The guiding principle behind the FT 400 is to focus on investors. We assessed financial advisers from the perspective of current and prospective clients.
The methodology is quantifiable and objective. In autumn 2013, the FT contacted the largest US brokerage firms to solicit advisers’ practice information and data for the firms’ most elite advisers. Thus, we could obtain verified adviser data on assets under management, rather than relying on adviser self-reporting, thereby increasing the list’s credibility. We asked the broker-dealers for advisers with 10 or more years’ experience and $200m or more in assets under management; the brokerages had no subjective input.
The FT invited the 1,500 advisers who qualified to fill out a short questionnaire that gave us more information about their practices. We augmented that information with our research on the candidates, including data from regulatory filings.
The formula the FT uses to grade advisers is based on six broad factors and calculates a score for each adviser. Areas considered include adviser assets under management, asset growth, years of experience, industry certification, Financial Industry Regulatory Authority compliance record and online accessibility:
Assets under management: Signals experience managing money and client trust
Assets under management growth rate: Developing assets is a proxy for performance, as well as for asset retention and ability to generate new business
Years of experience: Indicates experience in managing assets in different economic and interest-rate environments
Compliance record: Provides evidence of past client disputes – a string of complaints can indicate potential problems
Industry certifications: Shows technical and industry knowledge. Designations such as CFA (chartered financial analyst) or CFP (certified financial planner) signal a professional commitment to investment skills
Online accessibility: Illustrates commitment to providing investors with easy access and transparent contact information
Assets under management and asset growth comprise 80-85 per cent of each adviser’s score. Additionally, to provide a diversity of advisers, the FT places a cap on the number from any one US state that is roughly correlated to the distribution of millionaires across the US.
We present the FT 400 as an elite group, not ranked from one to 400, since each adviser takes a different approach to their practice and has different specialisations.