Cerulli-Invesco tool lets financial advisors see how practices measure up

Want to know how your business stacks up against the competition? A new product from Boston-based Cerulli and New York-based Invesco may provide answers.

The product, called The Practice Innovation Index, is part of Invesco Total CX, an all-in-one platform that includes content and coaching designed to help planners communicate with clients and maximize both client feedback and business results. Cerulli, who has been collecting wealth management data for over 30 years, provides the data that powers the comparison. Invesco provides resources that help planners address weaknesses in their practices.

The Practice Innovation Index works like a questionnaire. A planner spends approximately 20 minutes answering 35 questions in the areas of practice management (which includes succession planning, billing and technology), new business development (new clients, referrals and external strategic partnerships ), client services (client experience and communications) and wealth management (service offerings, assets under management, portfolio construction and results). The index then ranks a planner against their peers by assigning a percentile for the general topics and sub-topics explored in the questionnaire.

Armed with knowledge of practice areas that could benefit from specific attention, planners then have access to an online library of articles on how to consolidate everything from back-office technology to customer experiences. They can also benefit from personal coaching. Use of the index and tracking resources and services, company representatives said, are free.

A soft launch of 300 planners rounded out the index in early May, but none scored in the 100th percentile in any of the four categories, said Asher Cheses, associate director of wealth management at Ceruli. “Every adviser has areas they need to improve on,” he said.

Three points of differentiation
Paul Brunswick, who heads Invesco Global Consulting, said most advisers know there’s room for improvement, but they aren’t necessarily able to identify areas of weakness in their practices. Also, they don’t always know what they can do to solve problems.

“The index bridges the gap between knowing and doing,” Brunswick said. “Bridging the gap creates success.”

There aren’t many diagnostic tools on the market, Brunswick said, adding that this product has three points of differentiation.

First, his calculations are based on Cerulli numbers. This company already has a significant amount of data on wealth management companies and the amount of information will increase as more and more people use the index.

Second, the index works for all types of planners, from independent practitioners to large brokers.

Finally, Brunswick said, the indexing tool connects planners to a set of solutions.

“Perhaps your practice would be better if you had a wealth management checklist,” he said. “We are related to one of them.”

Planners can access approximately 100 articles and other tools that help improve various aspects of a practice.

So far, planners using the index have seemed particularly interested in whether they offer a full wealth management experience to their clients.

“They like the checklist,” Brunswick said.

Planners’ interest was also strong in understanding and connecting with customers, stratifying customer groups, conducting effective customer reviews, optimizing employee performance and leadership, managing meetings effectively. , career development and succession planning.

“We didn’t have any areas that people find uninteresting,” Brunswick said, although some index users are less interested in technology. This is at least partly because the circumstances of the job can control the planner’s decisions about technology.

What kind of practice do you want?
A person who wants to play basketball well probably cares more about their free throw average than someone who is mostly interested in ice skating. Likewise, planners who use diagnostic tools to see how they stack up against their peers will have more productive experiences if they first develop a sense of what they want from their practices, said Cameo Roberson, Founder of Atlas Park Consulting in Union City, California.

“Products like this are good for telling you how well you’re doing,” Roberson said, “but I don’t know if they’re good for helping you figure out what you want to do in the first place.” A financial planning practice should be based on the owner’s values, goals and lifestyle. “Once that’s identified, you can figure out what you need to build to help you achieve those goals,” she said.

Many people, including those in the wealth management industry, tend to think that every firm wants to maximize assets under management and build as big a business as possible. For some, especially wirehouses, that’s still true, Roberson said, adding there’s nothing wrong with this model.

But she also sees a shift toward planners crafting practices that make sense to them and their values.

“I have a client who wants to work with single people approaching retirement. He builds a lifestyle practice. I also see clients developing assets under management and letting that income subsidize passion projects,” Roberson said.

When planners use a product that compares them to their peers, they should keep in mind that peers may share their height or other demographics, but may not share their vision.

“Don’t decide you’re not successful because you’re not like them,” Roberson said. “Your vision centers you, brings you back to what you think is important and how you want to build your practice.”

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