Revenue Leakage has become a Top Priority for CFOs in 2025
For firms in the wealth and asset management industry, the path to higher profitability has become a core strategic priority. But it’s not just about AUM growth and operational efficiency; one of the most pressing, yet often overlooked, threats to profitability is revenue leakage. Revenue leakage, the silent erosion of legitimately earned income, has been a persistent issue in many organizations – one that firms recognize but struggle to fully manage. While it rarely triggers alarms, its impact compounds over time, making it a significant threat to the profitability growth objective. With industry estimates showing up to 5% of annual revenue quietly slipping through the cracks, CFOs can no longer afford to ignore the blind spot. In an industry where fee compression is intensifying, margins are tightening, owners are looking for more revenue and regulatory scrutiny is at an all-time high, plugging these leaks with purpose-built solutions is a direct path to margin recovery and enterprise value creation. The Silent Drain on Profitability CFOs Must Address Revenue leakage in the wealth and asset management industry is not a rounding error. It is a structural issue that chips away at profitability across the revenue lifecycle: client billing, advisor compensation, and contract execution. According to EY, the typical firm is losing between 1% and 5% of earned revenue annually due to misconfigurations, data fragmentation, and manual processing failures. To put this in perspective: a firm with $50 billion in AUM and average fees of 50 basis points is generating $250 million in annual revenue. A 3% leakage rate equates to $7.5 million in lost revenue; nearly all of that hits EBITDA directly. Why? Because the cost of servicing those clients has already been incurred. Leaked revenue isn’t deferred or recoverable later, it’s high-margin income that simply vanishes. What’s Driving the Leakage? The wealth and asset management industry’s increasing complexity is a major culprit. Client demands for personalization, the proliferation of hybrid and performance-based fee models, and the rise of SMAs, UMAs, and alternative assets have pushed many legacy billing systems beyond their limits. Key leakage sources include: 1. Billing Complexity & System Mismatches Tiered fee schedules, AUM-based breakpoints, and custom discounts are difficult to track manually. Errors occur when household assets aren’t aggregated properly, fee thresholds are misapplied, or negotiated terms aren’t enforced systematically. In some firms, even dividend payments in multi-manager UMA structures go unbilled due to software limitations. 2. Manual Processes & Spreadsheet Dependency Despite the stakes, many firms still rely on spreadsheets to calculate and track fees. One mis-keyed digit—like billing $5,000 instead of $50,000—can repeat across billing cycles undetected, costing the firm hundreds of thousands over time. A Deloitte case study showed that in a sample of 20,000 transactions, one firm was leaking 3–4% of its revenue due to discrepancies between paper contracts and billing data. 3. Advisor Compensation Misalignment Revenue leakage affects advisor payouts too. Complex grid-based compensation models rely on accurate billing to function properly. If client fees are calculated incorrectly, it leads to incorrect advisor commissions. The result? A double loss: leaked client revenue and erroneous payouts that require time-consuming reconciliations and risk eroding advisor trust. 4. Contractual Blind Spots Wealth Management Agreements and Investment Policy Statements often contain bespoke clauses e.g. fee adjustments, late payment penalties, and special asset class billing, that are never activated in billing systems. Discounts meant to be temporary or conditional persist indefinitely. These “sticky discounts” and unenforced terms represent a major, recurring drain. 5. Siloed Systems & Poor Data Hygiene Disconnected CRMs, portfolio management tools, billing engines, and accounting platforms create inconsistent data flows. A client’s household status might be updated in one system but not another, leading to fee miscalculations. In the absence of a single source of truth, leakage is inevitable. This is a CFO’s problem, not an Ops issue Historically, revenue leakage was seen as a back-office problem: a billing team inefficiency or a compliance box to check. But that view is dangerously outdated. In 2025, CFOs are being measured not only on cost control, but on the accuracy, reliability, and defensibility of revenue itself. Leakage undermines all of this: In short, revenue leakage directly undermines a CFO’s credibility with the board, investors, and auditors; it impacts the integrity of financial reporting. 