- For advisors, a successful merger can generate substantial growth and productivity enhancements.
- The advisory industry is increasingly shifting away from an individual producer mindset to that of a multi-advisor team.
According to new research from global analytics firm Cerulli Associates, broker/dealers, custodians, and asset managers need to adapt as advisor teaming grows.
"The appeal of advisor teaming has grown among both established and new advisors," comments Kenton Shirk, associate director at Cerulli. "For advisors, a successful merger can generate substantial growth and productivity enhancements."
With the growing complexity of planning needs, investment products, technology, and regulations, small advisor practices may struggle to tread water, opening the door to consolidation opportunities for larger practices with a robust infrastructure.
"The growth of multi-advisor practices is most pronounced in independent channels. The average number of total professional staff per practice is 3.3 in the wirehouse channel. That compares to an average of 5.2 for dually registered practices and 4.5 for registered investment advisors," Shirk explains.
"The advisory industry is increasingly shifting away from an individual producer mindset to that of a multi-advisor team," Shirk continues. "The industry's largest practices and mega teams also typically serve affluent investors, which reinforces their propensity for teaming. The desired result is providing broader and deeper services to meet the more sophisticated needs of their high-net-worth clientele."
"Mega teams cite the ability to provide more services as the primary reason for teaming. By pooling resources, they are better equipped to specialize advisor and staff roles," Shirk adds. "Teaming offers an opportunity to develop specialized roles for both advisors and staff, which greatly enhances advisor growth opportunities and productivity levels."