The Entrepreneurial Crossroads - Business Management for Financial Advisers

Most financial-advisory firms are in that awkward adolescent state. They’re too big, yet they’re too small. Once the firm begins to add any staff, it has started to accelerate its growth. It need to monitor and measure performance, counsel people, produce increasing revenue and invest in more employee benefits.

Although it may be intuitively appealing not to expand your practice so as to avoid the associated headaches, the reality is that every practice will experience problems in each of the management areas much of the time. If you choose not to grow, then you cannot provide a path for the individuals you hire, which may cause them to leave the job.

And by staying small thought you are not concerned about succession, your clients are. It is likely that they may have developed some dependency on you. What so ever path you may choose, your aim is to provide service and fulfillments to your clients.

Vital Signs

Having been in and around the advisory business for many years, Mark and Rebecca have found that the most successful advisory firms have several common characteristics:

  • Clear idea of their strategy and positioning
  • Human capital plan aligned with their vision
  • A compensation plan that reinforces owners’ vision for the business
  • Active management of profitability
  • Built-in leverage and capacity.

These concepts apply whether you’re a one-person operation or ensemble practice. The difference in the two operating models is that as a solo practitioner, you are the only adviser; in an ensemble model, other advisers or professional staff is a critical part of your practice.

We believe that the concepts of strategy, financial management, staffing, and client feedback are relevant and meaningful to solo practitioners, but it has become clear to us that the one thing solo firms lack is the built-in leverage and capacity that distinguishes the elite ensemble firms.

Few years ago, we were asked to look at a team that was attempting t o move away from the individual producer approach. We were impressed that the teams within this firm were generating more income per adviser and more income per client and seemed to be eliciting higher client-satisfaction scores than their individual-producer counterparts.

We segregated the data to evaluate the performance of solo practitioners and ensemble firms. Size did matter among advisors who opted to become ensemble business, means that they had multiple partners, principles or professionals.

The top performing ensembles generates 20% more revenue per professional, which is about 2 times the take home income per owner than their top performing solo practitioners.

Ensemble Firms Are More Productive

Ensemble Firms Are More Productive

Ensemble Firms Reward Their Owners

Ensemble Firms Reward Their Owners


The advisors who have made a transformation to ensemble model tell that they are more responsive and more proactive in dealing with clients. In the solo model, the challenge for the advisor is he is the only one who can advise, generate new clients and manage the business.

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