2025: The Perfect Storm Several converging forces make this the moment for CFOs to act: What Leading CFOs Are Doing About It Forward-thinking CFOs are reframing revenue leakage from a back-office inefficiency into a strategic lever for profitability, valuation, and operational excellence. They’re adopting a proactive playbook that includes: The Path Forward: Stop Plugging Leaks and Leverage Purpose-Built Tools Manual audits and legacy workarounds are no match for the scale and complexity of modern wealth and asset management operations. Best-in-class firms are turning to integrated, AI-powered revenue management platforms that automate billing, reconcile anomalies, and align advisor compensation. New business growth is hard-fought and costly. But recaptured revenue? It’s already earned. It’s pure margin. And it’s waiting to be unlocked by CFOs with the foresight to take control. In 2025, revenue leakage is the highest-impact opportunity hiding in plain sight. The time to address this is now. If you’re ready to understand how your firm stacks up against leading wealth and asset managers in capturing earned revenue, reach out to PureFacts Financial Solutions: the only purpose-built revenue optimization platform for the wealth and asset management industry. Founded in 2010, PureFacts is a global financial technology company specializing in revenue optimization solutions for the wealth and asset management industry. We partner with 7 of the top 10 leading firms to develop and implement advanced revenue lifecycle solutions — from billing to compensation to predictive insights. With over $15 trillion in assets on our platform and millions of accounts processed daily, we help 130+ firms capture 100% of their earned revenue with the lowest cost of oversight and operations. PureFacts delivers the visibility and intelligence CFOs need to drive profitability, reduce leakage, and make data-informed decisions for long-term performance.
Hidden Costs of Legacy Advisor Compensation Systems
In today’s competitive financial landscape, attracting and retaining top advisory talent is paramount. While a competitive, transparent, and fair compensation process is foundational to this, C-suite leaders must ask a more critical question: Is our advisor compensation framework a strategic asset, or a hidden liability impacting our end-to-end revenue management cycle? For many firms, the answer is unsettling. Makeshift spreadsheets, repurposed generic tools, or inadequately designed platforms are often struggling to manage the intricate revenue streams of the wealth management industry. If your organization relies on such improvised solutions, it could be silently hemorrhaging millions in potential revenue and creating significant operational drag. It’s time to put your current advisor compensation system under a strategic performance review. The High Stakes of Inadequate Compensation Systems The dynamism of the wealth management sector – with its diverse transaction types, evolving fee structures, frequent M&A activities, and shifting regulatory demands – necessitates an exceptionally agile and robust compensation management solution. Without it, your firm isn’t just risking inaccurate payouts; it’s risking its strategic objectives. Consider these critical blind spots that may exist within your current framework: Beyond Basic Functionality: The Data and Integration Imperative Minimizing compensation inefficiencies and maximizing profitability demands more than basic calculation capabilities. It requires sophisticated software architected for: The Real Cost of Miscalculation: A Multi-Million Dollar Risk Consider a simple scenario: an advisor discounts a $100 service to $80. Your firm’s agreed share is 50%, or $40. An inadequately configured system might incorrectly pay the advisor $50 (50% of the original $100) and allocate only $30 to the firm. This single error directly erodes your profitability. Now, amplify this across thousands of transactions, customized incentives, complex split agreements, and performance-based payout tiers. Even minor, systemic misconfigurations can compound into substantial financial losses annually. In an industry laden with such complexities, the potential for value leakage is immense if your compensation engine isn’t meticulously engineered and managed. Transforming Compensation from an Expense to a Strategic Driver In an environment where a single basis point improvement can yield significant financial advantage, settling for a sub-optimal compensation system is an economic misstep. Legacy systems or generic solutions may offer a temporary reprieve, but they ultimately create a competitive disadvantage. By re-evaluating your compensation framework and partnering with solutions that offer deep industry insight and flexible, purpose-built technology, you move beyond merely mitigating revenue leakage. You unlock new pathways for sustainable growth, enhance advisor loyalty, and fortify your firm’s financial health. Just as an underperforming business unit demands executive attention, an underperforming compensation system warrants immediate strategic review. Is your firm ready to transform its advisor compensation from a potential liability into a strategic driver of growth? Contact us to explore how PureFacts can help optimize your revenue lifecycle. — James Iacabucci is the Director, Product & Engineering at PureFacts Financial Solutions, an award-winning provider of end-to-end revenue management solutions for the investment industry, helping firms maximize profitability, ensure compliance and deliver exceptional client service.
