If you’re a financial advisor who has considered either starting your own financial advisor team or joining an existing one, you’re not alone. A 2017 study by Cerulli Associates found 55% of all financial advisors operate in teams.
The growing trend in financial advisors moving from the independent- to team-based model is rooted in some strong incentives. For one, you can join forces with advisors who may have more experience in services and specialties, so you can complement your client offerings.
Another strong case for joining a financial advisor team is the potential for growth.
Wealthmanagement.com‘s annual compensation survey found that advisors working in teams reported an average of $923,606 in gross production, versus $561,247 by solo advisors.
Financial advisor teams are not one-size-fits-all. Depending on your experience level, risk tolerance, and work style, you may have to do research on several teams before you call one home. Here are some of the major aspects to consider when joining a financial advisor team.
Track Record and Reputation
You want to make sure you’re joining a financial advisor team with a healthy track record and reputation in the industry. What is their AUM? Who are their clients, and what is the average account size? How many years have they been in business? What’s the lead financial advisor’s background? Depending on the team you choose to join, you can adopt some of the clients and brand recognition they’ve established and add legitimacy to your own practice.
Services Offered
Does the financial advisor team’s service offerings complement your own? For instance, if your specialty is retirement planning, you want to make sure that the team has a need for your expertise. If you want to pick up more institutional clients but lack that experience yourself, then partnering up with a team that can offer you support in that area can help build your own advisory repertoire.
Infrastructure and Resources
A major benefit of joining a team is the additional support you can get in managing your business. Do they offer support in compliance, marketing, back office functionalities? What is their technology like? Do they have research capabilities?
If you’re a new financial advisor, you may also be interested in learning about their mentorship opportunities. Does the team offer training programs to help you learn the ropes and manage client relationships?
Philosophy and Team Culture
It’s crucial to join a financial advisor team that aligns with your own goals, culture, and values.
While the registered investment advisor or broker-dealer has a large influence on the team’s culture, each team has its own practices and philosophies within the firm. When trying out different teams, pay close attention to how they service clients and manage investments. Make sure that the way they conduct business aligns with your own values.
Compensation Structure
Payment structure varies widely amongst financial advisor teams and is largely determined by the leadership structure. A vertical structure tends to have a single senior advisor as a leader and a clear chain of command. The senior advisor typically collects the payout from the entire team’s production and divides it up amongst the staff.
In a horizontally-structured team, all partners are on the same level and divide up production based on previously-established percentages.
We have over 10 high-performing teams using Alden Investment Group’s broker-dealer and/or registered investment advisory entities to conduct business. Explore our financial advisor teams and see if they’re right for you.