FA Magazine July/August 2022 | Page 75

figure 5
Number One Source Of Growth
firms were allowed to use multiple sources of growth as their top choice .
The growth of the community of independent-minded firms is mesmerizing in its speed and scope .
50 % 45 % 40 %
45 %
35 % 30 % 25 % 20 % 15 % 10 %
5 % 0 %
Business
30 %
market Performance
18 %
m & a
18 %
contributions
agement had the slowest growth in 2021 ( at 16 %). Those firms that work with the smallest clients , on the other hand ( people with less than $ 1 million in AUM ) had the fastest growth . That holds true as we progress to the other cohorts . Those firms whose clients have $ 10 million to $ 50 million saw 17 % growth ; those whose clients have $ 5 million to $ 10 million grew at 19 %. Finally , firms whose clients have $ 1 million to $ 5 million grew at 21 %. ( See Figure 4 .)
In other words , as you move from the mass market through the affluent , highnet-worth and finally ultra-high-networth markets , the growth slows down very likely because the competition dramatically stiffens .
According to an Ensemble Practice survey of consumers , 66 % of those clients with more than $ 5 million in assets under management already have an advisor , while 52 % of those with AUM between $ 1 million and $ 5 million have such a relationship and only 35 % of the smallest clients work with an advisor .
Forty-five percent of firms consider business development their No . 1 source of growth . Thirty percent of firms consider the market their primary source of growth , and an equal 18 % of firms relied on M & A or contribution of assets from existing clients ( additional savings or wallet-share ). ( Firms were allowed to use multiple sources of growth as their top choice .) ( See Figure 5 .)
If You Want A Faster Career , Consider Joining A Smaller Firm
When an advisory firm succeeds , so do its team members , and successful firms grow faster when they create more opportunities for their employees . They pay more in both bonuses and base compensation . They create more career paths . But small firms offer perhaps a faster way to the top .
Look at the organizational structure of advisory firms , especially the percentage of team members considered “ partners ” or “ top executives .”
In the top 100 advisory firms , 16 % ( one out of six ) of the team members are either partners or executives . This number grows to 18 % of the next 100 firms . It ’ s 24 % for the smaller firms ranking from 200 to 500 .
So in smaller firms , more team members are partners and perhaps there are many opportunities for advisors at the firms to grow their careers to that level . As the firms grow larger , they create more positions and more diverse paths to advancement , but perhaps the journey is slower and a smaller number of the team members are able to travel it .
Success And Failure
They say , “ Success has many parents and failure is an orphan .” There are many people who deserve credit for the success of the top firms . Their advisors deserve kudos for the amazing work they do with clients , continuing to forge wonderful relationships . The marketing teams deliver organic growth . The executives execute complex negotiations to grow the firms through mergers and acquisitions . Other staff members help retain clients . And then there are the markets , which gave us an amazing boost in 2021 !
The growth of the community of independent-minded firms is mesmerizing in its speed and scope . It has created a prosperous and evolving ecosystem of enterprises that continue to set records for size but , even more importantly , continue to create opportunities for their teams , care for their clients and provide returns to their investors . Congratulations to the top 100 !
PhIlIP PAlAveev is the ceo of the ensemble Practice llc . He ’ s an industry consultant , author of the books G2 : Building the Next Generation and The Ensemble Practice and the lead faculty member for the g2 leadership institute .
Retirement continued from page 65
an annuity ,” says Sizemore , “ but there are times when the additional income above the yield on a bond portfolio makes them worth considering .”
Theodore E . Saade , managing senior partner at Signature Estate & Investment Advisors in Los Angeles , might agree . “ As fiduciaries , it ’ s essential to present such products to clients where appropriate ,” he says , adding , “ The annuity industry continues to evolve and has come out with offerings ” that are often appropriate .
The Unknowns
It ’ s also a good idea to be mindful of how far a dollar will or will not go . “ Considering how inflation will affect [ client ] spending , especially in later years of retirement , is an integral part of easing a client ’ s concerns ,” says Ken Van Leeuwen , CEO and founder of Van Leeuwen and Co . in Princeton , N . J .
Given so many unknowns , perhaps the very idea of a “ withdrawal rule ” is nonsensical . “ It ’ s hard to make a onesize-fits-all rule ,” says Justin Dime , associate wealth advisor at Bordeaux Wealth Advisors in Menlo Park , Calif . “ You need to be creative and flexible , depending on the situation .”
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