The evolving wealth management landscape has seen a significant shift towards team-based advisory practices, which are proving to be more effective in achieving scale and building enterprise value. As reported by Financial Planning, new research by Cerulli Associates and Osaic, Inc., reveals that team-based practices outperform solo practices in key areas such as assets under management (AUM), services offered, and overall productivity.
The trend towards teaming is widespread, with nearly half of all advisors now working within a team-based structure. This approach is especially prevalent among the largest advisory practices, with 94.5 percent of practices managing over $500 million in AUM operating as teams, compared to only 5.5 percent that remain solo.
Team-based practices benefit from streamlined resources and processes, leading to higher productivity levels. The research indicates that these practices have a median of $100 million in AUM per advisor, significantly higher than the $72 million median for solo practices. Additionally, team-based advisors typically serve clients with larger portfolios, averaging $1.6 million per client compared to $1 million for solo advisors.
According to Financial Planning, advisors forming teams often broaden their service offerings to include more comprehensive financial planning and high-net-worth (HNW) services. On average, team-based practices offer 4.7 financial planning services and 2.9 HNW services, compared to 4.5 and 2.2, respectively, for solo practices. This expanded range of services usually results in higher wallet share, as clients tend to consolidate their assets with teams that provide a more comprehensive suite of services.
Overall, the shift towards team-based advisory practices is reshaping the wealth management industry, offering significant advantages in terms of growth, client service, and operational efficiency.
Financial Advisor Transitions consults advisors nationwide to explore employment transition options and to preserve and protect their practice in any transition that they make.
