An advisor looks at his dashboard and sees $47 million in AUM, up from $43 million last quarter. He feels good. Growth is happening.

But he doesn't know that half that growth came from market appreciation, not new clients or deposits. He doesn't know his client retention dropped to 88% this year. He doesn't know his cost to acquire each new client is $18,000 while they generate only $45,000 in lifetime value.

He's tracking AUM but missing the metrics that predict whether his practice is healthy or dying.

Most financial advisors track the wrong numbers. They watch outputs (AUM, revenue) but ignore the inputs that drive those outputs (client acquisition, retention, referrals). They see problems after they've compounded for months rather than catching them early.

The metrics you track determine the questions you ask and the decisions you make. Track the right metrics and you'll build a thriving practice. Track the wrong ones and you'll be surprised when growth stalls.

Core Growth Metrics: Client Acquisition

Client acquisition metrics tell you whether your marketing and sales systems are working.

New clients per month or quarter is the simplest measure of acquisition velocity. But don't just count total new clients. Segment by source (referrals, seminars, digital, networking) to see which channels are producing.

If you acquired 12 clients last quarter but 10 came from referrals and only 2 from your $15,000 seminar campaign, you've learned something valuable about channel effectiveness.

Client acquisition cost is the total investment (marketing, time, technology, overhead) divided by new clients acquired. This is covered in depth in client acquisition economics, but it bears repeating: you must know this number.

Industry benchmarks: $5,000-$12,000 for mass affluent, $10,000-$25,000 for high-net-worth, $25,000-$75,000 for very high-net-worth. If you're spending more, your acquisition system needs work.

Prospect-to-client conversion rate measures how efficiently you close opportunities. Calculate this as (new clients / total qualified prospects) over a period.

Typical conversion rates are 15-30% for cold prospects, 30-50% for warm introductions, and 50-70% for client referrals. If you're below these benchmarks, you've got a sales process problem or a qualification problem.

Average time to close tracks how long prospects sit in your pipeline before becoming clients. In financial services, 3-18 months is normal depending on complexity and client segment.

If your average is stretching beyond 12 months, you're either targeting clients with very long decision cycles or you're not effectively moving prospects through your process.

Core Growth Metrics: Asset Growth

AUM growth is the metric everyone watches, but you need to understand where that growth comes from.

Organic AUM growth is net new deposits from existing clients. This is money clients are adding from their cash flow, bonus checks, business sales, or inheritance. It's pure growth unrelated to market performance.

Calculate it as: (Ending AUM - Beginning AUM - New Client AUM + Client Attrition AUM - Market Appreciation). This tells you how much your existing clients are growing their relationship with you.

Target 3-8% annual organic growth. If you're below 3%, you're not capturing your clients' new wealth. Above 8% is exceptional and usually indicates you're working with clients in wealth accumulation mode.

Net new AUM is the sum of new client assets, existing client deposits, minus client withdrawals and attrition. This is your true business development performance stripped of market effects.

In a flat market year, net new AUM tells you whether you're actually growing or just riding market returns.

Market appreciation versus net new assets helps you understand your growth composition. If you grew from $50M to $58M, how much was market return (passive) versus net new business (active)?

If 90% of your growth is market appreciation, you're not actually growing your business. You're benefiting from a bull market. When markets correct, your "growth" disappears.

Household wallet share percentage measures what portion of a client's total investable assets you manage. If clients have $2M in total wealth but only $500K with you, your wallet share is 25%. Improving this metric is the focus of wallet share expansion strategies.

Track this by client and in aggregate. Low wallet share (<50%) suggests you haven't fully earned client trust or you haven't asked for the full relationship. High wallet share (>75%) indicates deep relationships and consolidation opportunities have been captured.

Core Growth Metrics: Client Retention

Retention metrics show whether you're building a book or churning clients.

Annual client retention rate is (clients at period end / clients at period start) × 100, excluding new clients. If you started the year with 100 clients, added 15, and lost 8, your retention rate is 92%.

