Do you know your numbers?
I’m amazed how well advisers know the “numbers” (i.e. portfolio balances, sums insured, cash flow balances) in the lives of their clients yet pay a fraction of attention to the “numbers” in their own business lives.
I’ve long been a fan of Verne Harnish, his Rockefellar Habits and his one-page planning tools.It’s the simplist and most effective manner we know to keep our advisory clients on track with their own “numbers”.
I’m also a fan of The Rise & Fall of Strategic Planning by Henry Mintzberg – planning and numbers aren’t everything. They are only scoreboards to the real game of life and business.
However, tracking the right numbers (at the right time) on the future scoreboards of advisory business isn’t as straightforward as it used to be back when ‘product’ delivery dominated the business models relied upon by Advisers. A few years ago financial advisory firms used to boast about their total funds under management or top line revenues or numbers of active clients. All of these are fast becoming throw backs to a former era when big was better and productivity wasn’t a concern.
Some of my favourite “SMART numbers” for our advisory clients are:
- face time – what’s the approx time (we’re not fans of detailed time sheets) advisers spend in front of their clients, prospects, their networks, their alliances, their centres of influence either delivering advice, collaborating with other advisers, researching the needs of their niches, presenting to prospective clients or similar work. Best practice is around 60% of their available time whereas averages are closer to 25%;
- ratio of active clients per adviser – divide the total number of active advice clients by the number of advisers (expressed in full-time-equivalent i.e. 4 day a week adviser is a 0.8). This number is reducing for our clients to somewhere between 40-100 depending on where they are in their business lifecycle – it used to 160+ which for us is a clear sign of a product offering rather than an advice offering
- referral rates – we like this ratio as it indicates a few things. Is the firm comfortable soliciting quality referrals from a well-defined client niche? Are clients satisfied enough with the services offered to offer introductions to potential new business? The gold standard is still 2/3 which means for every 3 ‘asks’ the firm receives on average 2 potential new prospects
There are obviously more – I’m interested in yours?
I’m also interested how you track your performance?