Financial advisors essentially are involved in assist their clients by optimally allocating their income in a number of financial products like stocks, bonds, options, insurance products, mutual funds, and many more, as per their requirement and preference
Financial advisors essentially are involved in assist their clients by optimally allocating their income in a number of financial products like stocks, bonds, options, insurance products, mutual funds, and many more, as per their requirement and preference. It is obligatory for financial advisors that they work best and ethically to their ability and provide advices that best suit to the needs of their clients. Fair understanding of the client needs is an essential task before actually starting with investment recommendation.
>From short term savings like tax treatments to long term goals like retirement plans and wills, financial consulting companies help the clients in achieving their aims by minimizing the risk and maximizing returns. Investment advice and products also depends upon the level of risk tolerance of the client, and for persons with higher risk tolerance a more volatile investment is appropriate as it provides higher returns.
Financial advisors also have a lot to offer in case of businesses. Companies seek the help of financial consulting firms to gain a specialized advice in areas like mergers and acquisitions, business modeling, business valuation, shareholder value management, and other such key areas.
In terms of financial advisory business, KPIs can be classified in four categories- financial, customer, internal processes and efficiency, and growth and development. Financial Perspective provides an insight of the financial performance of the business with KPIs like improvement in risk-adjusted returns, % rise in income per advisor, % increase in new business, etc. Customer Perspective includes KPIs such as accuracy level of forecasts, % drop in client attrition rate, customer satisfaction index, etc. Internal Processes and Efficiency Perspective helps in judging the operations and efficiency level in terms of KPIs like compliance level, number of areas served, improvement in advisory standards, etc. Finally, KPIs such as like number of service training programs, % increase in productivity per advisor, turnover rate of financial advisors and number of brain-storming sessions conducted form the part of Growth and Development Perspective.
Financial consulting firms are not only required to effectively cater to the needs of their clients but also with the financial products they are dealing with. As financial advisors offer a wide range of products of different companies, they often face the problem of conflict of interest. This sometimes forced them to operate unethically and harm the interest of their clients seeking their financial advice. Financial consulting companies also find it difficult to recruit and keep experience financial advisors with them. A very high attrition rate of financial advisors is not at all a good signal for the company because it may also end up losing key clients that are associated with those financial advisors. KPI can quite easily be used to tackle these challenges and a well designed balanced scorecard can go a long way in preventing issues like conflict of interest etc and to uncover the areas which needs further attention of the management.