Advisors should track their own performance. But how?

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ST. LOUIS — Measuring client performance is pretty straightforward: It’s hard to do better than returns after fees.

But how best should independent advisors measure their own performance? AUM? Firm revenue or profit? Profit per client? Or something less tangible, like, “Am I making enough money and what is my level of happiness?”

Advisors eager to get a handle on this issue crammed a room at XY Planning Network’s annual conference to discuss how metrics and key performance indicators can improve performance. After all, you can’t manage what you can’t measure, to paraphrase management consultant Peter Drucker.

One existential point sharpened the discussion:“Know the why of what you’re tracking,” said moderator Kyle Mast of Clarity Financial in Wilsonville, Oregon, one of three panelists who batted around best practices.

Key performance indicators can be pretty personal, as Mast and others elaborated. One planner’s must-have may be another planner’s whatever.

Yet KPIs of one sort or another are vital, the panelists said. “If you haven’t identified key performance indicators, you don't truly know the health of your business,” tweeted panelist Sara Stanich of Cultivating Wealth in Brooklyn, New York.

Once indicators are identified, how often should they be reviewed? The panelists differed sharply.

“Daily,” Stanich said.

Some monthly, others quarterly, offered panelist Michelle Smalenberger of Financial Design Studio in Deer Park, Illinois.

No matter how often advisors review, the metrics can prove especially revelatory.

Panelist Scott Snider of Mellen Money Management in Columbus, Ohio, found that his key performance indicators showed his investment-only clients were not profitable. As a result, he’s reconfiguring his client base.

“Helps you see how far you've come too!” added Cristina Guglielmetti of Future Perfect Planning in Brooklyn, who tweeted about the session.

Mast had yet another vital indicator: “I track my hourly wage pretty aggressively,” he said, primarily because he works three-and-a-half days a week.

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