In the wealth management industry, several cooks in the kitchen might actually improve the broth.
Wealth management heavyweight Osaic engaged research firm Cerulli Associates to expand its expertise in the "untapped area" of teaming, according to Dimple Shah, head of corporate strategy at Osaic. Cerulli talked to a broad sample of over 20 advising teams in the first quarter of 2024 and analyzed over 2,000 responses to its annual advisor research collaborative survey as part of the study.
"One of the focal points of our Corporate Strategy is to help entrepreneurial financial advisors achieve outsized growth and productivity," Shah said in an email. "To support this strategy, we are focused on developing new thought leadership as well as capabilities to help advisors supercharge their growth."
The resulting
"I think overall, advisor teaming has become prevalent across the industry. It's been a consistent drumbeat across all the wealth management advice channels," said senior wealth analyst Stephen Caruso of Cerulli. "There's an increasing opportunity for advisors to work together, and with working together it begets more solutions."
The study found that although more than half of financial advisors work in solo practices, advisors who work on teams brought in an average of $13 million more in net asset flows than individual advisors. And in team-based practices, each advisor averaged more assets under management than at solo practices.
"As an advisor, trying to do everything for your client — planning, paperwork, account maintenance, trading — is not the most efficient way of providing services to clients and limits the advisor's number of clients they can work with relative to a team," said Daniel Lash, partner and financial advisor at the Vienna, Virginia-based
Working on a team allows individual advisors to become more specialized in an area of expertise. The study found that over a third of team-based practices have specialized staff, compared to one-tenth of solo advisors.
Scott Bishop, partner and managing director at Houston-based
"You can have a multidisciplinary team. Very few are good at everything. By building a team, you can add the pieces that are not your strengths to be able to better serve clients," Bishop said via email.
Halbert Hargrove, a Long Beach, California-based wealth advisory and fiduciary investment firm, employs a team-based horizontal organization structure with a team of CFPs, client service managers and associates.
"Everyone has a voice," said Kelli Kiemle, Halbert Hargrove's managing director of growth and client experience. "Everyone has a say, and I think that's really helped as well. Also, none of the staff or advisors is managed by anyone on their individual team. We have outside managers that manage every individual on the team, and that structure has really helped as well."
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The Cerulli study found that having more advisors allows for better scalability — firms can generate more client relationships, referrals and opportunities for senior advisors to engage in work that is most valuable to the practice.
"So they're really freed up to really have high-level conversations with our clients and with their prospects. And all of that day-to-day maintenance and the paperwork type things, it's all done by the team," said Kiemle.
Integrating team-style organization also allows firms to better develop junior talent and ensure that retiring advisors have well-trained successors, according to the report. As the wealth management industry struggles to recruit younger advisors and replace those who pass away or retire, teams could offer one solution to succession problems.
"If I was a sole practitioner, how could I truly answer my client's question, 'Who will take care of my planning if you retire or if something happens to you?'" Bishop said via email. "With a team, I can tell them. … When I decide to retire, I want my team there to manage your financial planning and mine."
Caruso pointed to the ability to develop talent as one component that will affect the future of the financial services industry.
"It's been very important in our research over the last few years," he said. "How do you encourage the growth of next-generation advisors or folks that are coming to the industry for the very first time? How do you ensure that they're having an experience that makes them excited about their role, excited about the profession that gives them opportunities for growth?"
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Kiemle said that at Halbert Hargrove, everyone on a given team is familiar with the clients they work with.
"That's on purpose," Kiemle said. "There's that continuity of more than one person knows what's going on in their relationship, more than one person can service them. If something were to happen, someone else could step in and they don't have to start over from scratch."
To team or not to team?
However, teaming is not a strategy that works for everyone, according to Louis Diamond, president and financial advisor recruiter at Diamond Consultants.
"I think clearly this study and others have shown that there are quantifiable benefits," Diamond said. "But the cool thing about being a financial advisor is that they get to build the business the way that they want to, and if they feel like they're constrained on how that works, then they have options to go independent and do it truly on their own, or practice the way that they want to."
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Noah Damsky of Los Angeles-based
Edward Jones
"The 'Edward Jones' of the world have been reluctant to go the team way, but I think they've seen that they've lost advisors because they didn't allow teaming, and I think they've seen that in their pilot programs, that when advisors do work in teams that it yields better results," Diamond said.
Diamond also noted that introducing teams makes it harder for advisors to leave a practice, saying that teams can be "stickier" than individual advisors.
For solo practitioners considering a team-based structure, Kiemle said that although it can be a "hard sell" to those unfamiliar with working on a team, the transition is ultimately worthwhile as it gives advisors more choice in their activities.
"We have workflows across the firm; everything is structured in a way that's supposed to be efficient, and it's supposed to allow everyone on the team to have open communication and to know the status of what's going on," she said.
Osaic launched a "Teams Advisor Council" at the firm last year. The company is approaching teaming through a combination of education and training, holistic wealth management strategy, simplified business operations and management, community building and human capital consulting for its advisors, according to Shah.
"Last year, we launched our new financial planning and high net worth team to help advisors with complex client needs to better empower better financial planning in a team-based environment and are exploring ways of optimizing our financial planning offerings to implement best practices across Osaic," Shah said.
Diamond noted that teaming is "not one-size-fits-all," explaining that forming a team could look like selling a business, merging a business or even offering a fee-for-service model where a solo advisor pays a commission to a firm.
"So you have a lot of different ways that teaming could occur," he said. "It doesn't always have to be: 'We're one brand and we're doing everything together.'"
