Tough Economy Calls for Tough Metrics

With current narrowing margins and market volatility, effective use of metrics can make the difference for asset managers, according to a new report.

In rocky economic times, asset managers who want to allocate scarce resources more efficiently must apply more rigorous tactics to measuring the impact of distribution, according to kasina, an asset management consultancy.

With current narrowing margins, market volatility and macroeconomic uncertainty, effective use of metrics can make the difference for asset managers who want to sell, service, and market better than the competition, kasina said.

Firms tend to focus on metrics that are easily attainable, those that are necessary for determining variable compensation (for sales), and those that reflect overall firm performance relative to stated goals.

But the metrics currently used leave many important strategic questions unanswered, according to the study.

Though current metrics give firms a top-level, bird's eye view of distribution, they don't adequately measure the many variables that contribute to sales.

Instead, firms should look towards different kinds of metrics to gauge the true value of areas within the firm, such as marketing, whose contribution "has been notoriously difficult to measure in the past," kasina reported.

Net and gross sales figures are also of little value in evaluating the relative effectiveness of various current distribution efforts when making future strategy and resource allocation decisions.

Firms can rethink their current approach to metrics by disaggregating data, contextualizing data and opening up information flows, the study, entitled "Quantifying Distribution Strategies," found.

"But to truly follow through, firms must first overcome some common roadblocks that prevent accurate metrics and data from being obtained. Lack of transparency, time and resources are frequent obstacles firms face when generating metrics," kasina said.

The report also called into question individual distribution functions: among the distribution executives interviewed for the study, 50% felt their sales team was overvalued, while 58% felt their marketing team was undervalued.