Check Yourself Before
You Wreck Yourself

Over the next 10 years, Cerulli estimates more than 111,500 advisors will retire representing more than one-third of the workforce and assets.

Frankly, they have been saying this for a long time and much of it is nonsense but let’s play ball.

If you have been a successful advisor, your book of business is likely the largest part of your net worth. As you plan for your own retirement it’s natural to start wondering what intrinsic value your life’s work will net.

The problem is that most advisors are woefully clueless about the finer details of their own business.

Here is an easy trigger; go get a business valuation. See what happens to your business valuation when the valuator finds out 75% of your book is over 80 or your average account size is below $10,000.

Now before you get all woke on me there is nothing wrong with any of these metrics, but the simple fact remains that the details of your business should drive many decisions.

And advisors routinely ignore tracking the details… It’s not just about valuation but also growing your business in the first place. There’s a widely held perception that the harder you hustle, the faster your advisory business will grow. But that’s a myth: We’ve seen countless founders bust their butts off for years and barely move the needle.

Firms don’t only meet their growth potential by working hard, but by working smart. They grow by knowing their businesses inside and out, then pinpointing where their time and energy will have the biggest impact. The fastest growing companies use business intelligence to gain a growth advantage over their peers.

You can use business intelligence data in so many ways. These firms know, for example, exactly what type of client is most profitable and most likely to be an ambassador for the firm. So, they focus their service model, solution set and marketing on exactly that client profile. By doing so, they’re able to scale and build enterprise value faster and more efficiently than competitors who are trying to be all things to all people.

In short, to grow your business, know your business.

Of course, you likely are shaking your head by now thinking there is no one in the world that knows your business like you do. Entertain us for a second and let me know if you can quickly answer any of the following questions with your current tool kit.

• New and Closed Accounts. Can you identify patterns among account openings and closures? Are most of your new clients 45 and older? Do those who leave tend to be younger than 40 and risk adverse? This information can help you fine-tune your client acquisition efforts to tame turnover–or stop chasing clients who won’t stick.
• Asset Growth. How fast is your AUM growing month by month, and what’s driving the growth – market performance, contributions or new accounts? This information will help reveal whether your growth includes a healthy proportion of net new assets or is overly dependent on market gains.
• AUM Analytics. Can you take a deep dive into your book of business, breaking out your AUM by management style, account size, investment strategy or custodian? Identifying themes can help you pinpoint your target market so that you can build your business around finding and servicing similar clients.
• Demographics. Do you understand your clients’ ages, where they live and other demographic information? This data can help you formulate more targeted and effective marketing plans.
• Revenue. Can you visualize month-to-month fluctuations in advisory fees? This can help you avoid payout surprises and budget more effectively.
• Performance. Do you have you have a single destination to see MTD, QTD, and YTD performance for all of your clients in one snapshot? You shouldn’t have to click around between individual clients. A single hub means less friction and more efficiency.
• Advisory Fee Benchmarking. Can you see the average fee your clients are paying in order to fine-tune your pricing?

Business intelligence lets advisors understand every facet of their business. From client demographics to AUM inflows and outflows to fee characteristics, it should provide clear data visualization which sets the stage for efficient marketing, growth, and simply better decision making.

It’s time to stop making decisions based on a hunch. As business management pioneer Peter Drucker famously said, “If you can’t measure it, you can’t improve it.” Business intelligence tools provide crystal-clear insight into your business, enabling you to make data-driven decisions that will drive your growth most effectively.