it at Choose the link, “Free Two Year Marketing Plan.”  There are some other goodies there for you as well.

So let’s pencil in our offensive and defensive plans. Worst case to stay even, we need to be raising $316K per month. To hit a double, if performance doesn’t punish, we need $1.6 million  Big spread.

The question now becomes: Can we hit the top number?


Channeling New Assets

Out in California, they have people that “channel” dogs, or even deceased loved ones. That’s not what we’re talking about. When I say “channeling new assets” I mean identifying sources or channels of new business we can develop and manage. A channel is a stream of new assets.

There are three such channels: current clients, relationships, and mass marketing.

Very broad rule of thumb: You have 50% of your clients’ liquid net worth. That means there’s another $40 million out there. It’s probably not realistic to think you can get it all. But can you get half of it? $20 million? That’s $833,333 a month for 24 months.

You’ve done it a lot of months. Let’s pencil in: $833,333/mo from current clients. That’s half our double.

The question now becomes: Can we get the second half of our double from relationships, or do we need to do some mass marketing?

Another rule of thumb: A well executed referral marketing program should generate 10% of your AUM each year. Of the remaining $20 million we need, that would bring us $4 million the first year, and maybe $6 million in year two. We’ll pencil in $10 million from referrals. That still leaves us $10 million to raise. $5 million a year. How?

Stay tuned for next month.

Meantime, take some time and figure out your own offensive and defensive plan. How much can you count on from investment performance? From clients? Referrals? And then what’s left? Remember, no pens. Write in pencil. Come up with an idea. Can it be done? We’re still a long way from committing to ink.

Bill Good is chairman of Bill Good Marketing, #1 in marketing systems. His Gorilla CRM® System helps advisors double their production or work half as much. - 800-678-1480



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