Advisors who belong to teams can enlist specialists such as tax, estate and accounting experts when clients need that expertise.Jirapong Manustrong/iStockPhoto / Getty Images
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As advisors look to provide clients with holistic wealth advice, many are forming teams that offer investment management alongside financial planning and tax and estate services. But what’s the right size of team for a practice?
While there’s some debate, many organizations are moving to smaller teams of three to five members.
Research suggests that small teams can foster innovation. Dr. Vivienne Ming, a theoretical neuroscientist and proponent of “smart teams,” who spoke at an Ontario Securities Commission event in May, often cites a review of studies in the journal Nature that found smaller teams “disrupt science and technology with new ideas and opportunities.” These micro teams thrive by not having a hierarchy, and their small size increases accountability and boosts productivity.
Steph Condra, executive vice-president and chief experience officer at Wellington-Altus Financial Inc. in Toronto, says smart teams provide the kind of relationship clients want in relation to their finances.
“It’s quite intimate, quite transparent,” she says. “Three to five [members] feels like the right size for that kind of transparency.”
Grant Hicks, a practice management expert and president of Advisor Practice Management in Nanoose Bay, B.C., says this model means, “the client can get a more comprehensive approach and a deeper client experience.”
“You have a team to follow up and you have a lot of moving parts that are going to be taken care of by a group of people,” he says. “The best clients want at least 10 ‘touches’ – e-mails, calls, events – a year. You’re going to be able to get 10 to 50 touches a year when you build a team.”
It’s not surprising the small-team model has gained traction. A 2016 study from Deloitte found that many businesses were “decentralizing authority, moving toward product- and customer-centric organizations, and forming dynamic networks of highly empowered teams that communicate and co-ordinate activities in unique and powerful ways.”
Increase scale for a holistic experience
For Mr. Hicks, the main advantage of the smart team model is scale; with more advisors available to serve clients, the number of clients a team can take on grows exponentially. Much like the family office model, financial advisors and portfolio managers belonging to smart teams can enlist the help of other specialists such as tax, estate, accounting and currency experts when the client needs their expertise.
“For the same fees, clients can get more value, and access to different perspectives, resources and expertise,” Ms. Condra says. “The client gets a whole lot more for the fees they’ve been paying.”
The smart team can also offer a variety of perspectives to enrich the client experience.
“There’s no possible way one person can be really good at being the portfolio manager, the tax advisor, the estate planner, and the administrator,” says Rob Pollard, senior portfolio manager with the Wyndham Group at Raymond James Ltd. in Toronto. “Each area has its own skill set. So, by having teams, you can go, ‘Okay, who’s best at that?’”
With teams that use client relationship management systems to handle accounts, less gets missed and processes are more fluid.
“Technology enables you to implement processes,” Mr. Pollard says, noting the most successful teams take advantage of it.
Succession and continuity of service
Smaller teams help ensure continuity of service, Ms. Condra says. “In a rare situation when an advisor is not able to work for a period of time, either by choice or by circumstance, a team gives them continuity, speed of service as well as consistency of service,” she says.
The team model can also facilitate succession planning, allowing senior advisors to pass on their best practices to younger members. Mr. Hicks says one-quarter of advisors are expected to retire in the next five years, “so the succession piece becomes critically important.”
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