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Practice Management > Building Your Business

Tracking Your Advisory Firm’s Vitals

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As the end of the year approaches, it may be a good time to take a fresh look at your business and your goals for the coming year. When you know your business well, you should be able to create a better budget and improve operational efficiency. That will be the subject of this post. 

Tracking Your Vitals

Every business has an array of vital statistics. You might consider using an Excel spreadsheet to log the data and analyze it on a regular basis. While this not intended to be an all-inclusive list, here are a few items to consider:

1)      Assets Under Management

2)      Income

3)      Expenses

4)      Fee Analysis

5)      Goals and Initiatives

Let us discuss each of these. 

Assets Under Management

How have your total assets changed from the previous month as well as on a year-over-year basis? Client deposits and withdrawals, and market fluctuations, will affect this. It is a good idea to keep track of the broad allocation of every account (stocks, bonds, cash, alternative and other) an, to do the same on an advisor or firm level. The latter is useful to know how much fluctuation you might expect from market conditions. This is also an area of focus for client accounts. 


Projecting your income will be easier when you know the broad allocation of the firm, assuming you are fee-only. It is also good to monitor your income month-over-month and year-over-year so you can understand how it is trending. 


This is a good time of year to revisit your expenses for the remainder of the year and enter your expected expenses for 2016. How much will you allocate to various areas such as technology, business development, staff, etc.? This should be as comprehensive as possible. 

Fee Analysis

Again, assuming you are a fee-only advisor, what is your average fee? For example, if your fees are $10,000 per month and you have $10 million under management, your average fee percentage would be 1.2%. Moreover, how has it changed over time? 

Goals and Initiatives

Goals are an important part of every business. Here are five categories to consider:

1)      Business Development

2)      Asset Management

3)      Financial Planning

4)      Compliance

5)      Customer Service

Each one is important and there may be more than is listed.

It is important to know your business, understand its trends, and consider what changes you should implement. While this is a very basic overview, perhaps it will stimulate your thoughts. All we are really talking about is planning for the business.

Until next time, have a great week and thanks for reading!


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