One of the big advantages registered investment advisers have over wirehouse advisers is the extent of the control they have over their business’ performances. While RIAs can drive their own success by having a handle on all aspect of their businesses, wirehouse advisers, perforce, have a systemically myopic view of top-line growth.
You have probably read a lot about “big data” and a whole industry that helps businesses get a handle on measuring “metrics that matter.” One of the keys to success for an RIA is knowing both what to measure and how to measure it.
What are you tracking throughout the year: Financials? Business development? Client assets? Investment performance? Do you have these numbers at your fingertips? Or do you have to spend cycles manually collecting the data and analyzing the numbers?
The most efficient way to collect, analyze, track, and present this data is by using a dashboard. And I do mean dashboard in the most obvious sense — like the one in an automobile that should show you everything you need to know to keep on driving.
What makes for a great dashboard not only is the information it displays, but also what it looks like: simple, clear, and uncluttered. However, as you consider the metrics for any dashboard you need to address the following questions:
1. What is its purpose? Who will be seeing it? And who will be using it? (Are they front-line client service associates and analysts, or the advisers?)
2. What decisions need to be made on the basis of the information being presented?
Management also needs to view both strategic and tactical data to make sure the goals of the firm are being met. So for the management level dashboard you will, in addition, need to address the following considerations:
1. Are the metrics tied to critical firm business outcomes?
2. Do the metrics provide insight into how your team is affecting these outcomes?
3. Do the metrics help demonstrate your team’s overall effectiveness and financial value?
4. Does the dashboard provide insight into what is, and isn’t, working?
I enjoy working with RIAs to answer these questions, and building, with them, meaningful dashboards that help them identify and track their goals. And there should be dashboards — plural — both across the firm, and down to the individual adviser level. Only by understanding your critical business outcomes, both firmwide and on an individual level, and how the different parts of your team are expected to affect these, will you be in the best position to define your metrics and subsequently, use them effectively.
Additionally, a good dashboard should contain updates to what I like to call qualitative strategic initiatives. These are the continuing projects that are the actual work people do to meet their goals. For example, one firm ! I work with has several qualitative strategic initiatives to track: improvements in client satisfaction scores, the development of a new client report, a portfolio of new marketing materials and new M&A opportunities. Without these, your dashboards run the risk of turning into piles of meaningless data points and pretty charts.
Once the whole team, from top to bottom, has access to all the information they need to do their jobs — both as a firm and individually — the benefits can be enormous. For instance, with the ability to track their goals, successes, failures and even aspirations, the culture of caring for, and helping develop, the careers of your professionals simply become a natural part of your firm’s DNA: an essential condition for any really successful firm.
Another particularly successful firm with which I work uses dashboards to undert
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