New Fidelity Study Shows Advisory Teams Make Significantly More And Manage Almost Twice As Many Assets As Solo Practitioners

Friday, October 05, 2012 08:16
New Fidelity Study Shows Advisory Teams Make Significantly More And Manage Almost Twice As Many Assets As Solo Practitioners

Tags: Advisor businesses | independent broker-dealers | registered investment advisors | teams

A recent survey by Fidelity Investments shows that advisors who are members of teams make significantly more money than those who operate solo.

This Website Is For Financial Professionals Only

Advisors in teams make an average of 32% more than their solo counterparts. Teams also manage almost double the amount of client assets—about $86 million versus $45 million for solo practitioners.
That may be a given since teams have multiple advisors combining their assets. But the figures yielded by the study show hard data for the first time that teams have a significant earning and effectiveness advantage.
Teams collaborate to grow their businesses, tend to network more and also drop clients who are not profitable.
Yet teams are still in the minority with only 13% of advisors working as a team in a formal partnership. Solo practitioners make up 52% and the other 35% work in teams with certain clients but otherwise operate solo.
RIAs are the most common home for advisory teams. Regional brokerages and independent broker-dealers have the fewest numbers of teams.
Firm environment has a great deal to do with team success. With solid data that teams produce more, more independent broker-dealers and regional firms may up their support for team formation.
Right now, as in the family office and other areas of industry growth, RIAs have a distinct advantage, not only with their flexibility but also with the advantage of being in the forefront of developing trends.

Comments (4)

Wheres the benefit if the 'team' has more than 2 people?
brentb843 , October 05, 2012
The benefit comes from team composition. Combining the different talents of professionals - for example, one specializing in estate planning, one specializing in relationship management, one specializing in alternatives, one specializing in family dynamics, one specializing in tax management (even if outsourced) - can offer your clients a more robust level of service.

I often find advisors mistakenly think a team is rightly comprised of two or more advisors who do the same thing, have the same focus. That's not the type of team approach I think of.

Many a partnership has been broken because advisors thought it would be great to work together in a team but they failed to map out a pragmatic strategy to maximize each team member's organic assets (talents, intellectual, social and human capacities).

In my consultations with advisors, I have found that only by assessing the partners' complementary talents, then remapping those talents toward a common and mutually beneficial goal can the team truly experience the success it initially hopes for. And even then, care must be taken to keep everyone on course until everyone gels and the team functions as a unit instead of a group of different advisors trying to work together.
lisagray , October 09, 2012
I agree Lisa, but that is not the 'benefit' defined in the Fidelity study. They claim more clients, more $ for the 'team'

They are not looking to see if the client is better off, only the same ole more AUM, more production = success.
brentb843 , October 10, 2012
My experience is that both happen when the team is formed correctly. Even though clients may be shared, there is also more capability for clients to be served, although I would hope a team would be put together with a wise plan to create a client threshold so that integrity of service would be preserved.

In that case, increased assets under management can certainly happen. If it's a fee-only team, different types of compensation can come into play, increasing revenues through different types of service delivery.

The Fidelity study is a good spring point for those types of discussions in my view.
lisagray , October 10, 2012

Write comment

You must be logged in to post a comment. Please register if you do not have an account yet.