Advisor Teaming Gains Speed

By Cyril Tuohy
InsuranceNewsNet

A new report by Cerulli Associates said that multiadvisor teams will increase in the future as advisor practices operate with more independence and leave behind the “individual producer” approach that has permeated the industry for decades.

The trend represents an important shift in a financial advisory universe dominated by a cottage industry of small companies with a handful of employees.

Kenton Shirk, associate director at Cerulli, said the appeal of advisor teaming was growing among new as well as established advisors.

“The advisory industry is increasingly shifting away from an individual producer mindset to that of a multiadvisor team,” Shirk said in a news release. “The industry’s largest practices and megateams also typically serve affluent investors, which reinforces their propensity for teaming.”

Cerulli findings are contained in the “Teaming Issue” of the Cerulli Edge Advisor Edition published earlier this month.

Shirk said working as part of a team allows advisors to provide more services. In addition, pooling resources means advisory firms are better equipped to specialize for both advisors and staff, which leads to higher productivity and more opportunity.

Cerulli also found that the larger the advisory firm and the higher the assets under management, the more advisors are likely to operate as part of a team to offer investment, financial planning, succession and estate planning services.

Cerulli reported that 41 percent of practices with more than $500 million in assets employ investment personnel directly in their practices, compared with only 21 percent of practices with $100 million to $250 million in assets.

Among teams with more than $500 million in assets under management, 84 percent of advisors mention the ability to offer more services as a core reason for teaming, Cerulli said.

Shirk also said that the growth of multiadvisor teams is most pronounced among independent advisory channels.

Among advisory firms, the average number of professional staff is 5.2 for dually registered practices and 4.5 for registered investment advisors (RIAs).

Within the wirehouse channel, the average number of total professional staff is 3.3, the Cerulli survey also found.

Large or mega-advisors approach teaming from different angles, and appear to do so right from the start of a trainee’s career, the report found.

Merrill Lynch allows trainees to join a team as a specialist. Young advisors can choose to specialize in business development, relationship management, investments or financial planning, according to the report.

At Wells Fargo, young associates are paired with an experienced mentor and a performance coach before striking out on their own.

Regional broker/dealer Raymond James Financial invites young advisors-to-be to begin their careers as service associates with coaching that is “in line with the associate’s previous experience,” the report said.

After a year, the young Raymond James apprentice is eligible to move into the traditional trainee program, the Cerulli report said.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].

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Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at [email protected].