Wealth management is finding that teaming generates numerous benefits, including higher organic growth rates and expanded service offerings, according to a report released Thursday by Cerulli Associates.
The report notes, however, that strong teams will need collaborative leadership, consistent communication and a common vision among members to realize synergies.
Team-based practices have $20.3 million in average assets under management, compared with $8 million for solo advisors and $14.7 million for all advisors, according to the report. They have an average of 393 client relationships, versus 220 for solo operators and 309 for all advisors.
Team-based practices are also likelier to employ dedicated professional and administrative staff — 37% versus 8% of solo advisors. Cerulli said this fosters more specialization, creates capacity and enables them to offer a wider range of services through expanded expertise: 7.3 services on average, compared with solo advisors’ 6.5 services.
“Financial planning is a fundamental service provided by many advisor practices and is crucial for attracting new clients and encouraging them to utilize a wider range of available services and products,” Andrew Blake, associate director of wealth management at Cerulli, said in a statement. “Advisor practices that incorporate at least one planning specialist or paraplanner will be better positioned for expanding their financial planning capabilities.”
Sizable multi-advisor practices are expected to become more common, Blake said, as consolidation continues and pooling resources becomes increasingly feasible. Cerulli recommends that as they add to their headcount, these practices scale up their specialized staff, especially the number of financial planning specialists.
“Larger advisor teams will require greater support, and firms will need to add resources and hire more specialized staff to make them as efficient as possible,” Blake said.
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