Team-based advisor shops trounce lone wolf practices, Cerulli says

It's often said that financial advice is a contact sport. And for practices to successfully compete and win, they've got to also treat it as a team sport, according to new research from Cerulli. 

The latest data report from the research firm shows just over half of advisors now work in teams – including teams with single-leader and multi-leader hierarchies, as well as ensembles of equals – with adoption highest in the wirehouse and hybrid RIA channels.

Team-based practices carry significantly larger books, attract bigger clients, and expand capabilities through specialized roles.

Cerulli’s latest US Advisor Metrics report shows that the average assets under management for team practices are more than three times those of solo firms. Annual organic growth also skews higher for teams, averaging $20.3 million versus $8 million for solo advisors.

Across advisors, Cerulli found widespread pain points around serving too many non‑ideal clients and ineffective delegation. Teams are well-placed to address those challenges, as they're able to build capacity by adding professional and administrative staff dedicated to operations, compliance, marketing, and planning.

According to Cerulli, 37% of team practices employ specialized staff, and 28% have dedicated planning or investment personnel. That correlates with a broader menu of services, as team firms offered more services in total while maintaining larger average client relationships than solo peers.

Adopting a team-based structure also sets practices up better for long-term continuity and client handoffs. Cerulli also finds that 79% of teams have succession plans in place, compared with 66% among solo practices, and teams are more likely to employ junior advisors and paraplanning staff.

“Financial planning is a fundamental service provided by many advisor practices and is crucial for attracting new clients and encouraging them to utilize a wider range of available services and products,” said Andrew Blake, associate director at Cerulli. “Advisor practices that incorporate at least one planning specialist or paraplanner will be better positioned for expanding their financial planning capabilities.”

Building teams isn't exactly all smooth sailing, as nearly two-thirds of practice management professionals agreed that training junior advisors is a major difficulty.

But firms will have to confront that as well as other growing pains, as Cerulli suggests expanding the planning bench will be an essential strategy to cope with ongoing industry trends of scaling and consolidation. To hold together as strong teams, the report points to collaborative leadership, consistent communication, and a shared vision among members. 

“Large multi-advisor practices are expected to become more common as consolidation continues and as pooling resources becomes increasingly feasible,” Blake said. “Larger advisor teams will require greater support, and firms will need to add resources and hire more specialized staff to make them as efficient as possible.”