Establish Key Performance Indicators
After creating a set of bite size actionable steps, it is time to begin tracking, evaluating and improving the business plan based on what you learn as those steps are executed. To effectively Accelerate Advisor Success, understanding what to track and measure is critical. For this, you need to know what your indicators of progress and success are.
The starting point is clear articulation of a set of Key Performance Indicators (KPIs) that will provide effective measurement of progress toward business goals. Once defined, you need to ensure that leaders and advisors clearly understand the KPIs and why they matter.
In brief, KPIs are what an advisor should look at, to assess the health, progress, and success of their practice. Business leaders use KPIs to regularly measure how effectively they are progressing toward their strategic goals and objectives. To be useful, KPIs must be well-defined, quantifiable, and directly linked to achieving the goals of the business.
KPIs are divided into two types:
- Leading Indicators, which provide insight on what is yet to come
- Lagging Indicators, which show exactly where you are relative to your goals
Leading Indicators are measurable factors that signal future results and are often activity-based. Think of it like a yellow light at the intersection indicating the impending red light. Although leading indicators may not be as precise as the stoplight pattern, they can help you predict how your actual results will compare to your goals.
- Number of referrals (Firm and advisor)
- Number of meetings with clients (Firm and advisor)
- Number of meetings with prospective advisors (Firm)
- Managed account platform usage (Firm)
Lagging Indicators are measurable factors that change as goals are achieved and include metrics that measure growth or progress. They are most useful for defining where you are in relation to your end goals and identifying longer-term trends. Lagging indicators track how effectively an organization is executing on its’ strategic plan and provide the framework for fact-based discussions around progress, effectiveness, and efficiency.
- AUM (Firm and advisor)
- Client engagement (Firm and advisor)
- Profit and revenue growth (Firm and advisor)
- Advisor revenue recruited (Firm)
KPIs provide visibility and clarity to business leaders so they can effectively drive attention and resources to activities that are most valuable to their business. Many institutions currently have little or no visibility of advisor-level activities aligned to the business plans advisors are striving to execute. This lack of visibility and focus makes it difficult to predict results and Accelerate Advisor Success.
KPIs should be well understood by everyone who monitors or influences them. Regular discussion about the KPIs, why they are important, and their current and trending scores will improve the team’s engagement on activities that affect these measures. In addition, this regular discussion creates an environment of learning and sharing where colleagues discuss what is working and what is not. Financial institutions that leverage these learnings are more likely to achieve their goals.