As our industry becomes more complex and competitive, I see leading financial advisors bring new tools and techniques to better manage their businesses. These new tools allow them to leverage the business intelligence from the many data points that are inherent in their wealth management and client service processes. To optimally position their firms for success, advisors need to have access to the key metrics and drivers of profitability so that they can make decisions in an increasingly fast paced business.
Just consider the incredible amounts of data that exists in your business, not only from the wealth you are managing, but also in how you are delivering your advisory services, both in person and through technology.
Some of the key metrics to track include:
- Assets per advisor
- Clients per advisor
- Profitability per client
- Revenue per client
- Forecasted revenues
- Length of time it takes to complete a service request
- How often are clients logging into your client portal, what are they looking at, what do they value, how often do they refer you, and more
Being able to track a core set of metrics positions you to better understand your productivity, efficiency, service levels, and client satisfaction, ultimately getting to a point where you can clearly articulate your value proposition based on how you are servicing your best clients and what they value.
Why is this important? According to Ernst and Young’s “Global Wealth and Asset Management Industry Outlook,” …the ability to clearly define in client’s minds a ‘unique value proposition’ that differentiates your brand identity from that of other players in a very crowded market will be the key to success going forward.”
So, how do you get at this crucial data? A great place to start is with your core portfolio accounting and performance reporting system. Having a comprehensive platform that provides this kind of business intelligence from dashboards and easy to run reports, enable you to have a direct line of sight into the key business and service issues that are driving your business.
As an example, consider what you can do just by knowing what your forecasted revenues will be, by running reports from your billing and portfolio management system to get a view 6 months out based on various market assumptions. Having this information can give you a confidence level in making a new investment in technology, or an opportunistic new hire to further your value proposition, without damaging your financial situation. Without this information, advisors are flying blind on some of the most important decisions that can transform their businesses.
The upshot here is to take a look at your existing technology to see if you can easily access these types of data through business intelligence reporting and dashboards. If you can’t, it may be time for you to start looking at today’s latest technologies.
To learn more about what you may want to consider, download our white paper, The Power to Change: How Business Insights Fuel Success.
Timothy D. Welsh, CFP® is President and founder of Nexus Strategy, LLC, a leading consulting firm to the wealth management industry, and periodically blogs for Advent’s On Point blog. He can be reached at firstname.lastname@example.org or on Twitter @NexusStrategy.