Advisory firms continue to experience rapid growth to the point where the ability to recruit and retain talent has become a key ingredient to success, according to a new study.
   The Financial Planning Association's 2005 Compensation and Staffing study, sponsored by SEI Advisor Network and Moss-Adams LLP of Seattle, says that advisory firms are experiencing fast-paced growth.
   The study says a typical advisory firm has grown from an average of 1.5 employees, including owners and principals, in 2001, to 4.5 employees in 2005. Revenues have grown from $631,000 in 2001 to more than $1 million in 2005.
   Growth is expected to continue, the study says.
   "Many of these firms are expected to reach the critical mass threshold in the not too distant future, with more than $5 million in annual revenue and a staff of 20 plus," according to the study. "One driver of this is that as advisors evolve from the solo model and begin adding other professionals, their client, revenue and staff growth becomes exponential."
   That's why, says Rebecca Pomering, principal of Moss-Adams LLP, the ability to recruit and retain talented employees will define the successful advisory firms over the next five years.
   "The firms that show the ability to grow new advisors and provide a career track to their staff will continue to grow at a high pace and enjoy financially and professionally rewarding practices," she says.