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Dan Richards

No matter how successful your business, today you can’t stand still.

Twenty years ago, many prosperous businesses operated on auto-pilot – once retailers, manufacturing firms or financial advisors had a solid base of customers and were nicely profitable they simply kept repeating the things that had made them successful.

If it ain’t broke, don’t fix it was the watchword.

Today, that approach guarantees failure … in a world of intense competition and increasingly demanding customers, anyone who stands pat will be left behind. The only formula for ongoing success today is a commitment to constant improvement.

One key to making that happen is to identify the most important goals for your business and the key performance indicators (KPIs) to track your progress against those goals.

Having done that, you need to schedule 30 minutes each month to review how you’re doing against those KPIs. Arguably, the time you spend doing this will have the highest payoff of any 30 minutes in a month.

Comparing your performance

All advisors should track performance in four categories – financial performance, practice performance, existing clients and new clients.  In the perfect world, you’d compare how you’re doing against a peer group of comparable advisors … whether at your branch, your firm or the industry as a whole.

Everyone will have different goals and different KPIs to track those goals … what’s important is that you clearly define the goals that are right for you.  At the end of this article are some key performance indicators to consider.

Meanwhile, here are some results reproduced with permission from the most recent Insights whitepaper by investment industry software firm PriceMetrix. This report features 2008 to 2010 data from 15,000 advisors at a broad range of Canadian and US firms; these advisors worked with over 2 million investors representing assets of $850 billion (so an average account size of $400,000).

PriceMetrix tends to work with full service securities firms, so the specific numbers may not be directly relevant to advisors with other business models, although the overall trends should be.

Key trends for successful advisors

Some overall observations from the PriceMetrix report:

  1. At the end of December 2010, the average advisor had 193 household relationships, representing assets of $72 million and average gross revenue for 2010 was $522,000.  For most advisors, the past two years have seen a substantial increase in productivity, with significant increases in assets and revenue per household.
  2. Contributing to that increase in productivity was that households with less than $50,000 in assets dropped from 56% to 45% as a percentage of overall client relationships.
  3. Fee-based accounts represent a growing portion of advisors’ books, at 24% of assets, up from 19% two years ago. Fee-based accounts have seen a slight compression of revenue as a percentage of assets.
  4. The average advisor attracted 14 new clients in 2010, compared to 16 in 2009 and just 9 in 2008.