Top Adviser Teams Practice True Collaboration

More than 60% of advisers say they work within a team structure, yet only one-third of teams regularly collaborate in their daily decisions and processes.

New research from the Investments & Wealth Institute, published in collaboration with Janus Henderson Investors, suggests advisers like to use the terminology of teamwork—but they have less success at forming truly integrated advisory teams.

The firms present their findings in an analysis aptly titled “High-Performing Advisor Teams,” and they identify numerous advantages of working in a team context. Perhaps most importantly, the research seeks to “distinguish factors of the most productive teams.”

Study participants included advisers operating in branch networks (wirehouse and national/regional broker/dealers) and independent channels, including independent broker/dealers, registered investment advisers (RIAs), and hybrid RIAs. As the researchers lay out, teams were ranked by assets under management (AUM) per producing adviser, AUM per total headcount and average client size, and were then segmented into quartiles based on overall performance.

“These factors were crucial representations of an adviser’s ability to attract and retain clients, as well as the team’s overall efficiency, ability to scale its practice and success attracting high-net-worth investors,” researchers explain.

Key findings from the study suggest “truly shared decisionmaking” could be a lost opportunity for many practices. When it comes to the tenets of shared decisionmaking, the researchers point to frequent and detailed communications across all team members. In addition, teams of advisers seem to be better at fostering shared decisionmaking when the constituent members have all moved down the road of complementary specialization—with some team members focused on investing, others on working with clients to manage relationships and set goals, and others focusing on marketing or business development, for example.

The data shows over half of teams in the “top-performing” category hire specialized staff roles, compared to 37% of peer teams overall. Related to this, the top-performing quartile of advisory teams have a broader mix of advanced credentials and are 1.5 times more likely to hold a CIMA or CPWA designation compared to peer firms.

While it is in a sense obvious that adviser teams would, broadly speaking, manage more assets than individual advisers, teaming up seems to allow for excess benefits of scale. For starters, the research shows, the industry’s largest advisers with $100 million or more in individual AUM are more likely to operate in a multi-adviser team context. At the same time, over 60% of advisers with $100 million to $250 million in AUM operate as a team, as do 77% of advisers with $250 million to $500 million in AUM, and 90% of advisers with $500 million or more in AUM.

Specialization and deeper expertise characterize top performing teams

When analyzing top-performing teams, several distinguishing factors emerged with respect to client-facing activities. Notably, top-quartile teams offer an average of 3.8 wealth management services per client, compared to 3.2 for peers. A focus on client service and communication were also components that set successful adviser teams apart, according to the research. Nearly half of top-performing teams hold quarterly in-person review meetings with clients, compared to only 29% of peers.

“Outreach methods played at the forefront for successful advising teams,” the research states. “Responses showed that these successful, high-achieving teams are more likely to leverage proactive marketing and personal relationships help them to find new clients.”

Important to note, the study showed that half of top-quartile teams employ at least one producing junior adviser. At the same time, nearly half of top-quartile teams employ at least one non-producing junior adviser. Additionally, in peer teams, only 27% of advisers nearing retirement are uncertain about their succession, and in hierarchy-based teams with multiple leaders, only 16% of advisers are uncertain about their succession.

Additional findings from the research study, conducted with support from Cerulli Associates, are available here.