As the wealth management landscape evolves, the concept of teaming has become a core component of achieving scale and building enterprise value for advisory practices. New research from Cerulli Associates and Osaic, Inc. (“Osaic”), one of the nation’s largest providers of wealth management solutions, Top-Performing Teams: Exploring the Benefits and Approaches of Building a Team-Based Advisory Practice, finds that team-based practices outperform across key measures, including assets under management (AUM), services offered, and productivity.

The wealth management industry has seen a widespread increase in the development of multi-advisor practices to drive growth and increased scale. According to Cerulli, nearly half of advisors now operate in a team-based structure. The trend of teaming is even more pronounced among the largest advisory practices—94.5% of practices with greater than $500 million in AUM operate in a team-based structure, compared to only 5.5% that are solo practitioners.

The advantages of teaming are multi-faceted. Teams benefit from streamlined resources, processes, and services as a collective group and typically operate at higher levels of productivity compared to solo practices. Cerulli’s research finds team-based practices have a median of $100 million in AUM per advisor, compared to $72 million among solo practices. In addition, team-based practices serve a higher core market, with an average client size of $1.6 million, compared to $1 million for solo practices.

Advisors looking to move upmarket or enter a new client segment have had success forming teams to broaden their service offerings to include more financial planning and high-net-worth (HNW) services. On average, solo advisors offer 4.5 financial planning services and 2.2 HNW services, compared to 4.7 and 2.9 for team-based practices. An expanded set of services typically results in higher levels of walletshare, as clients tend to aggregate held-away assets with teams that can deliver comprehensive services.

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

“Teams are able to accelerate their growth by better leveraging platform resources such as financial planning, high-net-worth and advisory solutions, as well as business development resources and capital solutions,” says Kristen Kimmell, executive vice president, business development for Osaic. “Osaic has been recruiting more teams and partnering with solo advisors Iooking to evolve their practices to meet the increasingly complex needs of investors across the entire spectrum of wealth management services and capabilities.”

“In choosing their team structure, advisors should aim to maximize their drivers of growth while limiting existing areas of efficiency within their practice. Teaming creates natural opportunities to retool existing processes and establish new frameworks for success,” says Stephen Caruso, senior analyst at Cerulli Associates.