Last updated: 16:18 / Thursday, 26 February 2015
Research Released by Pershing

Rise of Super-Ensembles Signals a Profound Shift in the Advisory Industry, Forcing Firms to Reassess Growth Strategies

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Rise of Super-Ensembles Signals a Profound Shift in the Advisory Industry, Forcing Firms to Reassess Growth Strategies
  • A group of 250 super-ensemble firms are poised to shape the future of the advisory industry and are setting the standard for growth, client service and practice management best practices as evidenced by their impressive revenue and growth
  • Super-ensembles are advisory firms with more than $1 billion in AUM and are characterized by a defined brand, sophisticated value proposition and strong management
  • In 2014 the typical super-ensemble had $1,450,000 in owner income on average compared to $430,000 for ensembles (AUM under $500 million) and $305,000 for solo firms (one-advisor practices)

According to new research released from Pershing Advisor Solutions entitled Super-Ensembles: The Firms Who Are Shaping the Future of the Industry, a group of 250 super-ensemble firms are poised to shape the future of the advisory industry and are setting the standard for growth, client service and practice management best practices as evidenced by their impressive revenue and growth.

Super-ensembles are advisory firms with more than $1 billion in assets under management (AUM) and are characterized by a defined brand, sophisticated value proposition and strong management. Such firms are also achieving local market dominance through investment in technology, aggressive growth strategies and a long-term vision for their businesses.  

"Every business owner can learn from the strategy that super-ensembles are successfully bringing to the marketplace, and we are seeing their business practices quickly becoming the standard to follow for the rest of the industry," said Gabriel Garcia, head of relationship management for Pershing Advisor Solutions. "Success isn't merely defined by the size of a firm. We believe that firms of all sizes can learn from the different growth strategies and best practices being implemented by super-ensembles to more effectively manage and grow their own businesses."

The success of the super-ensemble model, and its ability to outperform the industry in terms of revenue and growth, is evident in the numbers. In 2014 the typical super-ensemble had $1,450,000 in owner income on average compared to $430,000 for ensembles (firms with AUM under $500 million) and $305,000 for solo firms (one-advisor practices). Super-ensembles were also the fastest growing firms with 18.6 percent revenue growth, compared to ensembles whose revenue grew at 17.1 percent and solo firms at 15.4 percent.

According to the study, super-ensembles scale primarily through strategic and organic means. However, they are also interested in growing through acquisitions and mergers. In fact, over one-third of super-ensembles (37 percent) are actively searching for acquisitions and 6.3 percent are interested in a merger with a similarly-sized firm. Other means of creating a super-ensemble are strategic partnerships and aggressive marketing.    

In contrast to their smaller peers, young super-ensembles are deliberate in their growth and more likely to pursue business development, which allows them to drive acquisition of new clients faster than other firms. Eighty percent have a defined target for non-owner lead advisors and 17 percent have business development partners.

For firms looking to become super-ensembles, the study outlines a number of steps they can take to achieve this goal:

  • Act like a super-ensemble, regardless of size: Dedicating time and resources to management, even if full-time management is not affordable, will keep any firm disciplined. Carefully articulating a strategy and being diligent in execution will help the firm progress and grow in a systematic manner.
  • Attract talent: The addition of professionals and managers who have experience working in larger organizations can assist smaller firms in finding a way to grow faster and impart knowledge from their larger peers.
  • Merge: There is no faster way to achieve size and reach the level of resources of a billion-dollar firm than a merger. Mergers are difficult, laborious and risky initiatives, but they have created many of today's largest firms.
  • Acquire: Acquisitions are not the exclusive domain of the largest firms and, in fact, many of the mid-size firms can find good opportunities to acquire solo practices and add clients and markets to their business.
  • Focus on culture: Culture is slow to evolve and change, and creating the "right" culture—even when the firm is smaller—will allow a firm to succeed at later stages in its evolution. A dedicated focus on developing the right culture can secure the success of the firm as it grows and can help shape the direction of any mergers and acquisitions. 
  • Prioritize growth: Growing faster starts with making growth a priority of the firm. The single most important marketing resource of a firm is the time of its most experienced professionals. Firms where partners prioritize growth tend to spend their time focused on this area, which is more likely to result in a faster expansion.

To obtain a copy of Pershing's whitepaper Super-Ensembles: The Firms Who Are Shaping the Future of the Industry, please visit this link

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