TORONTO, ONTARIO — (Marketwire) — 11/15/12 — PriceMetrix has leveraged their exclusive industry data to develop a revolutionary new approach for predicting the future performance of financial advisors.
Inspired by the bestselling book and hit movie Moneyball, about using data and analytics to gain a competitive advantage in professional baseball, PriceMetrix has uncovered a set of predictive advisor metrics that can give advisors and investment firms a competitive advantage in retail wealth management.
Like major league baseball teams, retail wealth management firms have been paying ever increasing amounts to attract highly ranked -players-, often more than two times an advisor-s historical annual production. But how do firms ensure that they-re spending money on the right talent?
This groundbreaking new methodology will help advisors and managers better identify, recruit, and pay for future outperformers, and also enable firms to identify, and act on, the most important factors for future growth in production.
“We wanted to help our retail brokerage clients ensure that their advisors and managers are focusing on the metrics that drive production outperformance,” said Doug Trott, President and CEO of PriceMetrix. “Frankly, we threw out the old playbook. As in Moneyball, our analysis determined that traditional metrics are not predictive of future outperformance, so we identified and validated those metrics which are far more powerful in forecasting future outperformance.”
PriceMetrix set out to uncover the keys to future success by forecasting performance based upon the metrics of advisors with 5 to 20 years experience. The company utilized its aggregated retail brokerage database consisting of 6 million investors, 500 million transactions and over $3.5 trillion in investment assets.
The first finding is that fee revenue is much more predictive of outperformance than transactional revenue. “What this tells us is that advisors, managers and firms must differentiate more aggressively between the different sources of revenue in their books of business,” noted Mr. Trott. “Books with greater production coming from fee accounts, as opposed to transactional or trailer revenue, are expected to outperform to a greater degree.”
Not surprisingly, PriceMetrix found that advisors with a greater number of high-asset households will outperform. For every household with more than $250,000 in investable assets in an advisor-s portfolio, future revenue is expected to increase by $1,650.
“What should make advisors pause for thought is that the reverse is also true,” said Mr. Trott. “Our data shows that advisors with a greater number of small households will underperform other advisors. In fact, predicted future production decreases $270 for every small household in an advisor-s book.”
Marketing research experts have long asserted that the depth of client relationships and client share of wallet are strongly linked to increased client retention and profitability. PriceMetrix data supports this assertion. One measure of the depth of client relationships is the number of retirement accounts, such as IRAs, in an advisor-s book.
“Another measure of the depth of an advisor-s client relationships is the average number of accounts per household,” noted Mr. Trott. “More accounts per household is indicative of deeper client relationships and a higher share of investable assets, which as it turns out is highly predictive of future production.”
PriceMetrix data indicates that less experienced advisors have greater potential for increased production than advisors with more experience. An advisor who becomes a top producer after five years has significantly better growth prospects than an advisor who reaches the same level of production after 20 years.
“Simply put, given two baseball players batting .300 and driving in 100 RBIS that are 25 and 35 years old respectively, which one would you choose? Likewise for financial advisors, the shorter length of time it takes for an individual to achieve a certain level of performance is indicative that they will have a greater future growth trajectory.” said Mr. Trott.
Brokerage firms, managers and advisors can all use these predictive analytics to improve their ROI on recruiting spend, to coach advisors, and to predict and manage future production.
PriceMetrix- full Insights report can be found here: .
About PriceMetrix
PriceMetrix is the first choice in practice intelligence solutions for retail brokerages in North America. We help wealth management firms enhance revenue growth, by enabling advisors to identify and action otherwise lost revenue opportunities. By combining industry know-how with powerful aggregated market data, we help our clients increase overall firm profitability.
PriceMetrix directly measures aggregated data representing 6 million investors, 500 million transactions, 1.6 million fee-based accounts, 7 million transactional accounts and over $3.5 trillion in investment assets. PriceMetrix combines its patented process for collecting and classifying data with proprietary measures of revenue, assets, and households to create the most insightful and granular retail wealth management database available today.
Founded in 2000 and headquartered in Toronto, Ontario, we service a notable range of retail wealth management firms within the United States and Canada. To learn about why our clients love us, please visit or call and email us at 1-866-955-0514 and .
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