High performers pitch well, run a tight ship, Fidelity survey finds

Advisory firms that stay focused on niche and make best use of staff grow faster and most profitably

Feb 10, 2014 @ 9:00 am

By Liz Skinner

fidelity, advisory firms, benchmarking
+ Zoom

Financial advisers with swift sales processes and efficient operations come out on top, the new 2013 Fidelity RIA Benchmarking Study suggests.

About 77% of the highest-performing advisory firms convince a client to join their firm in two meetings or less and nearly a quarter of them hook the client with a single meeting, the study shows. High-performers are considered those in the top 25% of the industry in terms of growth, profitability and productivity.

Only 57% of other advisory firms land the client in two meetings or less and just 7% of them do it in one meeting, according to the survey of 324 independent advisory firms released Monday at the T3 Conference in Anaheim, Calif.

“The best performers have an efficient sales process,” said David Canter, executive vice president and head of practice management for Fidelity Institutional Wealth Services. “They have a good process for delivering their presentation and they are very consistent and clear about the firm's story and value proposition.”

That can translate into higher profitability.

High-performing advisory firms have seen assets grow an average of 15% over the past three years, compared with 10% for other firms. Top performers are 30% more profitable and 50% more productive, Mr. Canter said.

The high-performing advisory firms also recognize the power of making the best use of junior advisers and taking a team-based approach within the firm, he said.

Advisers at high-performing firms have an average of 93 clients and generate revenue of $910,000 each, compared with other firms' advisers, who average 68 clients and $542,000 in revenue, the Fidelity analysis shows.

Top firms also have identified a specific type of client to serve and “they stick to target clients better than others,” Mr. Canter said.

The high-performing firms in the survey also focus on using resources — everything from personnel to technology — to run their businesses more efficiently.

About 56% of high-performing firms plan to devote resources to optimizing current systems, as opposed to 33% for firms overall, according to the survey. High performers also were more likely to spend resources on creating process workflows and automation, and shifting to cloud-based or outsourced solutions, it said.

Edgemoor Investment Advisors Inc. in Bethesda, Md., was one of the high performers in Fidelity's study. Timothy C. Coughlin, a managing director at the firm, said the fact that Edgemoor receives all new business through referrals has been a key to its success.

He said it's much easier to approach someone who comes in after a person they know and respect has suggested Edgemoor would be a good investment manager for them. Like most high performers, Edgemoor closes most clients in two meetings or less, he said.

“When a prospect comes in from a good recommendation, they are very quickly able to size us up and determine if they'd like to come or not,” he said.

Edgemoor also focuses its efforts on its core mission of researching investments for clients, not on other activities like marketing, he said.

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