Kudos to David Lincoln for responding to Peter Bielan’s charge to name the five metrics needed to manage wealth management in a financial institution during a recent BISA webinar.  That is a challenging task, which is why the metrics we track in our benchmarking studies now number around 60.  Firms and their managers must track many intersecting factors that impact their stakeholders, and the optimal measures vary depending on the institution and its priorities–there is no one-size-fits-all answer.


David’s five key metrics are operating margin, compensation and benefits as a percent of revenue, revenue per advisor, net new assets, and revenue mix.


How do we at Kehrer Group conceptualize the benchmarking needs of the investment services directors that participate in our annual survey and the practices they lead?  We understand that they need measures that provide visibility to the needs of the institution, the firm, the advisors, and the clients.


Overall, they need to know how their firm is performing relative to its opportunity.  How much of the investable assets of the institution’s customer/member base have they captured?  Some firms use revenue relative to the size of the institution, or customer/member penetration.


And since most institutions have a mandate to grow, they need a measure of year-over-year growth, whether it be net new asserts, revenue, or profit contribution.


And they need visibility into how efficient their production is.  What is the cost of sales?  The cost to serve?


They also need to know about the client experience.  What about net promoter scores?  Client attrition rates?


And they never overlook the importance of advisor satisfaction, with advisor attrition rates being the leading indicator of success, or an early-warning sign that there is a problem.


Of course, these are all outcome measures – the results of how the business is managed.  What investment services directors need most of all is an understanding of the key drivers of performance, and how the various metrics they track interact with one another.  How will changes to A and B impact X and Y?


Enough counting. Look for the results of Kehrer Group’s 2024 Annual Benchmarking Survey in your inbox next week.