Russell introduces Advisor Health Index to help advisors evaluate practice health
New tool provides personalized score and benchmarks across five strategic business measures
Seattle, WA April 27, 2011 Russell Investments has launched the Advisor Health Index, a new tool on its Helping Advisors site that provides financial advisors with a high-level assessment of the health of their practice in comparison to other advisory firms.
The Advisor Health Index score is calculated against one of five practice categories based on how a financial advisory firm is structured and its business life-cycle stage. A firm is then benchmarked against category peers across five strategic business measures, weighted according to Russell's view on their importance to an advisory firm's growth and success: total revenue per client, recurring revenue percentage, turn (revenue/AUM), active clients per FTE and AUM per client.
"Although each financial advisory practice is unique, our experience has shown that many firms face the same challenges and there are notable similarities in practice management across top-performing firms," said Sam Ushio, practice management consultant for Russell's U.S. advisor-sold business. "The goal of the Advisor Health Index is not to 'diagnose' an advisory practice but to facilitate a meaningful understanding of the metrics that drive the health of a business and provide a basis for comparison with high revenue firms so that advisors can modify business plans and practice management approaches as needed."
The Advisor Health Index prompts advisors to answer seven simple questions about their practice. The tool identifies a category benchmark based on practices with similar attributes and then outputs a score between 0 and 100 that reflects how the firm compares to the top quartile practices within the respective category. Higher scores indicate that the practice's metrics match up more closely to those of the top firms in the same category. A lower score indicates that in some key performance areas, a practice differs from high-performing category peers. In addition to the overall index score, the advisor also receives detail on how the firm is benchmarked against each of the five strategic business measures.
The Advisor Health Index benchmark data is derived from a custom dataset of 534 firms with $25 million or more in assets under management drawn from the InvestmentNews/Moss Adams 2010 Financial Study of Advisory Firms, conducted by Moss Adams, LLP. Within this dataset, prepared for Russell Investments by Best Practice Research, benchmark data represents mean values of high profit firms (top quartile practices in terms of pre-tax income per owner).
"The Advisor Health Index is designed to help advisors better understand the business measures that can drive profitability and ultimately, the growth and success of their firms," explained Ushio. "By doing this, they can make informed changes that can impact everything from their relationships with top clients and the rate of referrals they receive, to the range of wealth management services that they provide."
About Helping Advisors
Russell Investments created the Helping Advisors site in 2009 as a resource for financial intermediaries, to help them guide their clients and their businesses through the unprecedented market environment. Today, the site features:
About Russell Investments
Founded in 1936, Russell Investments is a global financial services firm that serves institutional investors, financial advisors and individuals in more than 35 countries.
Through a unique combination of interlinked businesses, Russell delivers financial products, services and advice. A pioneer, Russell began its strategic pension fund consulting business in 1969 and today is trusted by many well-known worldwide institutions for investment advice. Headquartered in Seattle, Washington, USA and with offices in major financial centers worldwide, Russell has $161 billion in assets under management (as of 3/31/2010) in its mutual funds, retirement products, and institutional funds, and is well recognized for its depth of research and quality of manager selection.
Russell offers a comprehensive range of implementation services that help institutional clients maximize their assets. The Russell Indexes calculate over 50,000 benchmarks daily covering 63 countries and more than 10,000 securities.
Jordan McKerney, 206-505-1858
Kerstin Österberg, 718-875-2121
Russell Investment Group, a Washington, USA corporation, operates through subsidiaries worldwide including Russell Investments. Russell Investment Group is a subsidiary of The Northwestern Mutual Life Insurance Company.
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