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Retirement Planning > Spending in Retirement > Required Minimum Distributions

How to Measure Your Firm’s Overall Efficiency

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The start of the new year is always a great reflection period combined with aspirations for the upcoming year. You want to build on your successes from the previous year and set new goals and objectives for the next.

Advisors are very good at conducting this type of work for their clients. They build a financial plan to meet the client’s financial goals, then measure on a consistent basis how the plan is doing. How well do you employ the same process for measuring the efficiency of your firm? Consider measuring the following areas to evaluate your firm’s overall efficiency.

Of the tasks that affect your firm’s efficiency, some of the most challenging to measure may be the various operational requests processed by your office. This would include processing address changes, check requests, required minimum distributions and updating beneficiary information. Some of these items can be very time consuming and unfortunately might fall in the “just get it done” category without much attention to evaluating the process and identifying efficiency opportunities. Measuring the time spent on operational requests can be the first step in evaluating and identifying efficiency opportunities. 

How long does it take to convert a prospect to a client? I’m not talking about the sales process, but the actual time it takes to prepare the forms and documents. This might involve a client questionnaire, account forms or statements. How is your firm leveraging technology through this process? Perhaps you use form-filling software, an imaging system for sharing and storing documents and then manage the overall workflow using your CRM system. This can be a very labor intensive process, but there are efficiency opportunities that can be realized, and the total time required to complete the task should decrease as you utilize technology to streamline the process.

How long does it take to produce your client reports? Advisors who have outsourced this task should be a little ahead of the game with meeting this requirement, but may still need to verify their quality and accuracy. Measure the time required to complete this task during each reporting period to show if you are truly realizing the benefits of a scalable process. Sometimes the reporting process can entail several distinct tasks. If this is the case with your firm, track and measure the time required for each task. Many times it becomes very clear which area is slowing up the process.

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Trading and rebalancing client accounts are also critical for measuring your firm’s efficiency. If your firm uses model portfolios that are applied to a large number of accounts, then you should be experiencing nice scalability benefits as you add new accounts. The time required to rebalance shouldn’t dramatically increase with the addition of new accounts, but don’t simply make this assumption—measure how long it takes. Furthermore, consider measuring the time it takes to handle the trades for alternative investments. Often, we focus on the time required for standard trading situations and overlook the time spent with more unique investment products.

You also should measure the time your staff spends addressing your firm’s internal policies and meeting industry regulatory requirements. Tasks like continuing education, compliance training and human resource programs all fall under this category. These are very important tasks; however, the challenge is to complete them in a timely and efficient manner. It’s quite possible that your staff is already saying these responsibilities take more and more of their time.

Technology can help meet these requirements. For example, make sure that your firm is taking advantage of the compliance webinars offered by your broker-dealer, custodian or directly from the regulatory organizations. Many of these webinars are pre-recorded, which allows your staff to watch them during slower periods in the office.

You might be a little surprised when you first review your firm’s overall efficiency. Some areas might not take much time at all and others will stick out as taking a significant amount of time, and the principals of the firm will wonder how long it has been this way. Ultimately, regularly measuring your firm’s overall efficiency will show if you are realizing continued process improvement.