Are advisor teams better than solo practices?

investmentnews.com:

As Bono famously sang in U2’s early 2000’s album “How to Dismantle an Atomic Bomb,” sometimes you can’t make it on your own. And as shown by a new report, that couldn’t be truer when it comes to the wealth management industry.

According to the joint research by Cerulli and Osaic, team-based advisory practices are outperforming solo practices in key areas such as assets under management, service offerings, and productivity.

The study, titled “Top-Performing Teams: Exploring the Benefits and Approaches of Building a Team-Based Advisory Practice,” reveals nearly half of advisors (46 percent) operate in team-based models, which can fall into one of three archetypes: silo practices, ensemble practices, or mega ensembles.

The trend is even more prevalent among larger advisory practices. The research found an overwhelming 94.5 percent of practices managing over $500 million in AUM are team-based, which means lone wolf advisors make up just 5.5 percent of that wealth stratum.

Teams stand to benefit from a streamlined approach to resources and processes, resulting in higher productivity. The research indicates team-based practices boast a median AUM of $100 million per advisor, compared to $72 million for solo advisors. These teams also serve larger clients, with an average client size of $1.6 million versus $1 million for solo practices.

“One of the key benefits of multi-advisor teams is the diversity of complementary skills, experience, and expertise,” Asher Cheses, director at Cerulli Associates, said in a statement. “Combining each team member’s experience allows practices to leverage their individual strengths and provide specialized services, including lending, estate planning, and tax services.”

As the wealth industry