Russell Investments announced Wednesday the availability of its new Advisor Health Index. The tool, available on its Helping Advisors site, provides a means of evaluating an advisor’s practice by means of benchmarks across five strategic business measures; it also offers a personalized score.
Advisors answer seven questions about their practices. Depending on how the practice is structured and its stage in the business life cycle, it is classified against a category benchmark based on other practices with similar attributes; there are five different practice categories.
Once a practice has been classified, it is given a Health Index score and benchmarked against peers within its category on five different strategic business measures: total revenue per client, recurring revenue percentage, turn (revenue/AUM), active clients per FTE and AUM per client. Russell has weighted the measures based on how important it believes they are to the growth and success of an advisory firm.
The score, between 0 and 100, reflects how the firm compares to category practices within the top quartile. Higher scores indicate closer matching, while lower scores highlight differences between a firm and its high-performing category peers. The tool also provides details to the advisor on how his firm is benchmarked against each of the five strategic business measures.