Target 95%+ annual retention. Anything below 90% means you're losing too many clients and spending too much effort replacing them. At 85% retention, you lose 15 clients per 100 annually. You need to acquire 15 just to stay flat, plus more to grow.

AUM retention rate matters more than client count retention because losing one $5M client hurts more than losing five $200K clients. Calculate as (AUM at period end + AUM lost to attrition) / (AUM at period start + new client AUM).

Target 97%+ AUM retention. This accounts for normal withdrawals for spending needs but shouldn't include clients firing you.

Client tenure measures how long the average client has been with you. Long tenure (10+ years) indicates strong relationships and good fit. Short tenure (3-5 years average) suggests you're churning clients or targeting the wrong segment. Strong client retention strategy directly impacts this metric.

Attrition reasons and patterns require qualitative tracking. When clients leave, document why. Common reasons include poor service, lack of communication, fee concerns, advisor personality mismatch, moving out of area, and death.

If one reason dominates (e.g., 60% leave due to poor communication), you've identified a fixable problem. If reasons are scattered, your issues are more systemic.

Core Growth Metrics: Referrals

Referral metrics predict the sustainability and cost-efficiency of your growth.

Referral generation rate is the number of referrals received per 100 clients annually. If you have 120 clients and received 25 referrals last year, your rate is 21 referrals per 100 clients.

Research from the Financial Planning Association shows top advisors generate 25-40 referrals per 100 clients annually. Average advisors generate 10-15. Struggling advisors generate fewer than 5.

If you're below 15, you have a systematic problem. Either your service isn't referral-worthy or you're not making it easy for clients to refer.

Referral conversion rate measures how many referrals become clients. Calculate as (new clients from referrals / total referrals received).

You should convert 50-70% of referrals. If you're converting less than 40%, you're either getting poor-quality referrals or you're mishandling them in your sales process.

Referral source breakdown splits referrals into categories: existing clients, centers of influence (CPAs, attorneys), other professionals, and friends/family. This shows where to focus relationship development.

If 80% of referrals come from clients but 0% from COIs, you're missing a major opportunity to build professional referral networks.

Operational Efficiency Metrics

Efficiency metrics show whether you're building a scalable practice or just creating a high-paying job for yourself.

Revenue per client is total revenue divided by number of clients. For AUM advisors, this correlates with average account size. For commission advisors, it measures transaction value.

Track this over time and by client segment. If revenue per client is declining, you're either taking on smaller clients or existing clients are withdrawing assets.

Revenue per advisor (for multi-advisor practices) shows productivity and capacity utilization. If advisors generate widely different revenue, you have either a book size issue or a productivity issue.

According to Investment Adviser Association benchmarking data: $300K-$500K revenue per advisor is typical. Top performers exceed $750K. Below $200K suggests the advisor is underutilized or working with too many small clients.

Clients per advisor indicates service capacity and model type. High-touch wealth management typically serves 50-75 clients per advisor. Mass affluent models serve 100-150. Robo-hybrid models serve 200+.

If you're serving 200 clients with a high-touch model, something's breaking. Either service quality is suffering or you're burning out.

Administrative time versus client-facing time ratio shows where your day goes. Track this for a typical week. If you're spending 60% of time on administration and 40% with clients, you need better systems or an assistant.

Target 60-70% client-facing time for client acquisition and retention activities. The rest should be administration, planning, and practice management.

Pipeline Health Metrics

Pipeline metrics show whether future growth is building or your acquisition engine is stalling.

Active prospects in pipeline is the count of qualified prospects at various stages (discovery scheduled, proposal pending, decision pending). A healthy pipeline has 2-3x the number of prospects you need to hit your acquisition goals.

If you want to close 20 new clients and your conversion rate is 30%, you need 60-70 prospects in your pipeline.

Pipeline velocity measures days spent in each pipeline stage. If prospects spend 45 days from first contact to discovery meeting and 60 days from proposal to decision, you know where delays occur.

Slow pipeline velocity kills momentum. Work to remove friction and move prospects faster through your process.

Discovery meetings scheduled per month is a leading indicator of future closes. If discovery meetings drop from 8 per month to 2, your future client acquisition will crater in 2-3 months.