How Leakage in Incentive Compensation Programs Impacts Profits
Leaks are rarely a good thing, and hidden leaks are the worst kind. Homeowners know that a slowly leaking pipe or roof is about the last thing they want to discover. Car owners grow frustrated that a slow leak in a tire can be the hardest kind to fix. And you don’t have to be a boat owner to know, as Benjamin Franklin said, that “A small leak will sink a big ship.” Your financial services business may be losing revenue and profits in the same way, through a wide range of seemingly small inefficiencies, poor procedures, misalignments, and human errors in your compensation system and compensation program. These leaks are often written off as an annoyance, rather than a problem that needs immediate fixing. But over time, the leaks turn into losses and reduce your bottom line. “Watch the little things; a small leak will sink a big ship.” ~ Benjamin Franklin How Big a Problem is Revenue and Profit Leakage? Profit leakage – in this context – erupts from the unintended (or unnoticed) loss of revenue from your business and poorly optimized operations, resulting in a significant loss in overall profitability. Statistics vary, but it’s generally estimated that every company, regardless of sector, experiences addressable leakage in a range of 1 to 5 percent of EBITDA (Source: EY). In our experience, profit leakage is a considerable and often overlooked problem in the wealth management industry and has root causes that are behavioral, structural and operational in nature. Behavioral causes stem from actions that are induced, usually unintentionally, by the compensation, metrics and performance management program. Operational causes are often the result of business complexity and fragmented business processes. Finally, Structural causes relate to the design of the business model and/or the technology tools that support it and insufficient or unreliable data to fuel it. Firms may experience one, two or all these root causes, contributing to significant recurring loss in revenues and profitability if not addressed. We’ve identified the 25 ways in which your compensation system, procedures and program are likely allowing profit to leak out of your wealth management business. 25 Root Causes of Revenue and Profit Leakage When compensation and reward structures are not designed, implemented and communicated to support your firm’s business strategy and performance objectives, this results in suboptimal organizational performance and therefore impairment of top-line performance is a drag on profitability. Business units that are meant to cooperate will be more successful when there is alignment of measurement and reward. Bringing multiple compensation regimes into alignment across multiple lines of business is difficult, but critical to avoiding counterproductive activities and organizational friction. Aligned measurement and compensation makes execution smoother and ensures focus is on value creating activities. Not measuring (or inadequately measuring) the contribution of the compensation plans and programs hides profit drains. Measuring compensation program performance is typically challenged by a lack of adequate and available data or the absence of organizational accountability for compensation performance ROI. Compensation program changes are often needed to enhance alignment with corporate objectives, to address shifts in the market and to respond to changes in the business or team. Every day that passes between the decision to change the program and the implementation of the changes, represents leakage. It delays addressing sales and service focus issues, decreases rep/advisor satisfaction, persists operational burden and prevents all the oars pulling in one direction. Your compensation programs should be easily updated or replaced. Time-consuming requirements for custom programming or technical intervention is costly, and a warning sign that your compensation regime is not likely nimble enough to support your business. Don’t accept when the capabilities (or lack thereof) in your compensation system stand in the way of rewarding for the right customers, the right revenue, or the right performance standards. Allowing compensation plans to become too complex ultimately results in them becoming less effective. Focused and easily understood are the key design considerations for impactful compensation programs. Complexity creates friction with the participants and that impairs their execution – exactly what you don’t want. Complex plans make it difficult to ensure that everything is correct and paid out appropriately to the right participants. The errors that spring from complex plans are themselves so complex that they can frequently only be resolved by extended research and then implementing time-consuming and costly manual adjustments. The sheer number of plans in use is not, in and of itself, a problem. However, how these plans relate and how they are managed can be a problem and can cause considerable errors and excess compensation. Plans should be easily created, named, managed, audited, understood and retired, as necessary. Poor process and oversight in plan selection, deployment and management can give rise to the wrong compensation plan or the wrong rules being deployed which results in compensation errors, reporting inaccuracies and contributes to significant leakage that can compound over time. A clean and organized user interface, logical workflow processes and efficient oversight processes mitigate many costly errors. Ideally a full and completely