Numbers Game

Numbers Gameblog

Latest research and trends from around the financial advisory business, updated regularly highlighting stats, charts, infographics and all things data.

Dec 15, 2014, 11:39 AM EST

Most advisory firms don't have a strategy for landing client referrals

By Matt Sirinides

There are a lot of figures that get thrown around about attracting new clients in the advisory industry. One that we frequently hear at InvestmentNews Research is that approximately 70% of a typical advisory firm's new business is referral-driven. In a 2012 study we conducted, the typical firm had earned nearly 50% of their new revenue in the prior year from client referrals alone. If professional referrals are included, that figure jumps to 70%, positioning referrals as by far the number one source of new business.In this year's InvestmentNews Financial Performance Study of Advisory Firms, we asked advisers: Do you have a formal, standardized process in place at your firm for asking for referrals from both third-party professionals and existing clients?What we found surprised us. Only about one out of every three firms have a formal process, which tells us that firms often take a passive approach to a strategy that accounts for the... Read full post

Nov 20, 2014, 7:27 AM EST

What top firms do differently with adviser technology

By Matt Sirinides

Today we launch the InvestmentNews 2015 Adviser Technology Study survey. Join the conversation and take the survey now.We do a lot of research here at InvestmentNews around practice management, from taking the pulse of advisory firms' financial performance to benchmarking the compensation and staffing of the elite firms in the industry. But after analyzing a firm's financial health and the single biggest factor on their bottom line — staffing — what practice-oriented feature affects advisory firm performance most?Tech is at the root of just about every basic function of today's advisory firm. Not only does it help advisers run their business — from cloud applications that have replaced servers to software solutions indispensable to business development such as customer relationship management software — it is also often central to the client service experience and acting at the heart of their marketing apparatus.... Read full post

Oct 16, 2014, 11:20 AM EST

Three ways top-performing firms stand out

By Matt Sirinides

Each year, InvestmentNews' benchmarking series looks at how top-performing firms rise above market conditions and industry competition to set themselves apart. This year's study — the InvestmentNews 2014 Financial Performance Study of Advisory Firms — is no different.With the industry's continued, unprecedented growth in 2013, we developed a methodology to identify top performers by not only quantitatively measuring the financial performance of participating firms, but also measuring stress factors such as owner income and earnings before owner compensation. By doing this, we were able to isolate the factors that contribute to an individual firm owner's success and the impact it has on firm development. Top performers represent the top quartile of a rank of more than 300 participating firms based on a composite of the following firm metrics:Revenue per professional: The amount of revenue generated per client-facing... Read full post

Oct 8, 2014, 3:45 PM EST

The evolution of how advisory firms monitor and sustain their success

By Matt Sirinides

2013 was another period of sky-high revenue and AUM growth and strong profit margins at advisory firms, according to the InvestmentNews 2014 Financial Performance of Advisory Firms. More and more, the modern advisory firm is looking like a business rather than the small practice of the past. That maturation process has been accompanied by an evolution in the way firms monitor and sustain their success. There are many narratives at work in this period of asset and revenue acceleration, so we asked the experts to provide insight into this year's study results. In our recent webcast, research and consulting pros Philip Palaveev, Brandon Odell (both of the Ensemble Practice and partners of InvestmentNews Research on the Excellence in Practice Management Research series), and Mark Tibergien, CEO and managing director of Pershing Advisor Solutions, break down the results.The slides below accompanied the webcast, and offer a glimpse at what... Read full post

Sep 5, 2014, 3:12 PM EST

11 slides prove the demand for financial advice isn't going away

By Matt Sirinides

As technology changes the way investors work, communicate and invest, new opportunities for advisers are emerging. At InvestmentNews Research we wondered: How are clients' financial goals evolving, and how can advisers best meet their needs? We surveyed nearly 1,000 investors, gauging their appetites for financial advice. We separated them into two camps, those who already work with a financial adviser, and those who don't: the DIY investor. In a companion survey, we asked over 500 advisers how they believed their services and business models would change, with investor demand in mind, in the near- and long-term. Click through the slides below for some of the top-level findings of our research, in what is the first installment of our three-part "Future of Advice" series.... Read full post

Aug 29, 2014, 10:30 PM EST

The real reason behind advisory firms' big gains in AUM

By Matt Sirinides

As the bull market continued to advance throughout 2013, advisory firms experienced another banner year, with the average firm seeing a 19.2% increase in AUM year-over-year, according to preliminary data from the 2014 InvestmentNews Financial Performance Study of Advisory Firms.... Read full post

Aug 1, 2014, 4:02 PM EST

Broker comp puts pressure on wirehouse profit margins

By Mason Braswell Matt Sirinides

Executives at the four largest brokerage houses have set their sights on higher profit margins. But even as they trim expenses, streamline branch offices and reduce back office staff, they're struggling with compensation costs for brokers.... Read full post

Jul 25, 2014, 2:39 PM EST

'Clients of the future' will want financial advice, but not how it's delivered today

By Matt Sirinides

In a recent InvestmentNews Research survey, we set out to identify the expectations of younger investors — the “client of the future” — as well as their adviser counterparts. The goal was to capture how the demands for and delivery of advisory services might look in the not-too-distant future. Advisory firms have experienced rapid expansion over the past five years, and for many, strategically managing that growth has involved structuring their practices to build businesses that will remain profitable for years to come. For advisers in this space, looking ahead to the next generation of clients is a critical part of this process. Who, then, is the client of the future, and what set of expectations will they bring with them? To answer that question, we looked at a subset of 225 investors — nearly a quarter off all investor respondents — who were under the age of 45 and had less than $500,000 in... Read full post

Jul 9, 2014, 3:49 PM EST

How advisers will communicate with clients in five years

By Matt Sirinides

In a first for InvestmentNews Research, we recently fielded a survey that reached out to both advisers and investors to get a sense of whether advisers are prepared to meet the expectations of the next generation of clients. Among the questions we sought to answer was, how will the basic delivery methods of financial advice change over the next five years? With the rise of the smartphone — 85% of investors own and use one regularly, and the device has higher ownership rates than laptops, desktops, or tablets among our respondents — the means of communicating with clients have become as varied and nuanced as ever. Nearly 9 out of every 10 clients can, with a device right in their pocket, communicate via phone, text, video conference, email or social media in an instant, and the channels for doing so are constantly evolving. In this first post recounting some of the results from the study, we track how advisers and investors... Read full post

Jul 2, 2014, 3:39 PM EST

Now is the time for advisers to embrace social media

By Matt Sirinides

Fear of running afoul of regulators continues to dampen adviser participation in social media. Obstacles remain in place for advisers who want to use social media as a means of developing their voice online, establishing their brand, driving referrals and engaging with their clients.An InvestmentNews survey of more than 450 advisers regarding social media usage and policy found that the biggest obstacle to using social media was uncertainty over compliance and regulatory issues, with 55% of respondents stating that such issues were their primary challenge when using social media for business purposes. Couple that confusion with outright firm-level bans on certain networks — 55% of advisers in the same survey say that their firm bans at least one network — and a grim picture emerges. One of an industry where one out of every two advisers is either forbidden from at least one social network, or daunted enough by regulators to ... Read full post

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