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

February 25, 2015

JERSEY CITY, N.J. - 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.

PAccording 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.

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 http://www.pershing.com/superensembles.

About Pershing Advisor Solutions

Pershing Advisor Solutions LLC (member FINRA/SIPC) is an affiliate of Pershing LLC and a leading provider of financial business solutions to independent, fee-based registered investment advisors and dually-registered advisors working in conjunction with many of Pershing LLC's introducing broker-dealer customers.

About BNY Mellon's Pershing

BNY Mellon’s Pershing and its affiliates provide advisors, broker-dealers, family offices, hedge fund and ’40 Act fund managers, registered investment advisor firms and wealth managers with a broad suite of global financial business solutions. Many of the world’s most sophisticated and successful financial services firms rely on Pershing for clearing and custody, investment and retirement solutions, technology, enterprise data management, trading services, prime brokerage and business consulting. Pershing helps clients improve profitability and drive growth, create capacity and efficiency, attract and retain talent, and manage risk and regulation. With a network of 23 offices worldwide, Pershing provides business-to-business solutions to clients representing more than 6 million investor accounts globally. Pershing LLC (member FINRA, NYSE, SIPC) is a BNY Mellon company. Additional information is available on pershing.com, or follow us on Twitter @Pershing.

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 March 31, 2017, BNY Mellon had $30.6 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. Follow us on Twitter @BNYMellon or visit our newsroom at www.bnymellon.com/newsroom for the latest company news.