How business intelligence can help raise your game

Submitted by jason.mousseau on October 2, 2017

How business intelligence can help raise your game

Jonathan Beatty

Senior Vice President, Sales and Relationship Management, Schwab Advisor Services

Jonathan Beatty describes how a successful firm leverages data from Schwab's RIA Benchmarking Study to align staffing with growth.

Independent RIA growth is expected to outpace that of all other advisor channels in coming years, but with success comes more competition, making growth at the firm level harder to achieve. For Vista Wealth Management, focusing on strategic direction, driving growth through new client acquisition, and aligning staff accordingly are keys to success. Find out where your firm stands in critical business measures such as asset and revenue growth, staffing, and productivity by participating in the 2017 RIA Benchmarking Study from Charles Schwab.

I've seen that many successful firms, like Vista Wealth Management, achieve their goals by relentlessly focusing on and planning for the future. They know where they want to go and are willing to invest in people and infrastructure to make their businesses stronger. Located in the San Francisco Bay Area, Vista is an example of a firm that has attracted a significant number of new clients and, as a regular participant in our annual Benchmarking Study, relies on study insights to inform its strategic vision.

In the words of CEO Michael Spector, growth matters because it attracts the best people, who will in turn build the best firm. The firm sets annual goals toward a 10-year growth model and leverages many strategies to attract new clients.

For example, rather than relying on only a few staff members for business development, Vista counts on everyone to help the firm grow and even offers an internal program to support the staff in seeking referrals. Additionally, the firm fosters external business relationships to help generate referrals and is considering push marketing strategies to promote its brand and services. As these practices indicate, Vista understands that long-term goals depend on acquiring new clients and growing the client base—and it also puts that idea into action.

"My preference is to grow by attracting new clients. You have to look carefully at acquisition opportunities, because there's a chance the assets you're buying could be depreciating assets."
—Michael Spector, CEO, Vista Wealth Management

Attracting clients with the right staff

As Schwab's 2016 RIA Benchmarking Study showed, firms are focused on human capital to propel success:

  • Seventy-two percent of firms planned to hire more staff in the next 12 months.
  • Seventy-five percent of firms planned to add either relationship managers or investment professionals this year.
  • A noteworthy 11% of firms were looking for dedicated management to free up principals and advisors to focus on serving clients and generating new business.

Remember that satisfied clients and strong partners can be the key to your firm's future. Seventy-five percent of new clients come through referrals.

Based on projected growth, Vista then uses its benchmarking data to figure out how many new advisors as well as administrative and operations staff to add along the way. Vista is able to retain people and grow profitably by following two basic principles: "We rightsize the headcount and institutionalize everything," Spector said. The firm's goal is to become a partner to its clients, providing the best independent advice on all their financial affairs. Spector's vision: "Help clients make smart financial decisions every day."

Putting benchmarking data to work

It's the job of Vista's chief operating officer, James Knight, to make the vision come true. To figure out the optimal number of people to provide that independent advice, Knight turns to the firm's customized Peer Benchmarking Report. He examines metrics for Vista and its competitors and analyzes how growing firms are staffed. Useful metrics include:

  • Clients per professional
  • Cost of staff time
  • AUM and revenue per staff member
  • Assets and revenue per client

If Vista's numbers are higher or lower than those of its peers, Knight and Spector analyze what that means and what to do about it. Could the existing staff do more? Should the firm invest in technology to increase productivity? Has hiring fallen short? Does everyone understand and use the firm's institutional processes? Knight has gone so far as to build dashboards in Salesforce to make it easier to track and review the data.

Yes, it takes time to pull together benchmarking data. But Vista finds it well worth the return on investment, and after the first time, it’s much easier, because data is prepopulated for previous participants.

"I'll never skip a year again," Knight said. "It's a lot easier to keep it up every year."
—James Knight, COO, Vista Wealth Management

Benchmarking your firm for growth

I hope you will make it a regular practice to participate in Schwab's annual RIA Benchmarking Study, as Vista does, to help you chart your firm's course. As the largest such study in the industry, it can help you glean insights, learn how you and your peers are performing, and plan for the future.

The optional compensation portion of the study is particularly relevant to the issue of staffing.

The optional compensation portion of the study is particularly relevant to the issue of staffing, and I hope you will consider completing this section. Firms that participate in the compensation study receive a customized Compensation Report and access to our online Compensation Benchmarking Tool. The report compares your firm’s data with national responses as well as responses based on several labor markets. You will also see how growing firms use equity to help attract and retain talent—increasingly important in recruiting the next generation of advisors.

All information you share will be treated with confidentiality. If you have questions about participating in the study or want more information about it, please reach out to your Schwab Relationship Manager for additional guidance.

Learn more

Participants in the 2017 RIA Benchmarking Study will receive a customized Peer Report that provides a side-by-side comparison of their firm's data against that of other firms with a similar AUM and business model. Firms that choose to participate in the compensation part of the study receive our Compensation Report and access to our online Compensation Benchmarking Tool.

The RIA Benchmarking Study is part of Schwab's Business Consulting Services, which provides a wide range of programs and services to help you grow and manage your business. Contact your Schwab Advisor Services Relationship Manager to take advantage of these resources or visit Schwab Advisor Center® (login required).

Also, if you're thinking about becoming an independent advisor, consider a custodian who invests in your success. Contact us to learn more about the benefits of a custodial relationship with Schwab.