February 25, 2015

Pershing Study: Rise of Super-Ensembles Signals a Profound Shift in the Advisory Industry, Forcing Firms to Reassess Growth Strategies

JERSEY CITY, N.J., Feb. 25, 2015 /PRNewswire/ -- According to new research released today from Pershing Advisor Solutions entitled Super-Ensembles: The Firms Who Are Shaping the Future of the Industry, a group of 250 super-ensemble firms are poised to shape the future of the advisory industry and are setting the standard for growth, client service and practice management best practices as evidenced by their impressive revenue and growth. Super-ensembles are advisory firms with more than $1 billion in assets under management (AUM) and are characterized by a defined brand, sophisticated value proposition and strong management. Such firms are also achieving local market dominance through investment in technology, aggressive growth strategies and a long-term vision for their businesses.  

"Every business owner can learn from the strategy that super-ensembles are successfully bringing to the marketplace, and we are seeing their business practices quickly becoming the standard to follow for the rest of the industry," said Gabriel Garcia, head of relationship management for Pershing Advisor Solutions. "Success isn't merely defined by the size of a firm. We believe that firms of all sizes can learn from the different growth strategies and best practices being implemented by super-ensembles to more effectively manage and grow their own businesses."

The success of the super-ensemble model, and its ability to outperform the industry in terms of revenue and growth, is evident in the numbers. In 2014 the typical super-ensemble had $1,450,000 in owner income on average compared to $430,000 for ensembles (firms with AUM under $500 million) and $305,000 for solo firms (one-advisor practices). Super-ensembles were also the fastest growing firms with 18.6 percent revenue growth, compared to ensembles whose revenue grew at 17.1 percent and solo firms at 15.4 percent.

According to the study, super-ensembles scale primarily through strategic and organic means. However, they are also interested in growing through acquisitions and mergers. In fact, over one-third of super-ensembles (37 percent) are actively searching for acquisitions and 6.3 percent are interested in a merger with a similarly-sized firm. Other means of creating a super-ensemble are strategic partnerships and aggressive marketing.    

In contrast to their smaller peers, young super-ensembles are deliberate in their growth and more likely to pursue business development, which allows them to drive acquisition of new clients faster than other firms. Eighty percent have a defined target for non-owner lead advisors and 17 percent have business development partners.

For firms looking to become super-ensembles, the study outlines a number of steps they can take to achieve this goal:

  • Act like a super-ensemble, regardless of size: Dedicating time and resources to management, even if full-time management is not affordable, will keep any firm disciplined. Carefully articulating a strategy and being diligent in execution will help the firm progress and grow in a systematic manner.
  • Attract talent: The addition of professionals and managers who have experience working in larger organizations can assist smaller firms in finding a way to grow faster and impart knowledge from their larger peers.
  • Merge: There is no faster way to achieve size and reach the level of resources of a billion-dollar firm than a merger. Mergers are difficult, laborious and risky initiatives, but they have created many of today's largest firms.
  • Acquire: Acquisitions are not the exclusive domain of the largest firms and, in fact, many of the mid-size firms can find good opportunities to acquire solo practices and add clients and markets to their business.
  • Focus on culture: Culture is slow to evolve and change, and creating the "right" culture—even when the firm is smaller—will allow a firm to succeed at later stages in its evolution. A dedicated focus on developing the right culture can secure the success of the firm as it grows and can help shape the direction of any mergers and acquisitions. 
  • Prioritize growth: Growing faster starts with making growth a priority of the firm. The single most important marketing resource of a firm is the time of its most experienced professionals. Firms where partners prioritize growth tend to spend their time focused on this area, which is more likely to result in a faster expansion.

To obtain a copy of Pershing's whitepaper Super-Ensembles: The Firms Who Are Shaping the Future of the Industry, please visit www.pershing.com/superensembles.

About Pershing

Pershing and its affiliates provide global financial business solutions to advisors, asset managers, broker-dealers, family offices, registered investment advisor firms and wealth managers. A financial services firm located in 23 offices worldwide, Pershing provides business-to-business solutions to clients representing 5.8 million active investor accounts on the U.S. platform. Pershing affiliates are members of every major U.S. securities exchange, and its international affiliates are members of the Deutsche Boerse, Australian Stock Exchange, Irish Stock Exchange, London Stock Exchange and Toronto Stock Exchange. Pershing LLC (member FINRA/NYSE/SIPC) is a BNY Mellon company. Additional information is available on pershing.com, or follow us on Twitter @Pershing.

Pershing Advisor Solutions LLC

Pershing Advisor Solutions is one of the world's leading providers of execution, custody, financing and business management solutions to help advisors manage their businesses efficiently and serve their clients effectively. Our clients are professionally managed, growth-oriented firms that serve high-net-worth and ultra-high-net-worth clients. We have built our registered investment advisor custody business from the ground up, organized around the needs of the advisory firms we serve in order to create the New Model CustodianTM. With a focus on delivering a superior client service experience, innovative technology and financial solutions and a practice management offering geared towards implementation, we help investment managers, wealth managers and family offices thrive in today's dynamic environment. Pershing Advisor Solutions LLC (member FINRA/SIPC) is a BNY Mellon company.

About BNY Mellon

BNY Mellon is a global investments company dedicated to helping its clients manage and service their financial assets throughout the investment lifecycle. Whether providing financial services for institutions, corporations or individual investors, BNY Mellon delivers informed investment management and investment services in 35 countries and more than 100 markets. As of Dec. 31, 2014, BNY Mellon had $28.5 trillion in assets under custody and/or administration, and $1.7 trillion in assets under management. BNY Mellon can act as a single point of contact for clients looking to create, trade, hold, manage, service, distribute or restructure investments. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK). Additional information is available on www.bnymellon.com, or follow us on Twitter @BNYMellon.

Paul Patella
+1 201 413 3609 


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