The ‘popular’ view of the world of financial advisors these days is that we’re all in a collective race for size and economies of scale, because only the largest can survive and everyone else is doomed to a world of declining profit margins as the overhead costs of running an advisory firm grind their income down to nothing.
Yet the latest industry benchmarking research for RIAs, including both the 2015 FA Insight “People And Pay” and the 2015 Investment News “Compensation And Staffing” studies, found that just the opposite may be occurring – by operating with lean staff overhead and leveraging technology, standout solo financial advisors supported by just 1-3 staff members are actually some of the most financially successful and profitable advisory firms out there, taking home more in owner income than any advisors but the partners of the largest super ensemble firms!
And perhaps most notable is that not only is the typical successful solo advisor practice doing exceptionally well financially, but it is succeeding not by serving an exclusive set of high-net-worth clients with $1M+ minimums, but by serving a mass affluent clientele often claimed (incorrectly!?) to be ignored by the RIA community! In fact, the latest benchmarking data reveals that the common stereotype that RIAs serve "only" the high-net-worth is entirely wrong, as it's really only a small subset of the largest (albeit also the most visible) advisory firms who are focused on those clientele, while the mass of solo financial advisors serve the broader mass affluent!