While working as an RIA, flying solo isn’t always as cool as it sounds and many RIAs are joining forces as “advisor teams”. Studies have found rapid organic growth with advisor teams. Working as a team leads to a more diverse pool of knowledge, a better pool of resources, and higher productivity. Compared to other leading firms and solo RIAs, working as a team promotes more rapid organic growth.
RIAs have an advantage in team collaboration. They use a plethora of independent sources to find the perfect combination of products for their niche clients. In a team-based model, the resource pool grows exponentially. The issues with working with a brokerage firm is missing out on new knowledge, trends, law changes that could affect individual clients due to oversight.
Independent Investors are booming these days. We are seeing more and more clients that benefit from personalized services. RIAs are more attractive to independent investors. Of course, there are pros and cons to working with a brokerage vs an independent. By pulling from both options, we could create the ultimate clientele experience: a group of RIAs working together to help niche clients excel in their investments.
Team-based advisories offer a deeper level of specialization to engage in client matters. The annual report from Cerulli Associates found that 36% of team-based practices employ specialized staff, including financial planning specialists or para-planners, investment teams, and tax professionals, compared to just 10% for solo practices. As an independent contractor, one must shoulder various unique responsibilities that are not present in traditional employment.
“One of the key benefits of multi-advisor teams is the diversity of complementary skills, experience, and expertise. Combining each team member’s experience allows practices to leverage their individual strengths and provide specialized services, including lending, estate planning, and tax services.” – Asher Cheses, director at Cerulli Associates
Word of mouth will always be the top-runner strategy for marketing. According to Cerulli Associates, team-based practices produced an average of $21mm in net-asset inflows in 2023, compared to $8mm on average for solo practices.
Nearly half of advisors operate using a team-based structure, Cerulli found, with a whopping 94.5% of practices that manage $500mm or more in client assets using teams of advisors.
Cerulli pulled the report from its annual survey of over 2,000 practices across the wealth management industry.
Do you think team-based advisories are the future of RIAs and brokerage firms or can we all fit at the same table? We’d love to hear your opinion!