Mega advisor teams with $500 million or more in assets under management control 42% of advisory marketshare, and are best poised to attract high-net-worth clients, according to a new report by Cerulli Associates.
The 2Q edition of The Cerulli Edge—Advisor Edition, notes that while these mega teams control a sizable portion of advisor market share, they account for only 14% of the total advisor headcount.
Kenton Shirk, associate director at Cerulli, notes that these mega advisor teams are appealing to high-net-worth folks mainly because their size “allows advisors to offer a greater breadth and depth of expertise to serve the complex needs of affluent clients.”
Cerulli also notes in its Edge newsletter that mega teams enjoy many benefits, the most obvious of which are financial. “Practices that increase advisor capacity can free their top-performing producers to spend more time on business development activities that drive revenue growth.”
These practices also operate at substantially greater levels of productivity than smaller firms, as measured by AUM per headcount, Cerulli notes. “Given that staffing expenses such as salaries, benefits, and payroll taxes comprise the largest overhead costs, a higher level of productivity can greatly increase a practice’s operating profit,” Cerulli says.