Advisor Teams Rule the Roost on Wall Street

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It’s official: Financial advisor teams outperform solo practitioners on assets under management and levels of  gross production. They also build more in depth client relationships.

But how do you build a team for success? First, let’s take a quick look at the data from the research and practice  management firm PriceMetrix:

“The average team advisor manages $130 million in assets compared to $110 million for the typical solo advisor, and generates $950,000 in revenue versus $830,000, according to the firms’ Insights report, “Be Part of Something Bigger: Teams in Retail Wealth Management.”

“What’s more, firms using teams grow faster, achieve higher return on assets, keep clients longer and take advantage of scale more readily than firms who don’t use teams, according to the study.

“There’s a reason the number of advisors working in teams has increased 25% in just the last three years,” Doug Trott, president and chief executive of PriceMetrix, said in a statement.”

Why Advisors Should Be Using Teams

Teaming up can be beneficial for advisors and clients alike, but getting it right is not so simple. Selecting potential teammates requires some serious due diligence. Not only must advisor team members  have complementary business skills but they must be able to have complete trust in one another. Vertical teams in which members  support a large producer or partnership are generally stable and trouble free. Their chain of command is clear. In contrast, horizontal teams comprised of  advisor partners who are co-equals often dissolve. When that happens, ferocious  clashes over the ownership of client accounts are not uncommon. Sometimes one or more team members attempt to grab  clients and then move them to rival firms.

It’s essential that all teams — especially horizontal teams — have a well-crafted marriage and divorce agreement that has been approved by the firm. Advisor coaches are particularly skilled at crafting these types of contracts. I would never consider partnering with anyone whom I hadn’t seen in action on the job. I’d want to know if they really cared about their clients. I’d also observe how they conducted themselves under pressure and in a variety of stressful situations.

Photo: 드림포유

About Mark Elzweig

I am an executive search recruiter with an inside track on financial advisors, the asset management industry, and Wall Street. My work has appeared in numerous publications including On Wall Street,AdvisorOne, and Fund Fire. Journalists regularly seek me out, so you catch my bon mots in The Wall Street Journal, Research Magazine, Reuters, and more. You can follow me on Twitter @elzweig or you can reach me directly at 212-685-7070 or elzweig@elzweig.com.
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