Team-based practices drive growth: report

Team-based practices have higher assets under management (AUM) than solo practices, offer more client services and are more likely to have a plan for succession, finds a report released Thursday by Boston-based research firm Cerulli Associates.

The median AUM per advisor for U.S. team-based practices was US$100 million versus US$72 million for solo practices. Team-based practices also served clients with higher average net worth at US$1.6 million, compared to US$1 million for solo advisors.

Among practices with more than US$500 million in AUM, 94.5% were team based.

Multi-advisor teams benefit from complementary skills and experience, Asher Cheses, director at Cerulli, said in a release. “Combining each team member’s experience allows practices to leverage their individual strengths and provide specialized services, including lending, estate planning [and] tax services.” 

Teaming up enables advisors to provide more financial planning and high-net-worth services, which helps practices move up market, the report said. On average, team-based practices provided 2.9 out of eight measured high-net-worth services, such as charitable planning and trust services, compared to 2.2 for solo practices.

“An expanded set of services typically results in higher levels of wallet share, as clients tend to aggregate held-away assets with teams that can deliver comprehensive services,” Cerulli said in a release.

Another advantage of teaming up is the opportunity for succession planning. Advisors who operate as part of a team-based practice are more likely to have a succession plan, which reduces the risk that clients will leave after the lead advisor retires. Just 14.4% of solo advisors plan to sell to someone within their own practice, compared to 37.4% for team-based advisors.

For solo practices that want to grow their business, Cerulli recommended advisors determine which services to offer and which to outsource, and to discuss working with other local advisors under a shared group name.

The report was based Cerulli’s annual financial advisor survey, which includes more than 2,000 responses, as well as on more than 20 interviews conducted in Q1 of 2024 with advisory teams across employee and independent channels. Interview participants were required to have a minimum of $50 million in AUM.

Jonathan Got

Jonathan Got is a reporter with Advisor.ca and its sister publication, Investment Executive. Reach him at jonathan@newcom.ca.