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7 Leading and Lagging Indicators for the Health of Your Business

By Brian Appel | March 11, 2022

For better or worse, we’re bombarded by a constant stream of economic data. Looking closely at both leading indicators such as bond yields and housing starts as well as lagging indicators like CPI, you make important portfolio decisions on behalf of your clients. And you field the nervous phone calls and emails each time the latest economic report fails to align with expectations.

But did you know that the same process of leading and lagging indicators can be applied to your own business—as something of a health check that may help to uncover issues and opportunities earlier?

At ClientWise, one of the tools we use to help benchmark advisory firms against the best in the business is our Benchmark Assessment ReportTM (BAR). The assessment delves into key areas of practice management and helps provide clarity around the health of your business via the following leading and lagging indicators which you may be able to better leverage to help grow your business in healthier and more dynamic ways:

  1. Organizing Priorities                                                                                                                                                  It’s impossible to succeed without a forward-looking organization and clearly articulated priorities. How single-minded is your team in understanding the firm’s priorities for the coming month, the next quarter, the next year, and beyond?

    Reflect & Revisit: On your 90-Day Plan, Vision and Mission Statements. Make sure your team understands and embraces the same objectives as the owners of the firm.
  2. Client Engagement                                                                                                                                                     A key differentiator of any elite advisory practice, client engagement challenges you and your team to continually engage with clients on multiple levels to deliver exceptional service and ultimately drive valuable referrals through client advocacy.

    Reflect & Revisit: Carefully review your Client Appreciation Surveys and Net Promoter Scores, and consider what they tell you about the overall health of your client relationships?
  3. Client Acquisition                                                                                                                                              
    Without continual client acquisition, the business can’t grow at an acceptable rate. Yet many advisors lack a coherent client acquisition strategy. It’s why we help teams model the best practices of elite firms in establishing clear acquisition goals and priorities, identifying an ideal client archetype, and creating a turnkey acquisition process.

    Reflect & Revisit: What does your current growth rate and strategy tell you about the health of acquiring and on-boarding new clients?
  4. Marketing Approach                                                                                                                                          Through marketing efforts such as social networking, public relations, and inbound marketing, your firm should be generating a steady stream of leads and successfully converting as many of those opportunities as possible into new clients.

    Reflect & Revisit: What does the ‘hit rate’ on your website or other social media tell you about the impact of your messaging?
  5. Team Development                                                                                                                                                    An advisory firm is only as successful as the quality of its team. You need to continually strive to set clear team and individual goals and work with team members to help them develop the skills they’ll need to be increasingly valuable contributors to the future firm.

    Reflect & Revisit
    : How would you currently assess your team’s interdependent and effective communication and collaboration using OKRs?
  6. Professional Advocates                                                                                                                                         
    Rather than simply generating referrals, your goal should be to build meaningful trusted relationships with other professional service providers—relationships based less on mutual monetary gain than on ensuring your clients have access to trusted counsel.

    Reflect & Revisit: What do the quality and quantity of your current professional referrals tell you about the overall health of your COI relationships?
  7. Business Operations & Management                                                                                                                      As successful financial advisory practices evolve from practice to team to enterprise, the complexities of running the business amplify along with increasing client demands, more regulatory requirements and shifting employee engagement (e.g., work from home). Avoiding capacity constraints will require additional structure along the way.

    Reflect & Revisit: Due Diligence! In what areas might you continue to flourish and in what areas might you need some guidance for improvement? Tax and compliance professionals can help offload some of the work, but when was the last time you benchmarked your business against the best in the business?

Pro Tip: Make tracking and reviewing these important leading and lagging indicators a part of your regular monthly and quarterly team meetings.

The best in our business are laser-focused on extraordinary client service and insightful, timely financial advice. As you consider the incredible impact you have on the lives of your clients, make sure you take time to also think about how your business will need to adapt and grow in order to thrive in an increasingly complex and competitive landscape. The power of knowing exactly where you are, where you’ve been, and where you want to go will help ensure your business grows at a healthy, sustainable rate. 


Coaching Questions from this article:

  1. Consider the areas of your practice (strategies and actions) that drive results. Which of these are most critical to your success and what measures can you use to track continual improvement?
  2. Think about the uniqueness of your client niche and/or service offering. What elements of your value proposition and client service delivery are essential components and how can you effectively benchmark those elements?
  3. Once you’ve identified the most critical measures to track your firm’s continued success, who on your team will be responsible for measuring progress, how frequently, and how will adjustments be implemented?

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Topics: Business and Operations Management Organizing Priorities

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