How Can Poorly Designed Sales Goals Undermine an Advisor?

Among the most important task advisors face is forecasting where the company's growth will come from, and then developing a plan to achieve company objectives. While this strategy makes sense, far too many investment advisors set themselves up for failure by establishing incorrect, unrealistic, or otherwise flawed expectations.

Below are four common ways in which advisors can minimize their frustration.

Sales Goals Are too Broad

The defining measure for a successful distribution effort is typically based upon the ability to grow AUM year-over-year. However, some circumstances call for broader metrics that measure momentum, particularly in the short-to-intermediate term. Too often, firms do not embrace this idea and wind up with ineffective measurements.

To develop appropriate sales goals, distribution execs should evaluate both absolute and relative goals including comparisons with rivals.

Additionally, one should have a solid understanding of where their advisory firm fits within the competitive landscape. With some expanded intelligence, firm leaders can adjust their expectations based on the current realities and the features and attributes that their firm possesses.

Establishing Incorrect Expectations for Salespeople

Senior management should not underestimate the difficulty of developing effective sales objectives. While previous performance can offer investment advisors an indicator of what future growth may be, it is often filled with uncertainty.

Executives want advisors to improve their performance from past years; however, they must be practical. Assumptions that are too lofty can create frustration and dissent among advisors. The most efficient managers are skilled at fostering good morale and incentives.

Setting Unrealistic Growth Targets for New Strategies

While new product development efforts are essential to some firm’s growth strategy, it is important to consider different metrics and time horizons when creating and evaluating sales goals for new products. We have seen too many cases where management has established the exact same expectations for unexperienced product specialists selling new products as they do for a veteran expert doing comparable work on established strategies.

Additionally, executives typically take too lightly the substantial function that marketing initiatives play in helping new products get seeded and establishing critical mass. Keep in mind, the strategy has no record or clients as well as begins without advertising. To be successful, the initiative will certainly need marketing and positioning.

Sales supervisors should be conscious of the added initiative that salespeople put in to make these launches successful as well as taking credit and being rewarded for teamwork.

On the other hand, if a company has an approach that focuses on an out-of-favor market, then execs ought to acknowledge the truth of the circumstance in their sales targets. Managers that spew misdirected disappointment at individuals conducting an otherwise solid marketing plan are disadvantageous.

Unrealistic Goals and Targets

Far too many managers set excessively aggressive growth targets.

Take a recently formed advisory firm with a three-year record that has attracted $200 million in new AUM. Since the firm now believes it is all set for the next trajectory the company's targets to double its AUM over a 12-month period. Advisory executives must take into consideration exactly how reasonable it is to think that a company that has raised $200 million over three years can double its assets in one year. That is a classic example of an unrealistic goal.

When implementing and reviewing effective sales programs, executives must consider metrics other than simply assets under management.  Realistic goals throughout the sales cycle will demonstrate credible leaders and boost the likelihood of sustaining energy and attaining long-term success.

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