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Quick off the benchmark

The payback for participating in benchmarking is that IFA firms are aware of what the rest of the IFA market is doing and what sort of action needs to be taken to retain revenues and profitability

Planning is vital, of course. However, a plan built without an understanding of how a firm is positioned against its competitors is likely to be doomed to failure. The challenge is how to obtain this data to prepare the plan and amend it as the market develops. This is where benchmarking techniques can assist.

Benchmarking is the confidential exchange of data between firms which is then used to generate meaningful information for participating firms. Benchmarking is confidential because a third party collects and processes the data to provide outputs (for example, reports, tables, etc) that allow firms to compare their performance against firms similar to themselves without being able to identify a particular firm.

A simple example of how to make data confidential but useful is to use averages, so a firm comprising two registered individuals (RIs) could compare their data against the average of other firms with two RIs.

Although benchmarking can supply a mass of interesting information, there should always be a number of key enablers or, in other words, information that enables IFAs to make a step change in their planning.

One such enabler could be the comparison of assets under advice. If the assets are identified as below average for firms of a similar structure, there may be some concern that the income from those assets may not support the IFA business in question. The IFA then has to decide what action to take, such as increase assets, increase charges, lower costs or a mix of all three.

Ascertaining the average fees charged by IFAs using a particular business model is another enabling business metric. If a firm’s fees are at the upper end of the scale, then they may be over-optimistic; if fees are too low, then the IFA could be underselling their services. The actions available here would include understanding the service offerings of the market and looking at revenues and costs.

Another enabler is monitoring the key milestones on the route towards RDR compliance. Knowing what the rest of the market, or similar firms, have accomplished can be a comfort or an impetus to reassess a firm’s RDR plans.

The payback for participating in benchmarking is that IFA firms are aware of what the rest of the IFA market is doing and what sort of action needs to be taken to retain revenues and profitability. Benchmarking allows participating firms to take informed decisions based on factual data rather than guesswork, which is critical to delivering business success.

Taxbriefs and the Money Marketing Academy have just started a benchmarking exercise with the IFA firms that attend their Business of Advice seminars. This data should supply a core sample of firms that are committed to meeting the RDR’s requirements. The benchmark service will be open to other IFA firms shortly. if you are interested in participating in this free service please email

David Lee, Director Cimetric


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