granular view into plan set-up, input data and the calculations, is available to business leaders, managers and advisors. A lack of this visibility complicates the process of finding and reconciling errors and resolving disputes. This wastes valuable advisor, front office and operations time and erodes trust which impairs revenue and adds costs. Each discrete data type – especially product, service and asset/security types – must be associated to a classification that aligns with the compensation program. Frequently this means that several new products or securities may need to be assigned within the classification each day. While an automated process is desirable, many firms have workflows that include manual process that often are time consuming, have key-person risk or lack adequate validation controls. Inconsistencies in product assignments can potentially have a large impact on compensation over time and can be resource consuming to correct. For organizations with multiple lines of business, where products may be classified a number of times, and in a variety of different ways, these errors have a habit
The Impact of PureFacts’ PurePossibilities Program in 2022
Earlier this year, PureFacts was profiled by the Toronto Star, Canada’s largest daily newspaper by circulation. As part of the MaRS ecosystem, we were humbled to be featured as an innovator in technology. With over two decades in wealth-tech, we’re no stranger to media coverage. Our award-winning SaaS platform to help investment firms improve revenue management has been profiled before. But unlike other pieces that often focus on our technical innovation, this piece struck a chord because, in addition to showcasing our solution, it focused on our company values. It’s in our DNA In the article, CFO Gerard Daniels explains that PureFacts’ values and commitment to giving back aren’t lip service – they’re part of the company’s DNA. Many employees come from humble beginnings, including founder and CEO Robert Madej, and have a deep appreciation for how difficult growing wealth can be, especially in today’s economic climate. So as the company started to think about things like corporate citizenship, it made logical sense to develop a program designed to foster growth. Enter the PurePossibilities Program PurePossibilities was created to help provide a leg up to those who need it to ensure more people have financial well-being and the ability to live their best life. The program is comprised of three pillars – Essential Needs, Education, and Employment. Each pillar is designed to support the growth and success of both individuals and communities. The program is managed by a dedicated team of PureFacts employees and led by Mehrnaz Shokrollahi, an award-winning computer engineer, AI-influencer, and PureFacts’ AI Team Lead. “I was fortunate to be able to come to Canada with my family and start a better life, receive a formal education, and build a positive support network of friends and family. I’ve been able to excel in my career but, unfortunately, not everyone has this privilege. Leading the PurePossibilities program gives me the opportunity to give back to the community that’s given so much to me.” With a distributed workforce and global footprint, making a meaningful, coordinated, contribution towards each of these pillars might seem like a tough assignment. But when giving back is such a key ingredient to your company culture, and you have a team of people passionate about helping others, it becomes a natural part of doing business. Donating to ensure essential needs are met In 2022 PureFacts contributed to a variety of charities to help provide access to essential support and resources. This meant raising money for international causes as well as charities in our own backyards. In 2022 our charitable contributions included: While for a small team these contributions were meaningful, they barely scratch the surface of what these organizations, and others like them, need in order to deliver essential services and support to some of the most vulnerable people in our communities. We’ll continue to support organizations in need in 2023 and beyond as part of the PurePossibilities program. Lifting people up through access to higher education This year, PureFacts partnered with seven programs across five Canadian universities to help increase access to education. Our PureScholars program provided $152,000 worth of scholarships for more than 30 students over five years. Scholarship recipients included students at: Providing mentorship to help create a path for meaningful employment Rounding out the PurePossibilities program in 2022 was our involvement in mentorship. The PureFacts team mentored scholarship recipients and students from a variety of different organizations, including Wavemakers, to help them gain meaningful work experience and future-ready competencies. One student even became a PureFacts intern. In 2023 we look forward to expanding our mentorship program even further to help others develop and gain the skills needed for a successful future. Continuing our commitment in 2023 Last year was a good start for our PurePossiblities program, and a great example of what’s possible when an organization prioritizes people and community. It’s by no means the finish line. We’re looking forward to further extending our support and making even greater contributions in 2023. At PureFacts we have a vision of worldwide wealth, and ensuring people have their essential, educational, and employment needs met is one way we can help make that vision a reality.
