The future of adviser benchmarking

The original Moss Adams compensation and staffing study has been enhanced for today's advisers' needs

Apr 14, 2013 @ 12:01 am

By Suzanne Siracuse and Philip Palaveev

Siracuse and Palaveev
+ Zoom
Siracuse and Palaveev

When we look into the future of the financial advisory industry, we see a thriving and successful community of firms that delivers tremendous value to clients and makes sound management decisions.

Good decisions are based on good information. It is the mission of the partnership between InvestmentNews and The Ensemble Practice LLC to supply that information to the industry.

Today's industry is very different than it was in 2001 when the first benchmarking study was published by Moss Adams LLP. Firms are much larger and more experienced in their management practices, and the industry is more competitive and more consolidated. The growth is there, but the fruit of opportunity is not as low-hanging as it was in 2001.

In the first benchmarking study, the average size of a participating firm was $180,000 in revenue, and firms with more than $500,000 in revenue were considered large. In the 2012 study, more than a decade later, the average firm had $1.4 million in revenue, and the large firms were those with more than $3 million in revenue.

The value of benchmarking doesn't lie in the simple comparison of mechanical numbers but rather in the ability to glean insight from the experience of the industry: Are we growing as fast as our competitors? When is it time to hire another adviser? Are our teams at capacity or are we being inefficient? Are we preparing the ownership group for the succession of the founders? How do we pay the partners/owners?

These and many other questions are the focus of our efforts.

InvestmentNews, Moss Adams, Pershing LLC and The Ensemble Practice have joined forces to deliver to the industry Benchmarking 2.0 — the next step in the evolution of management decision making in financial advice. We bring together the knowledge of working with the largest and most successful firms in the industry, the sophistication of one of the largest financial institutions in the world, a rigorous business discipline and the largest publication in the industry. (Participate now in the 2013 InvestmentNews/Moss Adams Compensation and Staffing Study.)

Our goals are ambitious, but we also have some very practical and very immediate ones in front of us.

These include:

• Focusing more attention on the industry by highlighting its best firms and promoting their success.

• Making it easier for every firm in the industry to participate in the study by making the information we ask for closely mirror the information most firms track.

• Meeting the needs of the largest firms by increasing our focus on firms with more than $1 billion in assets under management.

• Examining more of the specialized positions that have emerged in the industry, and clarifying job descriptions and pay practices.

• Bringing light to career tracks and the milestones for growth.

• Speaking to firms that are looking to grow to be large competitors.

• Dedicating time and attention to solo practitioners.

Our goal is to speak in meaningful ways to the management decisions made by each of the core groups in the industry and recognize their needs.

These include:

Superensembles. We recognize the complex and sophisticated management environment at the largest firms, as well as the need for information on partner compensation, professional career tracks, incentive compensation and specialized positions in operations and support. We will examine mergers and acquisitions, partner buy-ins and risk management, and many other topics.

Midsize firms. These are the heart and soul of the industry, and we look to help them grow faster, improve their hiring and compensation practices, find the right organizational structure and achieve higher profitability.

Solo practices. Solo practices play a huge role in the industry and have a future of opportunity if they can find the right way to be efficient, hire the right administrative and support staff, and choose the right strategic partners.

Each of these audiences deserves its own and specialized attention, and we have the experience and expertise to speak to every size firm.

On behalf of InvestmentNews and The Ensemble Practice, we invite you to visit Investment News.com/advisercomp and participate in the 2013 InvestmentNews/ Moss Adams Compensation and Staffing study, which is now officially live.

Suzanne Siracuse is the publisher of InvestmentNews. Philip Palaveev is chief executive of The Ensemble Practice LLC.

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