The Insights report – based on the firm's database of 40,000 advisors and 7 million retail investors – said the average team advisor manages $130 million compared to $110 million for the typical solo advisor, and generates $950,000 in revenue versus $830,000 respectively.

PriceMetrix noted that the concept of working in a team appeals to advisors in many, and often distinct, ways, including: the ability to leverage individual strengths; the discipline that working collaboratively brings for setting and achieving goals; and the benefits of a built-in succession plan.

The firm's insights mirror the findings of a report by Cerulli Associates in April looking at how and why the advisory industry is increasingly shifting away from an individual producer mindset to that of a multi-advisor team. Besides boosting advisor productivity and growth, the topic of teaming is also timely as it ties in with the issue of a perceived aging advisor workforce and industry concerns over a potential talent shortage

The numbers

On average, team advisors work with 130 clients compared to 140 among solo practitioners, according to the report, allowing them to spend more time with each client and ultimately deliver more value. Team advisors also manage larger accounts and have fewer "small" households in their books: the average team-served client has $1.1 million in investment assets versus $880,000 for the typical sole practitioner client, the data shows. Additionally, 38 per cent of clients in the average team-managed portfolio have less than $250,000 in assets, versus 43 per cent for solo advisors. 

Interestingly, teams also tend to build deeper client relationships, PriceMetrix said. They manage 3.3 accounts per household versus three for the average solo advisor, for example, and have a somewhat higher percentage of clients with a retirement account - at 74 per cent compared to 72 per cent. Team-based advisors are also slightly more likely to work with couples within a household than a sole practitioner, according to the findings: 42 per cent of the former's clients are couples versus 39 per cent for the latter.

“Given all this, it is perhaps not surprising that team advisors have higher revenues on assets, or RoA, across all asset levels,” PriceMetrix said, noting that the average team-based advisor has an RoA of .92 per cent for clients with $500,000-$1 million in assets, compared to .89 per cent for the typical solo advisor. Further highlighting this, advisors in teams grew assets by an average annualized rate of 7.9 per cent and revenues at a rate of 9.1 per cent between 2013 and 2015, it said. Sole practitioners, on the other hand, grew assets and revenue at 7.1 per cent and 8.3 per cent respectively.

While the report also noted that “timing is not really an issue for advisors considering joining or establishing a team,” the data does point to a sweet spot where team growth is most pronounced. Advisors at or approaching $150 million-$200 million in assets grow by on average 9.3 per cent as part of a team compared to 7.3 per cent alone, the report said.

Insight

“There’s a reason the number of advisors working in teams has increased 25 per cent in just the last three years,” said Doug Trott, president and chief executive at PriceMetrix. More than half of all advisors now work in some form of team arrangement, he said.

“Teams grow faster than sole practitioners, not because of a division of labor or some magic of ‘synergy,’ but because they do the fundamental things that drive growth,” Trott added. “They manage fewer accounts. They create deeper relationships and they are more likely to become the primary financial adviser for their clients.”

He continued: “Certainly nothing prevents a solo advisor from concentrating on the fundamentals to grow his or her business. But team members seem more likely to hold each other accountable and to have greater discipline focusing on the things that matter.”

Editor's note: PriceMetrix noted that a significant barrier when undertaking a data-driven study of teams is determining which advisors are operating in a team-based relationship. 

"Most firms do not maintain an up-to-date, central registry of teams, their participants, and associated economic arrangements," it explained. "Most compensation systems, though, do house ‘revenue split’ arrangements, where an account, or a set of accounts, may produce compensation that is shared across multiple advisor codes."