Performance Metrics & Benchmarking Methodology

Overview

This system calculates standardized performance metrics for Registered Investment Advisors (RIAs) using SEC ADV filing data to enable peer comparisons, competitive positioning, and industry analysis. The methodology produces 9 core metrics across 3 categories, with benchmarking against relevant peer groups.

Performance Metrics

Advisor Metrics

• AUM per Advisor: Average assets managed per advisor (productivity indicator)
• Advisors per Billion AUM: Number of advisors needed to manage $1B (efficiency measure)
• Client-to-Advisor Ratio: Average clients served per advisor (capacity indicator)

Employee Metrics

• AUM per Employee: Assets managed per total employee (operational efficiency)
• Employees per Billion AUM: Total staff needed to manage $1B (staffing efficiency)
• Percentage of Employees Who Are Advisors: Revenue-generating staff concentration

Client Metrics

• Average AUM per Client: Typical client account size (market positioning)
• AUM per Account: Average investment account size (account structure)
• Percentage of AUM from High-Net-Worth Individuals: Focus on wealthy individual clients

Benchmarking Methodology

Peer Group Classification

Firms are grouped into 5 AUM bands for comparison:

• Under $250M: Emerging RIAs
• $250M to $500M: Growing Mid-Market
• $500M to $1B: Established Mid-Market
• $1B to $5B: Large RIAs
• Over $5B: Enterprise-Scale RIAs

Geographic Analysis

State-level benchmarks provide additional context for local market conditions and competitive dynamics.

Statistical Benchmarks

For each peer group and metric, the system calculates:

• Percentile rankings (10th, 25th, 50th, 75th, 90th)
• Mean, median, and standard deviation
• Sample size and data quality indicators

Data Quality Controls

Filing Recency Filter

Only includes firms with filings less than 16 months old (487 days) to ensure current market relevance.

Sample Size Requirements

• Minimum 7 firms required for all benchmark calculations
• Applied consistently to national and state-level analysis
• Insufficient sample groups are excluded from benchmarking

Statistical Outlier Detection

• IQR Method: Uses Interquartile Range with 3.0x multiplier (conservative threshold)
• Peer Group Specific: Applied within each AUM band and metric combination
• Dual Processing: Outliers removed from benchmark calculations but retained in firm rankings

Ranking Methodology

• Firms ranked within their AUM band peer group
• Percentiles calculated where 100th percentile = best performance
• National and state rankings provided (state requires minimum 7 firms)

Data Sources

• SEC Form ADV Part 1A and Part 1B filings from the Investment Adviser Public Disclosure website

Usage Guidelines

Appropriate Applications

• Competitive positioning analysis within peer groups
• Operational efficiency assessment
• Industry trend identification
• Due diligence and valuation support

Important Considerations

• Compare firms within same AUM band and geographic region
• Consider multiple metrics rather than single measures
• Account for different business models and service approaches
• Verify sample sizes and data recency for meaningful comparisons