Last week we talked about how financial advisors can better understand their clients needs for a successful 2019. Using the soft side of client relationships ensures a seat at the table. Today we help you evaluate what are the critical numbers you need to monitor closely in 2019 to build a thriving financial advisory practice.

I understand that you are very good at knowing the critical numbers for your clients’ investments. I find many financial advisors are so busy with their clients’ investments and finding new clients, they overlook their own critical numbers. I believe if you focus on these critical numbers, you will build a successful business.

Since many of you are fee only organizations, it’s very important that you track these critical numbers. If you’re structured as a fee only company with your clients, you need to know these numbers. Many of the advisors I talk with don’t. Once you do, you are in a better position to decide what you need to grow a more successful advisory practice in 2019 and beyond.

Here are the critical numbers you should know as you plan for 2019 and beyond. This baker’s dozen of questions help you manage your practice more profitably today. They also help you better understand the value of your business tomorrow.

·         How many clients do you currently have?

·         What is the concentration of AUM (assets under management) between large and small clients?

·         What are your AUM average for each client?

·         How much does it cost to manage each clients account?

·         How much does your AUM grow or decrease each year?

·         As many of your clients retire, will this number decrease or increase?

·         How much does it cost to acquire a new client?

·         When do you break even with these new clients? 

·         What is the average lifetime value of your clients?

·         How long have you had your average client?

·         What is the annual increase of AUM per client? Percent and asset value.

·         Has your client profitability increased or decreased every year they are your client?

·         How much are your clients growing on a yearly basis?

These critical numbers are easy to obtain but many advisory practices do not look at these number until there is a problem. The question is how are these critical numbers trending? I bet you might be surprised by what these numbers tell you about the health of your business. What does it tell you about your current business model?

Take time between now and next week to get these numbers. Many of you know what they mean to the future of your organization. Next week I’ll share what I’ve seen when I talk with the many different advisory firms I partner with. 

See you next week.