As big advisory firms become larger and more profitable, their successes are being shared unequally among their employees, according to a recent study.

While firms of all sizes experienced double digit growth, according to the 2019 Adviser Compensation & Staffing Study recently sponsored by BNY Mellon Pershing, high-revenue advisors tend to grow faster.

Firms of all size in the study posted a 2018 median growth rate of 11%. But those with $10 million or more in annual revenue grew by 15% during the same period.

But the rising tide of revenue growth is definitely not lifting all boats equally. Executives, in particular CEOs and lead advisors, have experienced a 9% average increase in compensation since 2017, yet most other positions within advisory firms experienced compensation gains of approximately 2% within the same period.

In the meantime, income per firm owner increased nearly 18% during the same period. As advisory firms find ways to become more profitable, more of those profits are being directed to firm ownership and the upper echelons of firm leadership.

According to the survey, team productivity remains flat – in 2018, firms reported an average revenue-per-staff of $253,000 and revenue-per-professional of $464,000 – essentially unchanged since Pershing launched the study in 2014.

In her released comments, Christina Townshend, director of advisor solutions at Pershing, posited that flat productivity might be a sign of firms integrating new talent into their workflows, or of stagnancy in processes or technology.

“Stagnant productivity could be a positive indicator if a firm is investing in new talent as recent hires often need time to acclimate and achieve better productivity,” Townshend said in comments released on Wednesday. “However, if you have a mature team that’s firing on all cylinders -- and you have not invested in process improvement or automation to help scale service -- this could be cause for concern.”

There may be a need for productivity increases within advisory firms -- according to the study, 78% of advisors report that they are operating at or near capacity. With an aging advisor workforce, new talent and greater efficiencies will be necessary to meet client demand.

Pershing also asked advisors how they are growing -- as it turns out, organic growth is coming roughly equally from referrals, new assets from existing clients and advisors’ new business development efforts.

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