The science behind why advisory teams do better business

Study finds multiple advisers are more accountable to each other and disciplined than solo advisers, and higher assets and revenue follow

Oct 6, 2015 @ 6:00 am

By Liz Skinner

Planning teams perform better than solo advisers, and it's not just a matter of two heads being better than one.

Advisers who work together as a pair or even a larger team grow faster than advisers who work alone because they focus on the fundamental drivers that lead to more successful businesses, according to a PriceMetrix report released Tuesday.

"Teams do better because they hold each other accountable about things that cause firms to do best," said Pat Kennedy, co-founder of PriceMetrix, a practice management software firm. "It's similar to the benefits of having an exercise buddy."

Advisers working in teams grew assets about 7.9% a year from 2013 to 2015, compared with 7.1% a year for solo advisers, the report found. Teams grew revenues at a 9.1% rate, compared with solo advisers at 8.3% a year.


“The team is itself the path to accelerated growth," Mr. Kennedy said. "Teams operate with a little bit more discipline."

(More: At Edward Jones, it's still one person, one office)

Advisory teams generate more fee-based business, focus on a narrower segment of clients and have deeper client relationships — all characteristics that drive growth at firms, Mr. Kennedy said.

And advisers increasingly want to be part of teams.

The number of advisers working with clients as a team has jumped 25% over the past three years, with 55% doing so now, according to PriceMetrix data.


Overall, teams of advisers have about 17% more assets invested than solo advisers, and are more likely to have a client's retirement account — a signal of a strong relationship with the client, Mr. Kennedy said.

(More: The makeup of independent advisory firms has fundamentally changed)

The average team adviser manages about $130 million, compared with $110 million by the typical solo adviser, the report said. Revenue for the average team adviser is $950,000, compared with $830,000 for solos.

Teams of all asset sizes perform better than solos, but the difference is most pronounced for advisers with about $150 million to $200 million in assets. At that size, teams grew 9.3% a year on average compared with 7.3% for solo advisers, the report found.

The report also concludes that teams that include both a male and a female adviser slightly outperform those with just males or females.


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