Financial advisers interested in making more money may want to partner up at work.
According to a Fidelity Investments survey of 1,207 advisers and brokers, advisers who are part of a team earn, on average, 32% more than their colleagues who are solo advisers. All in, advisers on a team earn about $296,210. Solo advisers average $223,859.
Teams also manage more client assets — about $86 million, compared with solo practitioners' $45 million. Of course, that's to be expected, given that the figure for teams includes assets that are managed by more than one adviser.
Nevertheless, the results are something of an eye-opener. “For the first time, there's hard data to show how effective teams are,” said Alexandra Taussig, senior vice president of National Financial, Fidelity's clearing arm.
Advisers on teams also are doing more to expand their businesses, with more of them shedding clients who aren't profitable, and networking more to attract new clients, according to the survey.
Most of the time, teams form between a junior and a senior financial adviser or through advisers who have different specialties, such as one who may be most familiar with estate planning and another who is up on the latest compliance issues, Ms. Taussig said.
Teams, however, are still relatively uncommon. About 52% of advisers work alone, while 13% of advisers work as part of a team, the survey found. The other 35% work as a team sometimes, meaning with certain clients, they team up; with others, they remain solo.
The study, Fidelity's sixth annual Broker and Advisor Sentiment Index, did not examine how much these “combination” advisers earn. Advisers on teams are slightly less content with their firms than solo advisers, probably because those who are part of a team have to compromise on certain issues, whereas single advisers make solo decisions, she said.
Teams of advisers are most likely to be found at registered investment adviser firms and wirehouses, and least likely at independent broker-dealers and regional brokerages, the survey found.
“I expect that as it becomes more apparent that individuals on teams make more, you will see more teams at independent broker dealers and regionals,” Ms. Taussig said. “Firms can do a lot to help encourage teams,” such as by offering help with legal documents about how such teams will handle breakups.
Tommy Williams of Williams Financial Advisors LLC said he brought in two advisers with skills that compliment his own concentration on holistic planning and retirement. Adviser Steve Darden is analytical and adds an investment focus, while Chase Crump is a younger adviser who brings “a different generational slant to things in terms of technology and new ideas,” Mr. Williams said.
“The team approach is about being able to be comprehensive wealth managers and have a broader base of knowledge,” he said.