By: Mike Zebrowski, Chief Operating Officer | Docupace
In the financial services industry, numbers are everything. Successful firms and RIAs are always working to achieve operational excellence. But how do you know when you’ve reached it?
Research from Schwab shows that top-performing firms track and document goals and metrics. Tracking your progress with KPIs can identify areas of success and indicate future growth opportunities.
With numerous metrics to choose from, RIAs need to determine the key metrics to track. During Docupace’s Roundtable Webinar on Achieving Operational Excellence, three industry leaders shared insights into key metrics for RIAs.
All three experts highlighted the importance of regularly evaluating processes, strategies, and goals. Identifying key metrics clarifies performance expectations and drives results. When employees and advisors know the metrics the firm is tracking, the identified goals help focus employees’ efforts. Regular check-ins with supervisors are a great opportunity to track key metrics on your way to hitting goals and achieving operational excellence.
Here are four metrics that matter for RIAs:
Key Metric) Straight-Through Processing Rates
Transfers and trades that can be automated and occur without manual intervention are known as straight-through processing. Tracking how many trades and interactions occur via straight-through processing demonstrates a firm’s efficiency and whether advisors and clients are adopting the tools to automate trades.
Today’s clients want easy, simplified transactions, which often occur through straight-through processing. More straight-through processing means more time for advisors and back-office employees to focus on other areas and faster results for clients. The higher a firm’s rate, the more transactions are moving through on their own without getting slowed down by human manipulations.
Key Metric) Trade & Transaction Errors
Even with the best compliance efforts, trade errors like trading in the wrong account or for the wrong amount can occur occasionally. By observing and tracking trade errors, firms and advisors understand how often they occur and why they are happening. Trade errors are often the result of inefficient processes and volatility.
Measuring trade errors over time can help advisors identify patterns and pinpoint holes in the compliance process. As they track trade errors, advisors can find ways to improve processes and create more stability.
Key Metric) Service Levels & Reliability
Service levels measure how well a firm and its partners fulfill their promises. Service levels include numerous metrics which are often tied to the CRM. Specifically, these metrics track if a firm can process new accounts and transactions within its target timeframe, showing whether a firm or advisor is out of Service Level Agreement (SLA) and how they can get back in.
Within the service levels are two key drivers: How many calls and interactions are processed within the target time frame? And how can that time frame be shortened? For example, service levels can track how many forms an RIA processes within 24 hours. But they can also help improve the process to cut that time to 12 hours.
Key Metric) Client Satisfaction & Net Promoter Score
Ultimately, KPIs all lead to client satisfaction. When advisors turn things around quickly, reduce trade errors, and keep accounts out of Not in Good Order (NIGO), clients are more likely to be happy with the service.
Net Promoter Score, or NPS, is the most common metric for tracking client satisfaction. This metric asks clients a simple question on a scale of 1 to 10: How likely are you to recommend this advisor or firm to a friend? NPS helps firms measure if their clients are happy and helps the business grow through referrals. High NPS scores tell RIAs that clients are satisfied enough to refer their services. On the other hand, low NPS scores show there is room for improvement. RIAs can follow up with those clients to get specific feedback about what can be improved.
No matter which metrics you track as an RIA, reliable data are crucial. By using KPIs to evaluate your performance, you can measure how well your firm is achieving its goals. Docupace is a leading tool for cloud-based document and data storage. Click here for more information and to schedule a free demo.
Docupace is the leader in cloud-based fintech digital operations software for the wealth management industry. Mike Zebrowski is Chief Operating Officer for the company, and will oversee teams in product, delivery, relationship management, support, training, transitions and legal.