Track this weekly and react immediately when it drops.

Proposal acceptance rate shows how well your proposals match client needs and expectations. If you're proposing to 10 prospects but only 3 accept, you're either proposing to unqualified prospects or your proposals aren't compelling.

Target 50-70% proposal acceptance. Below 40% indicates a problem.

Profitability Metrics

Growth means nothing if it's unprofitable.

Operating margin is (revenue - expenses) / revenue. According to CFP Board practice management research, target 30-50% for sustainable practices. Below 25% means you're too lean on revenue or too heavy on expenses. Above 60% suggests you're underinvesting in growth.

Cost to serve by client segment allocates your operational costs across client tiers. Small clients consuming disproportionate time destroy profitability.

If your $250K clients cost $3,000 annually to serve but generate only $2,500 in revenue, they're unprofitable. Either raise minimums, reduce service levels through service tier strategy, or transition them out.

Minimum profitable account size is the threshold where revenue exceeds cost to serve. Calculate your fully loaded cost per client (time, technology, overhead). Divide by your fee rate. That's your minimum.

If it costs $3,000 to serve a client and you charge 1%, you need $300,000 minimum to break even. Your profitable minimum is probably $500,000+.

Benchmarking Against Your Practice Type

These metrics mean different things depending on your practice model.

Solo advisors typically have higher revenue per client and lower client counts. They might serve 50 clients generating $400K revenue ($8K per client). Operating margins are higher (40-50%) because overhead is minimal.

Team practices serve more clients with lower revenue per client but achieve scale. A three-advisor team might serve 200 clients generating $1.2M revenue ($6K per client, $400K per advisor). Operating margins are lower (30-40%) due to staff costs but the business is more valuable.

RIAs versus broker-dealers have different economics. RIAs typically have higher operating margins due to fee-based models and less regulatory overhead. Broker-dealers have additional compliance costs but may generate higher revenue per transaction.

Niche specialists versus generalists see different metrics. Specialists often achieve higher revenue per client ($10K+) with fewer clients (30-50) due to specialized expertise. Generalists serve more clients (100+) at lower revenue per client ($5K-7K).

Know your model and compare against appropriate benchmarks.

Using Metrics to Diagnose Growth Bottlenecks

The real value of metrics is diagnosing where your growth system is broken.

Low new client acquisition? Check your pipeline metrics. Do you have enough prospects entering? Is pipeline velocity too slow? Is conversion rate too low? Each points to a different solution.

Declining AUM despite new clients? Check retention and organic growth. You're churning existing clients or they're withdrawing assets. Fix service delivery before spending more on acquisition.

High acquisition costs? Check CAC by channel. One channel might be destroying your economics while another performs well. Reallocate budget to what works.

Slow revenue growth despite strong client acquisition? Check revenue per client and wallet share. You're landing small clients or not capturing enough of each relationship.

Metrics turn vague feelings ("things aren't working") into specific diagnoses ("conversion rate dropped from 35% to 22% after we changed our discovery process") that you can fix.

Making Metrics Actionable

Here's how to implement this starting today:

Pick 10 core metrics from this list. Don't try to track everything. Focus on what matters most for your practice stage and model.

Build a monthly dashboard. Use a spreadsheet or your CRM's reporting. Update it monthly. Review it with your team or accountability partner.

Set targets for each metric based on industry benchmarks and your growth goals. You can't improve what you don't measure and don't have targets for.

Review monthly and adjust quarterly. Don't overreact to one bad month. Look for trends over quarters. When metrics diverge from targets consistently, dig deeper and adjust strategy.

Make metrics visible. Don't lock them in a file cabinet. Share them with your team. Talk about them in meetings. Make improvement a team goal.

The advisors building seven-figure practices are obsessive about metrics. They know their numbers cold. They spot problems early. They make data-driven decisions instead of guessing.

The advisors who struggle treat metrics as an afterthought. They're surprised when growth stalls because they weren't watching the leading indicators.

Your metrics are your instrument panel. Would you fly a plane without instruments? Then don't run a practice without metrics.

Learn More