Beyond AUM: the business metrics advisors should audit before 2027

Financial advisors spend the year scrutinizing client portfolios. As 2027 approaches, practice management specialists say advisors should give their own businesses the same treatment – and stop relying on assets under management as proof that a firm is built to scale.

AUM can rise for years on market gains alone, masking thin margins, stretched teams and pricing that no longer matches the work. That gap is showing up in industry data. The Ensemble Practice’s 2026 True Ensemble Growth and Profitability study, based on 2025 financial data from 173 advisory firms, found an average operating profit margin of 38.6% even as organic growth from new clients hovered near historic lows, a disconnect InvestmentNews examined when it reported that advisory firms are hitting record profits while their growth engine stalls. 

Three practice leaders interviewed by InvestmentNews say the fix starts with a year-end audit of a few overlooked numbers, followed by a short list of changes with deadlines attached.

Which metrics matter beyond AUM?

Dana Burkhardt, vice president and head of business consulting at AssetMark, the Concord, California-based wealth platform, said a bigger practice is not automatically a more profitable one. She points advisors to operating profit margin, which is the share of revenue left after operating expenses. She also tracks revenue per household, revenue per team member and the true cost of delivering the service they have promised. Advisors should also separate growth from new relationships and net new assets from growth handed to them by the market, and track whether they are keeping existing clients. 

“The question is whether growth is strengthening the business or asking the advisor and team to work harder to keep up. A key point our consulting team makes to many advisors is that AUM doesn’t cover the bills, revenue does,” Burkhardt said.

Mary Mock, senior vice president and head of distribution at Cincinnati-based Touchstone Investments, focuses on capacity. The advisor-to-household ratio shows whether advisors are carrying more relationships than they can serve well, which drags on both efficiency and service quality.

She also recommends tracking the dollar-weighted average age of the client book. That figure weights each client’s age by the assets they hold, and it signals whether a practice is anchored to retirees drawing down assets or building ties with younger investors. A break-even analysis, which identifies the revenue needed to cover operating costs, rounds out the picture.

“Looking at these metrics, along with the dollar-weighted average by household, can help advisors evaluate the long-term sustainability of their practice, particularly when considering succession planning, a merger or an eventual sale of the business,” Mock said.

Joey Small, a private wealth advisor with Ameriprise Financial in Little Rock, Arkansas, warned that asset growth can create a false sense of success. 

“I’ve seen practices grow their assets for years while operationally becoming more complex and less efficient. I look at whether our business is generating stronger margins, creating referrals organically by delivering an exceptional client experience, and developing leaders who can make decisions effectively. To me, those are signs you’re building a true enterprise,” Small said.

For context, the median advisory firm posted an operating margin of 27.8%, nearly double those of US accounting and law firms, according to the latest findings on advisor growth and profitability benchmarks from the InvestmentNews Advisor Benchmarking Study. 

Finding pricing and client segmentation gaps

Mock said the audit should begin with an honest look at how clients are spread across AUM bands. Segmentation drives service levels, service levels determine how the team spends its time, and time ultimately should drive price.

“Over time, pricing can become inconsistent as advisors make concessions to win business or accommodate individual clients, so it’s important to reassess whether those arrangements still make sense,” Mock said. Touchstone offers a structured program, its Practice Analysis Reviews, to help advisors evaluate how their firms operate.

Burkhardt frames the same exercise as a test of alignment between who an advisor serves, what they charge and what they deliver. Asset size alone is a poor guide, she said. Advisors should weigh the complexity of each relationship and the time it consumes.

From there, she suggests examining how work moves through the office. That means finding the tasks on the advisor’s desk that someone else could handle, spotting where responsibilities are blurred and checking whether the team is using technology it already pays for. The answers point to whether a firm needs new pricing, clearer service commitments, better delegation or another hire.

“Advisors working with AssetMark have access to modeling tools that allow them to evaluate these metrics. For those advisors not working with AssetMark, we encourage them to use ChatGPT, CoPilot or another AI tool to help them capture and analyze this data,” Burkhardt said.

That advice tracks with AssetMark’s 2026 Advisor Insights: Artificial Intelligence Report, which surveyed 400 US-based financial advisors and found AI is saving advisors more than 200 hours a year. 

Small argued that when growth slows, firms too often diagnose a marketing problem when the real issue is allocation: where the advisor’s time goes and whether top performers are focused on the highest-value work.

“In my experience, growth is usually held back by misallocated attention long before it’s held back by a lack of opportunity,” Small said.

Why practice improvement plans stall

All three said the obstacle is rarely knowing what to fix. Burkhardt said advisors struggle to find the time and structure to follow through, because client demands always compete for attention. Her most frequent recommendation is to treat the business like a top client, with recurring meetings that are protected as firmly as any client review.

“Heading into 2027, I would encourage advisors to choose two or three changes that will make the biggest difference in profitability and capacity, then break them into a 90-day plan with clear owners and monthly progress reviews,” Burkhardt said.

Mock said day-to-day operations crowd out strategic work, and that outside accountability helps.

“Having a plan is one thing, but accountability is what helps advisors follow through; it’s much like going to the gym, where having a trainer or workout partner can make it easier to stay consistent,” Mock said. She advises advisors to review how they spend their time, block off planning days away from daily duties and make sure the whole team is aligned on priorities for the year ahead.

Small said plans stall when firms confuse activity with progress, building long lists of initiatives without deciding what no longer deserves time, capital and attention.

“As we head into 2027, advisors should be asking what they need to stop doing, not just what they need to start doing. Growth often follows clarity,” Small said.