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What the 2010 Financial Performance Study Reveals About Advisory Firms

What the 2010 Financial Performance Study Reveals About Advisory Firms. Mark Tibergien CEO Pershing Advisor Solutions. November 2010. Business Revolution. Professional management is one of the fast-track career developments A new picture of a performance-driven culture is emerging

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What the 2010 Financial Performance Study Reveals About Advisory Firms

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  1. What the 2010 Financial Performance Study Reveals About Advisory Firms Mark Tibergien CEO Pershing Advisor Solutions November 2010

  2. Business Revolution Professional management is one of the fast-track career developments A new picture of a performance-driven culture is emerging Advisory firms are learning to “sell” again Firms with multiple owners outperformed the average

  3. But There Are Symptoms of Strain Productivity decline Increases in Malfeasance and Misfeasance Higher staff turnover Expenses rising faster than revenue

  4. Root Causes Span of control Poor recruiting, training and delegation Inattention to profit levers No clear strategy or positioning Absence of effective leadership and management

  5. Trends to Continue Aggravating Operations Greater compliance burden Multiple locations Rapid client growth Talent shortage Rising human capital costs

  6. What Are the Top Performing Firms Doing? Investing in management and leadership development Organizing workflow to reflect new reality Matching the right people to the right jobs Managing to profitability

  7. Separating from the Masses How Are the Top Performing Firms Making Strides? 7 7 7 7 7

  8. Top Performers Produced Lower Gross Profit Margins Source: Moss Adams/InvestmentNews 2010 Financial Performance Study of Advisory Firms. Top performers are defined as the top 25% of respondent firms based on a combination of profitability, owner compensation and productivity.

  9. But Produced Better Net Margins Source: Moss Adams/InvestmentNews 2010 Financial Performance Study of Advisory Firms. Top performers are defined as the top 25% of respondent firms based on a combination of profitability, owner compensation and productivity.

  10. Expenses at the Average Advisory Firm Trending Up Source: Moss Adams/InvestmentNews 2010 Financial Performance Study of Financial Advisory Firms

  11. Top Performers Spend More on the Client Experience Source: Moss Adams/InvestmentNews 2010 Financial Performance Study of Financial Advisory Firms Per Client Expense Is 15% Higher

  12. Top Performers Spend More on People Median People Cost as % Exp. (Prof + Non-Prof Comp Expense) Source: Moss Adams/InvestmentNews 2010 Financial Performance Study of Financial Advisory Firms

  13. Yet, Top Performing Firms Are More Productive and More Cost Conscious Overhead as % of Revenue (Total) Source: Moss Adams/InvestmentNews 2010 Financial Performance Study of Financial Advisory Firms

  14. Top Quartile Get a Better Return on Labor High-Performing Firms Surround Their Professionals With the Types of Individuals and Processes That Help Them Be More Productive Source: Moss Adams/InvestmentNews 2010 Financial Performance Study of Financial Advisory Firms

  15. Median Revenue per Staff (Total Headcount) Source: Moss Adams/InvestmentNews 2010 Financial Performance Study of Advisory Firms. Top performers are defined as the top 25% of respondent firms based on a combination of profitability, owner compensation and productivity.

  16. Top Performing Firms Are More Productive and More Cost Conscious Smaller Staff + Streamlined Infrastructure = More Work Completed Source: Moss Adams/InvestmentNews 2010 Financial Performance Study of Financial Advisory Firms

  17. Median Revenue per Client Source: Moss Adams/InvestmentNews 2010 Financial Performance Study of Advisory Firms. Top performers are defined as the top 25% of respondent firms based on a combination of profitability, owner compensation and productivity.

  18. Top Quartile Firms Had More Owners Top-Quartile Firms on Average Had More Owners, Paid Them Better, and Seemed to Be Getting More From Those Owners in Terms of Management Skill and Engagement TQ Firms (All) AO Firms (All) TQ Ensembles AO Ensembles TQ Solos AO Solos Source: Moss Adams/InvestmentNews 2010 Financial Performance Study of Financial Advisory Firms

  19. Greater Reliance on Non-Advisors Source: Moss Adams LLP

  20. Action Steps What Are Top Advisors Planning to Do Now? 20 20 20 20 20

  21. Advisors Are Raising Fees Source: Moss Adams/InvestmentNews 2010 Financial Performance Study of Financial Advisory Firms Larger Firms Will Continue to Increase Fees for Their Smaller Clients

  22. Owners Plan to Spend More Time on Business Development A Systematic and Strategic Approach to Business Development Will Be Critical to Future Success Source: Moss Adams/InvestmentNews 2010 Financial Performance Study of Financial Advisory Firms

  23. Refer Madness Referrals Still Reign Supreme in Business Development Source: Moss Adams/InvestmentNews 2010 Financial Performance Study of Financial Advisory Firms

  24. But Relying on Pure Salespeople Not a Good Option Firms Using Dedicated BDOs Did Not Necessarily Outperform Source: Moss Adams/InvestmentNews 2010 Financial Performance Study of Financial Advisory Firms

  25. Other Big Challenges Improving Workflow Improving Gross Profit Margin Becoming the Employer of Choice Creating a Differentiating Message Managing Risk

  26. The Best Invest in Leadership and Management Success Starts With Commitment and Culture 26 Page 26

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