The verdict is in: advisors working in teams outperform sole practitioners.

Teams attract more affluent clients, manage more money, and produce more revenue, according to a new report by PriceMetrix, the Toronto-based research and practice management software firm.

The average team advisor manages $130 million in assets compared to $110 million for the typical solo advisor, and generates $950,000 in revenue versus $830,000, according to the firms' Insights report, "Be Part of Something Bigger: Teams in Retail Wealth Management."

What's more, firms using teams grow faster, achieve higher return on assets, keep clients longer and take advantage of scale more readily than firms who don't use teams, according to the study.

“There’s a reason the number of advisors working in teams has increased 25% in just the last three years,” Doug Trott, president and chief executive of PriceMetrix, said in a statement. “They perform better and advisors and their firms understand that. More than half of all advisors, specifically 55%, now work in some type of team arrangement.”

DISCPLINE IS KEY

Why are teams more effective?

"Teams have a higher propensity to do the right fundamental things that cause practices to grow," says Pat Kennedy, PriceMetrix' co-founder and chief customer officer. "It's not that solo practitioners can't do those things - they can. It's just that teams seem to have more discipline because of joint accountability. It's like having an exercise partner. Having one won't cause you to lose weight, but if you work out with someone else you're more likely to do what you need to do to lose weight."

Teams also tend to build deeper relationships with their clients than sole practitioners, the report finds. They manage 3.3 accounts per household versus three for the average solo advisor and they have a somewhat higher percentage of clients with a retirement account, 74% compared to 72%.

And while team advisors grow faster than solo advisors at all asset levels, PriceMetrix' data revealed a "sweet spot" where team growth is most pronounced compared to sole practitioners: advisors at or approaching $150 million to $200 million in assets will grow on average 9.3% as part of a team compared to 7.3% practicing alone.

But advisory firms shouldn't view teams as a magic bullet, Kennedy warns.

"The average team is better than the average sole practitioner, but a bad team is far worse than a sub-par advisor," Kennedy says. "Firms need to be wary of expectations, and assemble a team carefully."

Data: PriceMetrix

HOW TO ASSEMBLE A TEAM

So what should a firm considering switching to teams keep in mind?

Teams with members closest in age grow the fastest, the report found, while family teams grow more slowly than teams where the members are not related. Mixed gender teams showed the most revenue growth, followed by male-only teams, while female-only teams showed the slowest revenue growth.

"Firms thinking about using teams should make sure the advisors are doing it for the right reasons and are well-aligned before jumping in," Kennedy cautions.

Overall, the case for teams is compelling, the report concludes. "Make that case to your advisors," the report recommends. "Invest in your practice management and branch leadership to help advisors build effective teams.  Design compensation plans that reward advisors to work in teams."

Not all teams will be successful, but, PriceMetrix maintains, "our data is conclusive - advisors who choose to work in teams are more likely to be part of something bigger."

Read More: