Performance Methodology

Overview

The system calculates 8 core performance metrics for each RIA firm using data from ADV filings. Metrics are designed to be:

• Comparable across firm sizes through ratio-based calculations
• Business-relevant for RIA operations and benchmarking
• Outlier-aware with automated detection and flagging
• Temporally aligned using rolling 15-month lookback window for comparison
• Peer-group comprehensive with 4-level ranking analysis (National, AUM Band, State, State+AUM Band)

Metric Categories

Operational Efficiency Metrics (4 metrics)

Measure how effectively firms utilize their human resources and operational capacity:

• AUM per Advisor - Advisor productivity and capacity utilization
• AUM per Employee - Overall organizational productivity and leverage
• Accounts per Employee - Staff efficiency in account management
• Client-to-Advisor Ratio - Advisor workload and service capacity

Client & Business Focus Metrics (4 metrics)

Measure client relationships, service depth, and market positioning:

• Accounts per Client - Service depth and wallet share capture
• Average AUM per Client - Client sophistication and target market
• AUM per Account - Account size and service complexity
• % AUM from High-Net-Worth Individuals - Market segment specialization and concentration

Ranking Exclusion Policy and Wealth Management and Financial Planning Focus

Wealth Management and Financial Planning Focus:

RIA Pulse benchmarks and rankings are aimed at evaluating traditional RIAs. To ensure meaningful comparisons and statistical reliability, firms must meet minimum thresholds to be included in our benchmarks and rankings. Metrics are still calculated for all firms and can be viewed against our benchmarks, but rankings are not provided for firms that do not meet these thresholds.

Benchmark Inclusion Thresholds:

• Minimum Clients: 20 clients or more
• Minimum Accounts: 20 accounts or more
• Minimum Employees: 1 employee or more
• Individual + HNW Client Focus: Individual Client AUM and HNW Individual AUM must total to 10.0% or more of the total AUM

These thresholds ensure that benchmarks reflect firms with sufficient scale and focus on traditional wealth management and financial planning services.

1. AUM per Advisor

Formula: Total AUM ÷ Advisory Staff Count
Units: Dollars
Direction: Higher = Better (more productive advisors)

Business Value:

• Measures advisor productivity and capacity utilization
• Higher values indicate advisors managing larger asset pools

2. Accounts per Client

Formula: Total Account Count ÷ Total Client Count
Units: Ratio
Direction: Higher = Better (deeper client relationships)

Business Value:

• Measures service depth and wallet share with existing clients
• Higher ratios indicate more comprehensive financial relationships
• Shows firm's ability to expand services within client base

3. Client-to-Advisor Ratio

Formula: Total Client Count ÷ Advisory Staff Count
Units: Ratio
Direction: Contextual (depends on service model)

Business Value:

• Balances advisor capacity with personalized attention
• Higher ratios may indicate efficiency or potential overload
• Lower ratios may indicate premium service or underutilization

4. AUM per Employee

Formula: Total AUM ÷ Total Employee Count
Units: Dollars
Direction: Higher = Better (more productive organization)

Business Value:

• Measures overall organizational productivity across all staff
• Includes support staff, operations, and administrative personnel
• Indicates operational leverage and scalability

5. Accounts per Employee

Formula: Total Account Count ÷ Total Employee Count
Units: Ratio
Direction: Higher = Better (more efficient staffing)

Business Value:

• Measures staff efficiency in managing client accounts
• Higher ratios indicate more accounts per employee (higher efficiency)
• Important for operational scalability assessment

6. Average AUM per Client

Formula: Total AUM ÷ Total Client Count
Units: Dollars
Direction: Contextual (depends on target market)

Business Value:

• Indicates client sophistication and firm's target market
• Higher values suggest focus on affluent/institutional clients
• Lower values may indicate mass market or growth-stage clients

7. AUM per Account

Formula: Total AUM ÷ Total Account Count
Units: Dollars
Direction: Contextual (depends on service complexity)

Business Value:

• Measures account size and service complexity
• Higher values indicate larger, potentially more complex accounts
• Helps assess operational complexity and fee potential

8. % AUM from High-Net-Worth Individuals

Formula: (HNW Individual AUM ÷ Total AUM) × 100
Units: Percentage
Direction: Contextual (depends on business strategy)

Business Value:

• Shows market segment specialization and client type focus
• Higher percentages indicate HNW individual specialization
• Lower percentages may indicate institutional or corporate focus

Peer Groups

Comprehensive Peer Group Coverage

Each metric is ranked across 4 distinct peer group types, providing complete comparative analysis:

1. National Rankings

• Scope: All firms across all states and AUM bands
• Use Case: Industry-wide leadership identification and benchmarking

2. AUM Band Rankings

• Scope: Firms within specific asset size ranges
• Use Case: Size-appropriate peer comparisons and operational benchmarking

3. State Rankings

• Scope: Firms within specific geographic regions
• Use Case: Regional market analysis and geographic expansion planning

4. State+AUM Band Rankings

• Scope: Firms within both state and AUM band
• Use Case: Most relevant direct competition analysis

Ranking Data Available

For each metric and peer group combination, the system provides:

• Rank: Absolute position (1 = best, higher numbers = worse)
• Percentile: Relative position (0-100, higher = better)
• Sample Size: Number of firms in the ranking pool
• Rank Change: Period-over-period ranking movement (positive = improved)