Will Henwood (left) and Rod Bertino

Not enough financial planning firms embrace benchmarking even though many agree that it’s important.

That’s the view of Rod Bertino, a principal of practice management consultancy Business Health, who notes that benchmarking is rarely seen as urgent and sometimes, other stuff gets in the way.

Benchmarking, he says, allows planners to know how they compare with others. “They shouldn’t make decisions based on the benchmarking results alone, but at least they’ll be able to make some informed business decisions based on how their businesses compare to others,” he tells Professional Planner.

Bertino says most firms operate in in isolation and don’t get to see how other businesses function.

“They may be part of a large licensee – if the licensee provides some benchmarking data, it can only ever be against other firms under that license,” he says.

“They may have a feel for how they compare against other practices in the group, but where does that place them in the marketplace? Top quartile against best in class or are they the best of perhaps a small subset?”

Spotting the gaps

Bertino adds that benchmarking provides insight into what may be possible. Advisers may, for example, be happy with their firm’s profitability percentage, but then see that other firms have much higher figures and that they need to act.

Will Henwood, a director and senior adviser at Perth-based Acumen Wealth Management, agrees, noting that benchmarking shows where there’s potential to make more profits, perk up resource usage or time efficiency or improve in the areas of workplace culture and staff development.

“Many principals and owners are busy giving advice, wearing the practice management hat and feeling close to reality, but they shouldn’t just trust their gut feelings,” Henwood says. “It’s important that data should be driving business decisions.”

He says Acumen Wealth Management introduced benchmarks in 2022 following a merger. It first used high-level benchmarks such as annual EBITDA of 35 per cent or better, the average fee per client for different segments and so on.

It then took the granularity down to measures such as the number of clients an adviser should be managing, client satisfaction and retention rates, the number of client review meetings per month, the amount of client contact points and the number of support staff per adviser.

“This has given us a clear focus on the value drivers within our business and allows us to ‘measure what we treasure’,” Henwood says.

Comparing apples with apples