Invesco, the $1.6 trillion asset manager, and the consulting firm Cerulli Associates have teamed up to create a free tool that benchmarks wealth management firms against each other according to their business development, wealth management, client service and practice management.
After wealth managers complete a 20-minute, 35-question survey, the Practice Innovation Index shows them how they stack up against peers and provides them a customized roadmap to help them grow their businesses. The benchmark that firms are compared against is created using Cerulli’s two most recent yearly surveys of 1,500 wealth managers.
The benchmarking tool was developed and tested for almost a year before Wednesday, when it became available for any advisor to use for free.
The tool is hardly the first that gives wealth managers a sense of how well their business is doing relative to others, but Invesco and Cerulli say it stands out.
“A lot of the historical benchmarking tools that have been put forth in the industry are very focused on productivity or assets and are essentially just a ranking tool for advisors. Whereas this tool is much more comprehensive,” Asher Cheses, associate director of wealth management consulting at Cerulli told RIA Intel. “[The tool] gets into the underlying elements of an advisors practice, and so it goes a lot more in depth in terms of client servicing, business development, technology, wealth management.”
More than 270 advisors have already taken the diagnostic test that asks for the five-year compound annual growth of their assets under management and the number of households they work with. It also asks advisors to share the general allocations of their client portfolios, the percentage of clients leveraging model portfolios, and a breakdown of clients assets in advisory and brokerage accounts.
The current benchmark is based on Cerulli data that is an aggregate of information from RIAs, independent broker-dealer, wirehouses, private banks and family offices. However, in the future, Invesco hopes to segment those types of businesses to give users a better comparison, as well as a benchmark against peers of more similar ages and size. Cerulli plans to update the benchmark every quarter with additional data from wealth managers who use the tool.
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“The plan is to be able to allow advisors to benchmark themselves across not just the similar channels, but also certain practice types. And so, if you’re a practice with over $500 million in [assets under management] you can compare yourself to a practice with a similar size,” Cheses said.
The questionnaire advisors complete covers four areas: business development, wealth management, client service and practice management. Advisors can view an aggregate score for each vertical or their score for every question they answer and compare them to the benchmark. Depending on their scores, the tool will suggest a list of free resources created by Invesco. Firms also can use the tool to create an action plan, assign tasks to team members and set deadlines for tasks to be completed.
“I often talk about the knowing and doing gap. It's one thing to know what to do, that creates awareness. But to do it, to close that gap, to execute, creates success,” Paul Brunswick, head of Invesco Global Consulting, told RIA Intel. To help firms with their shortfalls identified by the new tool, Invesco has created more than 100 resources, including video courses and written materials.
This is not the first benchmarking tool Cerulli has helped create — it has helped other asset managers do similar things. But Cheses said the Practice Innovation Index is the only diagnostic tool that uses this particular data set and most others are not free and publicly available.
Holly Deaton (@HollyLDeaton) is a staff writer at RIA Intel and based in New York City.
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