Next Mile
Rethinking AUM: A Better Way for RIAs to Measure Success
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Episode 106: On this week’s episode of Next Mile, I speak with Lacey Shrum, Founder of Smart Kx. An accomplished professional with a diverse background in law, compliance, and entrepreneurship. At Smart Kx, she applies her extensive experience to drive strategic initiatives and deliver innovative solutions within the legal and technology sectors.
We take a deep dive into the metric that truly matters for advisory firms—revenue. Lacey shares why AUM can be a vanity metric, how to calculate and use blended rates, and ways to streamline billing for greater efficiency and profitability. We also discuss common challenges during firm growth and acquisitions, how average daily balance reconciliation can smooth out revenue volatility, and why automation reduces friction in advisor operations.
Key Takeaways
Build a true revenue system—not just billing. Go beyond sending invoices. Create a complete revenue framework that combines accurate AUM fee calculations, airtight documentation of every client agreement, and detailed revenue analysis. This holistic view will give you clarity and control over your firm’s financial health.
Ditch the spreadsheets for fee management. Spreadsheets are fragile, error-prone, and a single point of failure. Replace them with specialized technology that automates and validates calculations, ensuring accuracy while freeing your team from time-consuming manual work.
Automate to eliminate friction. In a slow-to-adopt industry, actively seek tech that reduces clicks and speeds up payment workflows. The less time you spend chasing revenue, the more time you can invest in serving clients and growing your business.
Quotes
Revenue is so important to anybody’s business. We are trying to make a profit here, provide for ourselves, and build a business.” ~ Lacey Shrum
“If you are responsible for signing that ADV and representing your firm in that contract, you have to have some orderly system, or you’re just kicking the can down the road of a regulatory and probably litigation nightmare.” ~ Lacey Shrum
“Advisors are not in the billing business. They’re in the business of managing money. So, try to get billing down to the least amount of time possible so you can manage money.” ~ Lacey Shrum
Links
Onboarding New Clients Made Easy with Lacey Shrum
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Kyle Van Pelt