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