Lack of capacity 'single biggest' growth inhibitor for advisory firms

Lack of capacity 'single biggest' growth inhibitor for advisory firms
Average adviser has roughly 1,800 hours available in work year, but approximately 60% of it spent 'on crap,' Pershing's Tibergien says.
OCT 19, 2016
Lack of capacity is the main deterrent to achieving growth within advisory firms, according to Mark Tibergien, chief executive of Pershing Advisor Solutions. “The single biggest inhibitor to growth is lack of capacity,” Mr. Tibergien said Tuesday at the InvestmentNews Best Practices Workshop in New York City. The average adviser has roughly 1,800 hours available in the work year, but approximately 60% of that time is spent “on crap” such as compliance issues and management meetings, while the remaining 40% is spent on client service, Mr. Tibergien said. (More: Despite having the tools, most financial advisers don't track sales leads) Of the time spent servicing clients, advisers take about 20 hours per year on each “high-value” client, 10 hours on those considered mid-value and five on those considered low-value, Mr. Tibergien said. On an industry level, the rate of growth has slowed at advisory firms, productivity in many cases is declining and margins are getting squeezed, according to Mr. Tibergien. “Advisory firms are getting bigger. Some may think bigger is better, but it depends what's happening underneath,” he said. (More: Advisers finding more social media success) The optimal advisory firm uses a “leverage” model to help boost adviser capacity, which allows advisers to delegate some responsibilities to lower-cost employees, Mr. Tibergien said, who acknowledged it's a “hard concept in this business.” The model uses a five-level pyramid, starting at the bottom with employees to which advisers can delegate some work to free up capacity, such as analysts and senior analysts, then moving up to those with more relationship-focused positions such as advisers, senior advisers and partners.

Latest News

401(k) participants seek advice, but few turn to financial advisors
401(k) participants seek advice, but few turn to financial advisors

Cerulli research finds nearly two-thirds of active retirement plan participants are unadvised, opening a potential engagement opportunity.

Court revives lawsuit over 15% fund return promise
Court revives lawsuit over 15% fund return promise

'Nostradamus' real estate entrepreneur accused of misleading investors on social media despite SEC's objections.

Los Angeles Federal Credit Union splits from LPL’s CFS to Cetera
Los Angeles Federal Credit Union splits from LPL’s CFS to Cetera

LPL loses another institutional client as Cetera adds a $160 million win to its credit union partnership streak.

UBS keeps focus on costs in US wealth management business
UBS keeps focus on costs in US wealth management business

Meanwhile, the bank is also investing in technology for its financial advisors in the United States.

Vanguard seeking SEC green light to expand trademark tax-busting fund design
Vanguard seeking SEC green light to expand trademark tax-busting fund design

The Jack Bogle-founded firm is looking to apply its famed dual-share class structure to actively managed strategies.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today’s choppy market waters, says Myles Lambert, Brighthouse Financial.

SPONSORED Beyond the dashboard: Making wealth tech human

How intelliflo aims to solve advisors' top tech headaches—without sacrificing the personal touch clients crave