Advisor Teams Are Getting Bigger. Here's Why

Yahoo

14 hours ago

The more, the merrier — or so advisors seem to think.
Advisor teams are getting larger as firms grow in size and aging founders scramble to find succession plans. Although a majority of advisor teams are still relatively small — think one to three advisors — more are reaching 10 people or more, according to a recent report from AdvizorPro. These teams are also younger, more diverse, and more likely to embrace technology.
Larger teams signal a shift toward centralized models, per the report, with firms hiring more staff to handle back-office operations, while outsourcing their investment management needs. Experts say this trend is slated to continue as the ongoing M&A mania and private equity funding reshape the wealth management landscape.
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Advisors have always worked in teams, but those teams have grown larger as client needs become more complex and as demand increases for holistic advice and alternative investments. This year, 65% of Barron's top-ranked private wealth teams had between 10 and 25 team members, up from 53% two years ago. Two reasons a firm might want larger teams are succession planning and to offload certain roles, like compliance, said Michael Belluomini, SVP of M&A at Carson Group. Consolidation driven by M&A and aging advisor demographics is likely to continue. 'I don't know that we'll ever see a frenzy like we just did over the past four years,' he said, 'although I do think we're going to have a pretty stable market for at least the next 10 to 15.'
The AdvizorPro report also found:
Merrill Lynch and Morgan Stanley had the highest number of mapped advisor teams, which operate as 'institutional-style units' with lots of clients.
LPL and Osaic had the third- and fourth-most teams, respectively, with their models instead supporting semi-autonomous advisor groups spread out across the country.
Team-based advisors are more than six years younger, on average, than solo advisors, with a median tenure of 12 years compared to 24.
'We're finding advisors are leaning heavily into technology and AI to help scale their businesses,' said Dustin Echenique, CRO of AdvizorPro. 'They're relatively lean in terms of their number of resources, and that trend seems [likely] to continue.'
Consolidation Craze. Despite the rampant M&A activity of the past few years, however, the largest firms have yet to join forces. That's because there are still so many independent and hybrid firms out there to be snapped up, Belluomini said. Private equity interest in the space, and the risk-free nature of PE investment compared to M&A dealmaking, is also a factor. 'We're starting to see now… more regional PE firms investing in a $4 or $5 billion RIA that historically had been kept out of the business,' he said. 'So there's a long way to go there.'
This post first appeared on The Daily Upside. To receive financial advisor news, market insights, and practice management essentials, subscribe to our free Advisor Upside newsletter.