With apologies to “The X-Files”, Rod Bertino goes in search of industry best practice.

While the Australian financial services sector is huge in monetary terms, it is substantially influenced by a relatively small number of larger players (product manufactur­ers, platform providers and dealers alike), and the fact remains that financial advisers (that is, those who deal most directly with the Australian con­sumer) are effectively running “small businesses”. And, very often, these principals operate in relative isolation to their profession. Outside of professional development (PD) days and indus­try conferences, they generally have few opportu­nities to come together to learn from others who are running businesses similar to theirs.

Consequently, it is difficult for most to know what is loosely termed (and for want of a better description) “best practice”. For example, in a business similar to mine:

  • What is the standard ratio of support staff to advisers?
  • What is the average level of practice profitability?
  • Is my practice performing better or worse than others in terms of growth/attrition rates over the past 12 months?
  • How does my client satisfaction level compare to my peers, not only from within my own dealer group but also to “external” firms?
  • How often should staff meetings be held?  And so it goes on.

But as agents Mulder and Scully reminded us each week in “The X-Files” – the truth is out there. It’s only a matter of taking time and mak­ing the effort to find out. So why don’t more seek out the truth and benchmark their practice? We have noted that over the past year or so, an increasing number of licensees are looking to provide some form of internal benchmarking service – that is, comparing some of their prac­tices to others within the same dealership. But this raises two important questions:

1. How do the practice’s results compare to the broader, external market?

2. What about those practices where benchmark­ing isn’t available internally within their dealership?

Let’s say a practice surveys its clients and achieves an overall satisfaction score of 4.1 out of a possible 5.0. Immediate impressions would have to be that this is a very good result – well done to the practice, right?  However, when benchmarked against the 40,000-plus client responses in our CATScan database (that is, the marketplace at large), this result is slightly below the industry average and would place the practice in the second-bottom quartile.

The message clearly is: know the underlying data set (against which your practice is being measured) and be satisfied that it represents a valid basis for comparison.  As to the second question – whether a prac­tice is small or large – surely it makes good busi­ness sense to take stock of how it is positioned com­pared to its peers? A competitive set of benchmark re­sults can not only provide a level of satisfaction, and indeed reassurance, to its principals (yes, we’re on the right track and are doing things well), it can also add to the business’s market value.  The fact that your dealer doesn’t currently offer benchmarking shouldn’t “let the practice off the hook”. Why not seek external data and input from recognised market experts in this field anyway?

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