Why do some wealth management firms experience explosive growth while others plod along at a more leisurely pace? To answer this question, we recently invited senior executives from nine firms that manage $1 billion or more to join us for a full-day discussion of what’s driving growth at these firms.

While each firm had its own unique market niche, they all shared one common trait: they focus on meeting the needs of high net worth and in some cases ultra-high net worth clients, and they do so profitably. These findings were consistent with Fidelity’s 2012 RIA Benchmarking Study, which revealed that 75 percent of high-performing firms serve clients with average assets under management of $1 million or more.

Wealth management firms looking to get on the path toward high performance may want to emulate these billion-dollar firms and consider adopting the following best practices:

1. Define and Segment Your Target Market

The market for high net worth investors is not one single, amorphous market, but rather several sub-segments. This includes “emerging affluent” investors with $1 million to $5 million, high net worth ($5 million to $20 million), ultra-high net worth ($25 million or more) and family offices ($50 million or more).

Definitions vary, but no matter where you set the bar, you need to understand which prospects are an ideal fit for your firm and which are not. In order to attract your ideal clients, your products, services and people must address the specific needs of your target market. Recent Fidelity research revealed that “high-performing firms” applied greater rigor to client selection, pursuing just three percent of opportunities outside of that profilei.

2. Focus Not Just On Growth, But Profitable Growth

High net worth investors have high expectations for their advisors, and the higher up the food chain you travel, the more resources you will need to provide. To maintain your profit margins, you should understand your fixed and variable costs. Most of the billion dollar firms we observed do this by meticulously tracking their hours to understand where they are devoting resources, which clients are profitable and which are not. They “hire their clients carefully” by focusing on those who fit their service model, while weeding out prospects who will require too many resources or who have unrealistic expectations.

3. Employ a Team-Based Approach

Rather than expecting advisors and client service personnel to wear a variety of hats, these billion-dollar firms use a team-based approach with clearly defined roles and responsibilities. For example, some firms sever all ties between sales and client service. Advisors manage client relationships and are compensated based on their ability to satisfy and retain clients, while business development officers focus exclusively on sales. This ensures that each person on the team adds value and maximizes his or her skills and time. When expertise is not available in-house, such as estate planning or trustee services, these functions can be outsourced to trusted providers.

4. Communicate Your Fees Clearly

Billion-dollar firms were more likely to offer bundled fees rather than a la carte fees. For example, 91 percent of the high-performing firms surveyed by Fidelity bundle philanthropic planning in their asset fee, and 78 percent bundle in estate and trust planningi.

The key to this approach is to be explicit about which services are included in your fees and which are not. Failure to spell out the details can result in “scope creep” and reduced profitability. That said, in our experience billion-dollar firms are flexible when it comes to negotiating fees and will tailor them to clients’ specific needs. For example, a client who is asset rich but cash poor may prefer an annual retainer. Others may prefer a combination of asset management fees and hourly fees for financial planning, estate planning or trust services. No matter which approach you use, it’s important to communicate to clients the value of the services you are providing.

5. Offer a Trust Services Solution

Trusts provide a way for clients to ensure their wealth and family values are passed on to future generations. With increased longevity and vast numbers of Baby Boomers retiring every year, demand for trust services is expected to grow. Firms with the ability to facilitate multi-generational wealth transfers will improve their ability to retain clients’ assets and deepen relationships with clients’ heirs. Whether you create a standalone trust company or outsource, trust services are highly valued by affluent investors and thus should be considered to be part of your service menu.

Our experience working with 3,300 RIAs, banks and third party administrators, including firms with $1 billion or more under management, shows there is a clear path to high performance and faster growth. That path starts with a well-defined target market, a focus on profitable growth, and the right combination of services, operational infrastructure, technology and people.

David Canter is an executive vice president, practice management and consulting at Fidelity Institutional Wealth Services.