Measure the efficiency of your marketing efforts by calculating Client Acquisition Cost (CAC) and the Payback Period for your financial planning practice.
This tool evaluates the financial efficiency of your practice's growth engine:
Client Acquisition Cost (CAC) = Total Marketing & Sales Costs (TMC) / Number of New Clients Acquired (NCA)
CAC Payback Period = CAC / Average Monthly Net Revenue per Client
Scenario: A mid-sized RIA firm running a seminar campaign:
Results:
In the competitive landscape of wealth management and financial advisory services, "productivity" isn't just about how many hours you work; it is about how efficiently you allocate capital to grow your book of business. The Financial Planning Productivity Calculator is an essential tool for RIAs, broker-dealers, and independent financial planners who need to quantify the effectiveness of their business development strategies. Unlike general manufacturing metrics, productivity in financial services is defined by the cost-effectiveness of turning prospects into fee-paying clients.
The primary metric calculated here is Client Acquisition Cost (CAC). This figure represents the aggregate investment required to bring a single new client onboard. Whether you are spending money on seminars, digital advertising, or buying leads, understanding your CAC is vital. If your CAC exceeds the first-year revenue of a client, your cash flow may suffer. The Financial Planning Productivity Calculator helps you identify if your marketing budget is being deployed efficiently or if your sales process has friction points that are driving up costs. This concept is central to modern business analysis, as detailed in resources like Wikipedia.
The second critical output is the CAC Payback Period. This measures the velocity of your return on investment. In a recurring revenue model—common in AUM (Assets Under Management) or retainer-based planning—it takes time to recover the upfront cost of acquiring a client. The Financial Planning Productivity Calculator calculates exactly how many months it will take for a client to become profitable. A shorter payback period means you can reinvest your profits faster, accelerating growth. According to industry standards often discussed on platforms like Investopedia, a payback period of less than 12 months is generally considered healthy for professional service firms.
By regularly using the Financial Planning Productivity Calculator, firm owners can move away from "gut feeling" marketing to data-driven decision-making. It allows you to A/B test different strategies—such as comparing the CAC of a dinner seminar versus a LinkedIn campaign—to see which yields the most productive use of your capital.
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You should include every dollar spent to acquire new business. This includes advertising spend (Google/Facebook ads), costs for hosting events or seminars, software subscriptions (CRM, email marketing tools), and the salaries or commissions of staff members dedicated to business development.
There is no single number, as it depends on your client's Lifetime Value (LTV). However, a common industry benchmark is that your LTV should be at least 3 times your CAC. For example, if you spend $3,000 to acquire a client, that client should generate at least $9,000 in net revenue over their relationship with your firm.
The Payback Period measures cash flow risk. If it takes 24 months to recover your acquisition costs, your firm must have enough capital reserves to float that expense for two years. A shorter payback period (e.g., 6-9 months) reduces risk and frees up cash to acquire more clients sooner.
Yes. If you are commission-based, estimate the average "Monthly Net Revenue" by taking the total expected upfront and trailing commissions for a typical client and dividing it by their expected retention period in months, or simply use the upfront commission as the revenue to see if you are profitable on day one.