KPIs Every Financial Advisor Should Know

Key performance indicators, or KPIs, measure how well your firm is doing in terms of meeting goals. At a glance, KPIs can tell you whether your firm is moving in the right direction or veering off-track. On a deeper level, these indicators are helpful when it comes to developing strategic plans for the sustainability and growth of your firm.

Ready to grow your client base? SmartAsset AMP can help you take your marketing to the next level.

Understanding KPIs for Financial Advisors

KPIs are not specific to the financial services industry; they’re a tracking tool that virtually any type of business can use to measure performance. That being said, KPIs can tell advisors a lot about the health of their businesses and how they’re doing financially, operationally and competitively. Tracking performance indicators enables advisors to make informed decisions about their businesses, which is often the key to building a sustainable and profitable firm for the long term. 

Consider this: advisors anticipate annualized growth of 12.4% through 2027, according to the Natixis 2024 Global Survey of Financial Advisors. ¹ U.S.-based advisors will need to add an average of 16 new clients to their book of business per year to reach that goal. If you have a similar goal, tracking KPIs can help you get there. 

Here are some helpful tips for using performance indicators to gauge your firm’s health:

• Start by defining your primary business goals or objectives.
• Choose KPIs that are specific, easily quantifiable and relevant to your overall goals.
• Clearly define each indicator and the source of the data you’ll track.
• Establish a consistent frequency for tracking indicators.
• Determine a framework for analyzing and evaluating the data you collect.
• Share KPIs with your team and incorporate them into business planning and strategy sessions.
• Benchmark your firm’s performance against industry standards. 

The most effective KPIs for financial advisors are easily measured, actionable and designed to show proof of progress. KPI tracking software can simplify the process of collecting and organizing data. You might consider adding a KPI program to your tech stack if your customer relationship management (CRM) software doesn’t offer this level of functionality.

Client Acquisition Simplified: For RIAs

• Ideal for RIAs looking to scale.
• Validated referrals to help build your pipeline efficiently.
• Save time + optimize your close rate with high-touch, pre-built campaigns.

CFP®, CEO

Joe Anderson

Pure Financial Advisors

We have seen a remarkable return on investment and comparatively low client acquisition costs even as we’ve multiplied our spend over the years.

Pure Financial Advisors reports $1B in new AUM from SmartAsset investor referrals.

Target New Clients This Year

I am a registered fiduciary*

Book Your Free DemoNot sure? Learn more about AMP.

KPIs for Financial Advisors to Track

Performance indicators can be divided by category or by type. Some KPIs are operational, while others are strategic. Below, you’ll find some of the most helpful indicators that you can track for your business.

Financial KPIs

Every advisor wants to run a profitable business, ideally one with revenues that increase year-over-year. If you’re assessing the financial side of your business, you might find it helpful to track the following:

• Net profit
• Gross profit
• Debt-to-asset ratio
• Cash flow
• Total assets under management (AUM)
• AUM growth
• Revenue per advisor
• Net profit per advisor

Net profit tells you how much revenue remains in the business after all outflows are calculated for a set period of time. Gross profit, meanwhile, measures your overall profitability. At the other end of the spectrum, revenue per advisor and net profit per advisor can tell you which members of your team are your strongest performers.

Client-Focused KPIs

How well do you know your client base? Tracking these indicators can help you better answer that question, which can prove useful when creating marketing campaigns:

• Number of households served
• Average revenue per client
• Net profit per client
• AUM per client
• Time spent per client

Looking at these data points can give you a better idea of which segments of your client base generate the most or least revenue, and how that corresponds proportionally to the time spent working with each client.

You can also look at two other categories of indicators: client acquisition and client retention.

Client Acquisition KPIs

Gaining new clients for your firm can contribute to growth, but you also have to retain them. Among advisors polled by Natixis, 43% expressed concerns surrounding the $84 trillion set to change hands in coming years through the Great Wealth Transfer. Specifically, those advisors are worried they won’t retain client assets that are inherited by their spouses or children. 

