The top-performing 10% of LPL’s 22,000 advisors earn three times what their peers make while working similar hours, according to a new white paper from the broker-dealer.
The paper found that four business-building strategies accounted for much of top advisors’ success.
“We learned that nearly all the top-producing advisors operate their business like a CEO and they optimize their time by delegating or outsourcing,” Joe Lanser, senior vice president for business solutions at LPL, said in an interview. “They [also] offer holistic services for every stage of their clients’ financial lives and align their personal values with every aspect of their business."
Work hours weren't a significant determining factor for success, according to the report. The top advisors worked about 49 hours per week, compared with 47 hours for everyone else.
"We believe this is valuable data that any advisor can leverage to help take their business to the next level,” said Lanser, who noted that much of the data was reported via the firm’s partnership with CFO Solutions, which allows advisors to hire fractional CFOs.
To operate like a CEO, top advisors focus on growth, design and making sure their organizational design is sustainable for the future, according to the white paper.
Some 75% of top producers formally evaluated staffing levels, roles and individual performance every six months. They designed their organization to suit their needs, delegate tasks and invest in growth, with many being guided by their fractional CFO, according to the paper.
“Because of the CFO offering, we have unique insights into what extraordinary advisors are doing to drive their outperformance at a granular level. Each month they meet with their CFO to review their goals and shift strategies to optimize their success,” Lanser said.
That’s in contrast to 50% of advisors industrywide who said they were not able to effectively delegate to staff due to undefined roles and inconsistent or undocumented processes.
“A key mindset shift of top advisors is that they see themselves as both business owners and financial advisors. One growth inhibitor advisors often face is continuing to perform too many tasks by themselves, while not effectively building and leveraging a team. A CEO mindset combats that inhibitor—it includes a consistent focus on growth, and a strategy for how to keep growing past natural resistance points,” the white paper found.
Those attributes also come through in succession planning. The top 10% of LPL’s advisors were 40% more likely to have a long-term successor identified, 60% more likely to have legal agreements in place and 25% more likely to have communicated their succession plan to clients.
The top advisors also optimize their time by automating and building out resiliency in the day-to-day operations of firms, according to the white paper.
Top advisors were more likely to use investment management outsourcing, with 95% of top advisors using a models-based investment practice across their practice, thereby eliminating most time spent customizing investments. They are also three times more likely to outsource model development/management.
On the trading front, 70% use a rebalancing tool, "making them three times more likely to use trading automation solutions—to help save time in routine rebalancing of those models,” the white paper found.
As for resiliency, 68% of top advisors believe their staff are highly trained, four times higher than other advisors, while 77% have made sure a staff member is trained to cover the duties of at least one other staff member.
Top advisors also offer comprehensive advice that can serve clients through all stages of their financial lives. “Discovery doesn’t end at onboarding, but continues throughout the course of the ongoing relationship. As you know, clients’ goals and priorities often shift— embed yourself into every pivotal milestone of your clients’ lives so you don’t miss an opportunity to serve them,” LPL said.
Compared with other advisors, the top 10% are 53% more likely to offer estate planning and 41% more likely to offer tax planning.
“This is the first time we’re seeing tax and estate planning being offered at this level, but it really allows advisors to add value especially for high-net worth clients,” Lanser said. While many advisors are building out their own tax planning team, they can also outsource to LPL’s team of CPAs and attorneys for a nominal fee that is waived for clients with $5 million or more to invest, he said.
Top-performing advisors are also aligning their firms with their own personal values. More than 70% of the top 10% of LPL advisors felt their businesses were highly aligned and nearly 90% of them have a written value proposition or mission statement that is publicly posted.
“This is a key differentiator that really allows advisors to be more selective with the clients they take on and how they structure their firm,” Lanser added.