How financial advisers can stay ahead of the competition

Eight practice management ideas from the Fidelity Inside Track Conference

Nov 1, 2013 @ 8:54 am

By Megan Durisin

Advisers who compare themselves to the competition have a better chance of staying ahead.

That's the advice Mathias Hitchcock, vice president of Fidelity Institutional Wealth Services, gave to advisers at the Fidelity Inside Track conference in New York.

His lecture dove into data from Fidelity's 2012 RIA Benchmarking Study. (The 2013 version is set to roll out later this year.) Mr. Hitchcock focused on how high-performing firms — those in the top 25% in the industry in terms of profitability, assets under management over a three-year period and productivity as a measure of earnings before owner's compensation — are outperforming the competition.

There isn't one thing that separates high-performing firms from the rest of the pack. Overall, it's a matter of gaining assets through better sales effectiveness, investment performance and client retention, Mr. Hitchcock said. Looking at the data as a whole shows some ways they are a “little bit better” across numerous industry benchmarks, he said.

“We see this very clearly as being a story of strength across the board,” Mr. Hitchcock said. “It's a very significant difference in business performance.”

Here are eight takeaways from his panel discussion:

1. Seventy-two percent of top firms close business in two or fewer meetings. That compares to 53% of other firms.

2. Only 3% of high-performing firms stray from their “target client” profile. That compares to 11% of all other firms. “They get better at telling the same consistent story to the same consistent client and that does have an impact,” Mr. Hitchcock said.

3. Top firms focus more intently on larger client relationships.

4. They are more likely to bundle services in their overall management fees.

5. High-performing firms have seen assets grow an average of 20% over the past three years. Other firms have grown assets an average of 12%.

6. Top firms manage an average of 3% more assets per client.

7. On average, top firms have a more diversified staffing model. The largest allocation of their head count, 45%, is designated “other staff.” Forty percent of their staff is advisers and 15% is management. For other firms, advisers make up the majority of staff positions.

8. High-performing firms have an average of 80 clients per adviser, versus 64 clients per adviser at other firms. The firms also manage an average of $113 million in assets per adviser, versus $75 million per adviser for other firms.

0
Comments

What do you think?

View comments

Recommended for you

RIA Data Center

Use InvestmentNews' RIA Data Center to filter and find key information on over 1,400 fee-only registered investment advisory firms.

Rank RIAs by

Featured video

Events

BNY Mellon's Pershing's Sholes: Growth, tech shaping the future of advice

What's top of mind for advisers today? Tom Sholes of BNY Mellon's Pershing says the huge growth in the RIA space is driving innovation.

Latest news & opinion

Merrill re-evaluates commission ban in retirement accounts

The wirehouse's wealth management group announces a fresh look at the ban now that the DOL rule is on the brink of death.

10 biggest retirement mistakes

Adhere to enrollment deadlines and distribution rules or pay a hefty penalty.

DOL fiduciary rule on brink of death as key deadline passes

Justice Department didn't petition the Supreme Court to rehear the case. A mandate from the 5th Circuit would finally lay the fiduciary rule to rest.

Finra to overhaul broker information system, cut compliance costs for broker-dealers

The move is intended to cut compliance costs for firms as well as make the registration and disclosure process more efficient.

SEC rule proposal doesn't include 401(k) sponsors in 'best interest' advice

Plan sponsors are left out of the equation because they don't appear to fall within the definition of "retail" investor, legal experts say.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print