If you have similar concerns, you may consider tracking these KPIs:

• Client retention rate
• Monthly recurring revenue per client
• Customer satisfaction score
• Average client tenure
• Customer lifetime value (CLV)

Net promoter score (NPS) is another useful indicator to monitor; this can tell you how likely your clients are to recommend your firm and services to others. You might use a client satisfaction survey to measure this metric.

Strengthening advisor-client relationships could help to improve retention rates. Seventy-six percent of advisors in the Natixis report cited relationship-building as being critical to client retention. Tracking KPIs that measure client communications or engagement could offer insight into where you may have room to improve.

Client Retention KPIs

Gaining new clients for your firm can contribute to growth, but you also have to retain them. Among advisors polled by Natixis, 43% expressed concerns surrounding the $84 trillion set to change hands in coming years through the Great Wealth Transfer. Specifically, those advisors are worried they won’t retain client assets that are inherited by their spouses or children. 

If you have similar concerns, you may consider tracking these KPIs:

• Client retention rate
• Monthly recurring revenue per client
• Customer satisfaction score
• Average client tenure
• Customer lifetime value (CLV)

Net promoter score (NPS) is another useful indicator to monitor; this can tell you how likely your clients are to recommend your firm and services to others. You might use a client satisfaction survey to measure this metric.

Strengthening advisor-client relationships could help to improve retention rates. Seventy-six percent of advisors in the Natixis report cited relationship-building as being critical to client retention. Tracking KPIs that measure client communications or engagement could offer insight into where you may have room to improve.

Marketing KPIs

Marketing KPIs can tell you how effective your marketing campaigns are, as well as which efforts are generating the best return on investment. Some of the indicators you might find useful include:

• New visitors to your website
• Returning visitors to your website
• Search engine rankings
• Email opt-in rates
• Email open rates
• Email click-through rate
• Unsubscribe rates
• Social media follower count
• Social media engagement
• ROI for digital ad campaigns

These indicators can help you track the performance of your digital marketing plan. You can also review KPIs for any digital marketing tools you’re thinking of using. For example, if you’re interested in exploring the benefits of SmartAsset’s Advisor Marketing Platform (AMP), consider the number of new leads generated per month, the cost per lead and the average AUM per lead. 

If you’re tracking offline marketing campaigns, such as print ads or direct mail marketing, you might collect data on cost-per-lead or cost-per-conversion.

Build a Better RIA

Drive growth with automation, not headcount using the all-in-one advisor marketing platform.

Get Started

Frequently Asked Questions (FAQs)

Why Should Financial Advisors Measure Performance?

Measuring performance is the best way to see how well your firm aligns with your goals and expectations. Without any type of benchmark to measure yourself against, it’s difficult to determine whether your momentum is propelling you closer to your goals, or further away from them.

What Is Benchmarking for Financial Advisors?

Benchmarking means comparing your firm’s business practices against your competitors or the industry as a whole. You choose a baseline or standard to measure your firm against, and use your findings to determine which areas of your business need improvement the most.

How Can Financial Advisors Monitor KPI Results?

Utilizing KPI tracking software is a straightforward way to organize data and analyze results. These programs can allow you to create KPI tracking templates or dashboards that you can then use to track the various indicators you’re monitoring.

Bottom Line

Key performance indicators can shed light on how your firm is doing right now, and where you may need to improve to reach your future goals. Tracking these and other KPIs is an integral part of business development for advisors who hope to continually reach higher performance levels.

Tips for Growing Your Advisory Business

• Tracking marketing results is important for understanding the effectiveness of your various campaigns. If you’re looking for a way to simplify marketing, you might consider partnering with an advisor marketing service. SmartAsset AMP (Advisor Marketing Platform) is a holistic marketing service financial advisors can use for client lead generation and automated marketing. Sign up for a free demo to explore how SmartAsset AMP can help you expand your practice’s marketing operation. Get started today.
• Collecting data on employee KPIs helps you evaluate how your team performs, outside the scope of new clients added or revenue generated for the firm. For instance, you might track things like turnover rate, absenteeism rate and overall productivity. You may also track employee satisfaction if you’re interested in reducing turnover and retaining top talent.

Photo credit: ©iStock.com/VioletaStoimenova, ©iStock.com/ArLawKa AungTun, ©iStock.com/ipopba