Documenting Your Production Before You Need It

The short answer: Almost every advisor assembles their own production figures under deadline, from memory and whatever the firm still lets them export. That reconstruction is reliably lower than the truth, and it becomes the number everything is priced against. Keeping the record while there is no pressure is the entire advantage.

This is part two of the 18-Month File, a series for advisors who are two years out from any decision.

Here is a scene we have watched more times than is comfortable.

An advisor decides to have a serious conversation. Someone asks the obvious first question, which is what the practice produces. And the advisor, who has run this business for nineteen years and knows it intimately, cannot answer with precision. They know the approximate number. They know last year was better than the year before. Beyond that, they are going to have to go and look.

So they go and look, under time pressure, using whatever reports their firm's systems will produce, and they assemble a figure.

The figure is nearly always too low.

Why the reconstruction runs low

Memory is selective, and it is selective in a consistent direction.

The large relationships are recalled without effort, because they are the ones you think about. What goes missing is the long tail and the irregular: planning fees, one-off revenue, insurance business, the held-away assets you advise on without custody, the accounts sitting at a second custodian, the household that moved most of its money in during a quarter you were not paying attention to revenue.

None of those are large individually. Collectively they are frequently a double-digit percentage of the real number.

And because the figure is assembled once, under deadline, it becomes the anchor. It goes into the first conversation, and every conversation after that is priced against it. Correcting it later is possible and is also a slightly awkward thing to do, so many advisors simply do not.

What to actually keep

Five things, and the splits matter more than the totals.

Trailing twelve, split by revenue type. Recurring advisory fees separated from commission and transactional revenue. This is the single most important distinction in the entire record, because every counterparty values the two differently and a blended figure conceals exactly the thing they will want to know. The valuation consequence is set out in what is your book actually worth.

Assets, split the same way. Fee-based assets, brokerage assets, held-away assets you advise on, and anything at a second custodian.

Household count, and the shape of it. How many households, and what share of revenue sits in the top ten and the top twenty-five. This is the concentration number, and it is the one nobody volunteers because it is frequently uncomfortable.

Net new assets by year, with rough attribution. Not just how much the practice grew, but where growth came from: referrals, existing households adding, market appreciation, or new relationships won. An advisor whose growth is almost entirely market appreciation has a different practice from one growing organically, and the difference is invisible in a headline AUM figure.

Three to five years of history. One year is a snapshot. Three shows a trajectory. Five shows how the practice behaved through at least one bad market, which is the part that makes any of it credible.

Where to keep it

Somewhere that does not depend on continued access to a firm system.

This is worth saying carefully. Keeping a record of your own practice performance, meaning aggregate revenue, growth, mix and concentration, is an ordinary professional thing to do. It is categorically different from exporting client data, contact lists, statements or account numbers, which belong to clients and to the firm and which this series does not suggest touching. Part seven, what not to do while you are still there, covers that boundary properly.

Contract provisions vary and the line is not identical everywhere. Review yours with your own counsel rather than with an article.

The part that has nothing to do with moving

Set the transition question aside entirely and the record still earns its place.

An advisor who cannot say what share of revenue is recurring does not know how stable their income is. An advisor who does not know their concentration does not know their largest risk. An advisor who has never attributed growth cannot tell whether the practice is growing or the market is.

Those are instruments you need to fly the business, and most practices are running without them. Whether the question of a move ever arrives is, in that sense, beside the point.

What it changes when the question does arrive

It changes the conversation from an estimate to a fact, and it changes who is doing the estimating.

An advisor who arrives with three years of documented, split, attributed numbers is negotiating from a position that the other side has to work from. An advisor who arrives with an approximation is negotiating against someone else's model of their practice.

The next piece in the series, reading your own agreement two years early, covers the other document you will wish you had read sooner.

We build this picture with advisors as a matter of course, years before anything is decided, and often for advisors who never move. If you want yours assembled properly, request an introduction. The advisor never pays, and it is held in confidence.