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Financial Advisors Emphasizing Human Capital Reap Six Times More Revenue, Five Times Better Profits Than Firms Without These Practices

REDLANDS, Calif., May 31, 2011 /PRNewswire via COMTEX/ --

A new study conducted by Quantuvis Consulting and sponsored by Genworth Financial Wealth Management shows that financial advisory firms that place a priority on human capital functions - the way they hire, manage, compensate and advance employees - achieve six times more revenue, and five times greater operating profits than firms that do not focus on these areas. According to findings released today in part three of the Best Practices Study Series, Human Capital Findings 2010, the top 25 percent of advisors in the study as measured by owner income outperformed their peers in all financial categories and also demonstrated superior performance across metrics related to their firm's human assets.

The Human Capital Study showed that the top 25 percent of all advisors in the study are strong in key business metrics relative to peers:

  • 3.5 times higher fee-based AUM
  • 2 times the revenue per full time equivalent (FTE) employee
  • 2.5 times more fee-based AUM per FTE employee
  • 3.5 times greater operating profit per FTE employee

"The top 25 percent of advisors are clearly benefitting from actively employing human capital programs and financial performance is setting them a part," says Stephanie Bogan, CEO of Quantuvis Consulting, a practice management consulting and research firm and a subsidiary of Genworth Financial. "These advisors are achieving far greater potential, productivity and performance from their human assets than the rest of the advisor universe."

According to the survey, top firms get the most advantage from human capital by investing in their team in the following ways:

  • On average, top quartile advisors spend more than twice the amount per staff than those in the lower quartile
  • 85 percent of top quartile advisors have established job descriptions for team members, compared to 67 percent for bottom quartile advisors
  • 60 percent of top quartile advisors have some form of career advancement in place. By contrast, only 34 percent of the bottom quartile are implementing career advancement strategies
  • Over 80 percent of top quartile advisors invest in benefits for their team

While top-performing firms are more likely to actively employ practices for harnessing human capital, data shows there is room for improvement. On average, top advisors have a 10-20 percent greater likelihood of employing a successful human capital program, but at times, their use of these practices is somewhat informal.

"While it seems contradictory that top-performing firms recognize the importance of investing in staff, and can still fall short when it comes to process, we've learned that even incremental improvements in human capital can create an important advantage, allowing advisors to focus their time on clients and growth," says Natalie Doss, research manager for Quantuvis.

The data also shows that hiring and training represent the least developed tenets of human capital for the entire advisor universe. The study found that most firms understand the importance of effective hiring yet only 17 percent of those surveyed consistently implement a formalized hiring process. Without this process, Doss notes, hiring decisions often rely on gut instinct and likeability, increasing the potential for hiring wrong candidates. Hiring mistakes can lead to an expensive endeavor and a huge drain on resources rather than a gain in profitability.

"The reality is that many firms add staff or additional advisors to solve problems or capitalize on opportunities, but without a sound human capital program in place to hire, train, manage and advance their teams, the solution to one problem, simply creates new ones," says Bogan.

"It is only in recent decades that the industry has begun to transform from a population of practitioners into a more established group of professionals and, overall, the data supports the emerging trend toward business practices over personal preferences. We suspect the future will bring consistent and incremental improvements in the hiring and training practices used by advisors of this generation and the next."

Best Practices: Human Capital is part three of a four-part Best Practices Study Series. Based on months of comprehensive research, the findings provide a pulse on advisory firms' implementation of the key tenets of Human Capital together with the best practices, actionable advice and insightful information that can help advisors better manage and advance their staff to help drive growth and increase profitability.

An innovative feature of the series is the Online Dashboards that each study participant instantly receives, which provide comparisons to industry benchmarks and advisor goals. In addition, the Quantuvis study findings include In Practice sections that break down data and provide advice for advisors considering how to benefit from the information to improve their practices.

Advisors can order a copy of the Human Capital Findings Report online and receive the accompanying Dashboards with their purchase at www.quantivis.com/study.

Questions regarding the Quantuvis Best Practices Study Series can be directed to Natalie Doss, Research Manager at 909-798-5328 or natalie@quantuvis.com.

About Quantuvis

Founded in 1996, Quantuvis is a leading practice management consulting firm that specializing in working with the nation's top independent financial advisors and institutions. Located in Redlands, California, Quantuvis Consulting was acquired by Genworth Financial in 2008.

http://quantuvis.com

About Genworth Financial Wealth Management, Inc.

Genworth Financial, Inc. (NYSE: GNW) is a leading Fortune 500 global financial security company. Genworth has more than $100 billion in assets and employs approximately 6,500 people with a presence in more than 25 countries. Its products and services help meet the investment, protection, retirement and lifestyle needs of more than 15 million customers. Genworth operates through three segments: Retirement and Protection, U.S. Mortgage Insurance and International. Its products and services are offered through financial intermediaries, advisors, independent distributors and sales specialists. Genworth Financial, which traces its roots back to 1871, became a public company in 2004 and is headquartered in Richmond, Virginia. For more information, visit Genworth.com. From time to time, Genworth releases important information via postings on its corporate website. Accordingly, investors and other interested parties are encouraged to enroll to receive automatic email alerts and Really Simple Syndication (RSS) feeds regarding new postings. Enrollment information is found under the "Investors" section of Genworth.com.

About Genworth Financial

Genworth Financial, Inc. (NYSE: GNW) is a leading Fortune 500 global financial security company. Genworth has more than $100 billion in assets and employs approximately 6,000 people with a presence in more than 25 countries. Its products and services help meet the investment, protection, retirement and lifestyle needs of more than 15 million customers. Genworth operates through three segments: Retirement & Protection, US Mortgage Insurance and International. Its products and services are offered through financial intermediaries, advisors, independent distributors and sales specialists. Genworth Financial, which traces its roots back to 1871, became a public company in 2004 and is headquartered in Richmond, Virginia. For more information, visit Genworth.com. From time to time Genworth releases important information via postings on its corporate website. Accordingly, investors and other interested parties are encouraged to enroll to receive automatic email alerts and Really Simple Syndication (RSS) feeds regarding new postings. Enrollment information is found under the "Investors" section of Genworth.com.

SOURCE Genworth Financial, Inc.