PureFacts 2022: A look back
As we embark on a new year, it brings an opportunity for reflection. For investors, wealth advisors, and asset managers, this is a good occasion to evaluate what worked last year, what didn’t, and what could be done differently as you begin 2023. For us here at PureFacts, the beginning of the new year is a natural time to check in on the progress made against our goal to help our clients, and their investors, live their best lives possible through better wealth management. Here are just a few of the ways we’ve furthered that mission in 2022. Deepening our connection with the international wealth and asset management community With travel restrictions loosening, 2022 was the year the PureFacts team got back on the road to reconnect face-to-face with the wealth and asset management community. We were honoured to participate in The Summit for Asset Management (TSAM) in London, New York, and Toronto, as well as the TSAM ESG conference. In addition to these events, we also participated in the annual MMI Conference, the Aviso Wealth Elevate Conference and The World Business Forum. At each event we were inspired by the amazing work our clients are doing for their investors. We were also excited to see topics like, AI, ESG, and digital transformation dominate panel and speaker sessions, giving us the opportunity to share our insights and extensive experience in these areas with other innovators in wealth management. Giving back with the launch of PurePossibilities This past year was also one where we made corporate social responsibility (CSR) an even greater priority. Making a positive impact has been a cornerstone of how PureFacts operates from day one. Founder and CEO Robert Madej, President Rajini McRae, and many PureFacts employees come from modest means. They’ve seen, firsthand, what can be achieved when there is guidance in financial investments and education So in 2022 we defined and formalized our model for CSR with a comprehensive corporate citizenship program called PurePossibilities. Based on Abraham Maslow’s Hierarchy of needs, the program is designed to make a community and social impact in the following areas: essential needs, support in education, and meaningful employment. The program has grown quickly and is already starting to make a difference in communities – helping PureFacts recognize its vision of worldwide wealth. Prioritizing ESG Last year saw a rise in more conscientious investing. No longer prioritizing growth at all costs, investors, particularly young investors, see environmental, social, and governance (ESG) principles as more important factors when choosing where to invest their money. Companies ranking sustainable and ethical impacts are becoming far more attractive for clients and investors. In 2022 we shared our position regarding ESG and its impact on markets with speaking engagements at various conferences like TSAM, where we discussed the Future of Wealthtech and ESG. We also continued to make support for wealth and asset managers working with ESG products a priority with ongoing development of tools to help score and evaluate ESG assets. Being recognized as a trusted voice in WealthTech Beyond events, new programs, and staying on top of investment trends, 2022 was also a year that showcased PureFacts’ thought leadership, talent, and industry expertise. PureFacts was featured in several publications, including the : The company was also recognized for its leadership in wealth and financial technology. In addition to several awards, the team was humbled to be included on the 4th annual WealthTech100, the AIFintech100 and the global ESGFinTech100 lists. Looking Forward The groundwork set in 2022 positions PureFacts to deliver even more value to clients, communities, and the wealth and asset management industry in 2023. A heartfelt thank-you to all our clients, vendors, and partners who enable our growth and success year after year. In a few weeks, we’ll shed some more light on priorities for the upcoming year. In the meantime, subscribe below to receive more information about what’s to come, and other relevant tips, trends, and guidance to improve your fee billing, client onboarding, and wealth and asset.