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How Does Your Firm Stack Up?

You can move your business to the next level and improve your chances of success when you evaluate key data to figure out how you are doing.

Sandra L. Atkins and Helen Modly, 05/05/2011

It's survey season again. Several professional organizations and magazines collect information from advisory firms at this time of year. Some use the data to publish lists of top advisors that meet certain criteria, and others develop reports that identify trends in the industry. Is it worth your time to fill them out?

To run a successful business, you need to know certain metrics about your firm so you can track growth and maintain profitability. Don't miss the opportunity to participate in surveys and then follow up by comparing the results with your own firm. You can move your business to the next level and improve your chances of success when you evaluate key data to figure out how you are doing.

What Metrics You Should Track
Most of the surveys are attempting to identify trends in the industry. They request data that indicate the amount of growth firms have experienced during the period covered by the survey. This includes the following information as of the beginning and end of the period, plus for some prior periods:

  • Assets under management
  • Number of clients
  • Number of staff

Depending on how comprehensive the survey is, you may be asked for other information, including detailed financial statements, a listing of the types of services your firm provides, the percent your firm invests in various products, and the classes of your employees and their compensation.

Always keep a copy of the answers you submit so that you can compare your firm's metrics with the industry statistics when they are published.

Types of Surveys
Several advisor magazines and web-based publications sponsor surveys. These typically ask a few targeted questions and the results are used to substantiate a written assessment that is published in an article. Most provide general information about trends in the industry, but some actually rank firms by name.

Comprehensive practice management surveys can take several hours to complete, but they provide the most useful information. The lengthy reports issued by the sponsoring organizations are valuable practice management tools that measure financial data and provide detailed information regarding financial performance ratios, staffing, compensation, and employee benefits.

Practice Management Surveys
The Investment News/Moss Adams Adviser Compensation & Staffing Study has been around for quite awhile. The report, which is very thorough, addresses current issues facing the industry and breaks out the analysis by firm size. It includes a detailed written evaluation of the survey results, as well as detailed summaries of financial and other information provided by the participating firms.

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