Issue link: https://resources.envestnet.com/i/1527487
Taking the Measure of Advice © 2022 Envestnet. All rights reserved. 21 FIGURE 6: CORRELATION BETWEEN ADVISOR PRACTICE SCORES AND CLIENT FINANCIAL WELLNESS OUTCOMES On the basis of this regression analysis, Aite-Novarica Group has constructed an Intelligent Financial Life Advisor Practice Score. The score is calculated as follows: • Each advisor receives a score from 0 to 100 for each of the five factors based on responses to questions about the advisor's practice. • The score for each factor is multiplied by a weighting that reflects its relative importance as determined in the regression analysis. • Breadth of advice receives a weighting of 26% • Financial planning receives a weighting of 18% • Psychology of money a weighting of 10% • Platform capabilities a weighting of 9% • Family engagement a weighting of 7% • The weighted scores of the five factors are added together, and these are added to a baseline score of 28. The baseline score reflects the fact that advisors may deliver a small measure of financial wellness to clients by merely having a relationship with the client, independent of any of the financial-wellness-related behaviors. 0 10 20 30 40 50 60 70 80 90 100 0 10 20 30 40 50 60 70 80 90 100 Correlation Between Advisor Practice Score and Financial Wellness Outcomes (Base: 483 financial advisors primarily serving individuals/families, with 3 or more years of experience) Source: Aite-Novarica Group's survey of 483 U.S. financial advisors, Q4 2021 Financial wellness outcomes Advisor practice score