I am a firm believer in respecting your elders. After all, I am one - I've been in the financial services business for more than 30 years. But you don't have to be an industry veteran to achieve great things.

In one of my firm's recent studies, we discovered a select group of advisors who are enjoying significant success even though they're quite new to the industry. These advisors all had less than five years of experience when we surveyed them, but already had reached $50 million in assets under management - a milestone some advisors never achieve.

We dug deeper to understand who these advisors are and how they accomplished such impressive results in such a short time. Here's what we learned.



After surveying more than 2,100 advisors, we broke them down into groups:

*Newcomers: These advisors have practiced for less than five years and manage less than $50 million in assets. They represented 23.2% of the survey.

*Rank & File: These industry veterans (who accounted for 31.9% of the survey) have practiced for at least five years, but haven't reached the $50 million AUM mark.

*Elite: These are advisors who are well-established, with at least five years under their belts, and are managing a minimum of $50 million in assets. The Elite represented 39.9% of the group.

*Quick Starters: Like Newcomers, these advisors have been practicing for less than five years. But they are already experiencing substantial success, with each managing at least $50 million in assets and a few managing more than $500 million in assets. They represented just 5.1%.

Obviously, the Quick Starters stood out. Although the group is small, its members' success suggests that there is much to learn from them.

The group's demographics are intriguing. Four out of five are 34 or younger. It's not surprising that this is a younger group than the Rank & File and the Elite, but this group is younger than even the Newcomers (only 50.1% of whom are 34 or younger). Given their ages, it's likely that the financial services industry is a first career for most.

Women are also better represented in the Quick Starter group than in the other three groups. Of all the advisors we surveyed, just 18.1% were women (reflecting the degree to which women are underrepresented in the industry). Among the Quick Starters, however, that number was much higher: 31.4%.

Of course, simply being young or female doesn't make one more likely to manage more assets. But it's worth considering that perhaps being new or being part of a group that continues to be underrepresented in the industry (or both) enables these advisors to approach their work with greater openness and flexibility - something particularly valuable in a rapidly shifting environment.



Quick Starters tend to serve large numbers of clients. More than one-third (35.2%) of the Quick Starters serve 300 or more clients - quite similar to the 39.7% of Elite advisors who do so. By contrast, the Rank & File (21.7% of whom serve 300 or more clients) and Newcomers (10.8%) generally have smaller practices.

More important is the number of clients who are most valuable - those with $1 million or more in assets. In this, the Quick Starters stand far above the Newcomers and the Rank & File; indeed, they're nearly on a par with the Elite. A large portion of both the Elite (39.4%) and the Quick Starters (36.1%) serve 30 or more of these clients, something that only 2.5% of the Rank & File and 1% of the Newcomers can claim.

The Quick Starters are even ahead of the Elite in one critical measure: total number of affluent clients. While 22.2% of the Quick Starters have built practices that serve 75 or more clients with at least $1 million in assets, just 15.8% of the Elite have done so.

Consequently, Quick Starters manage sizable assets. Among this group, 13.9% manage $500 million or more in assets. The percentage of Elites at that level is just 5.4%. Likewise, more than a quarter of Quick Starters (26.9%) have $200 million to $500 million in AUM, compared with only 17.2% of the Elite.

Even so, Quick Starters do not earn the most money. Despite managing more assets than the Elite, Quick Starters as a whole report earning far less net income.

While 65.4% of Quick Starters are earning annual net incomes of less than $100,000, only 13.1% of the Elite fall into that category. Also, we see a small percentage of Quick Starters in the upper-income ranges: Just 7.7% of them earn net incomes higher than $200,000, versus 49.6% of the Elite.

Most likely, this is because the two groups are in different stages of their business life cycles. The Elite are likely to have scaled up and be well established, with relatively little need to continue to make major capital investments. The Quick Starters, on the other hand, are likely to be investing heavily in their businesses, thus greatly reducing their net incomes.



Clearly, Quick Starters are more successful than their experience might suggest. When we look at their business practices, we see that they take a few key steps that drive that success.

They are selective. Top advisors recognize they can't provide truly exceptional service to every prospect who walks through the door. Great service means working only with clients who will be profitable, whom they enjoy and whose needs they can address effectively. To that end, nearly half of Quick Starters (48.2%) require a minimum account size for new clients. (Half of the Elite - 50.9% - also have such a requirement.) Among the other groups the numbers are far lower: 25.6% of the Rank & File and 18.5% of the Newcomers require a minimum asset size.

They use teams of experts. Affluent clients often face complex financial challenges that require significant technical expertise. And Quick Starters understand that no one person can be an expert in all areas; as seen in the chart above, 62% say they rely on teams of experts to address their clients' diverse financial needs. As the survey results show, the Quick Starters are more likely than the other groups to serve more affluent clients and to manage the most assets. This would be very difficult, if not impossible, without outside expertise.

They plan for business growth. Planning distills an advisor's vision and focus into deliberate, prioritized action steps. When it comes to having plans for moving their businesses forward, the Quick Starters are most likely to have business plans in place (73.2%), while the Rank & File are the least likely (49.3%). The Quick Starters lead in marketing as well, with 61.1% having marketing plans in place, compared with just 29.5% of the Rank & File. The Quick Starters fall short only in succession planning, with just 16.7% of them having such plans, compared with 20.9% of the Elite.

The survey also found that 42.4% of the Rank & File don't have any type of plan at all, despite being in business for at least five years. The same can be said about approximately one-quarter of both the Newcomers and the Elite, but only 13.9% of the Quick Starters.

Clearly, there is a group of young advisors who have accomplished great things in short order. Their approach - which includes serving select clients, developing teams of experts and engaging in deliberate planning - serves as a lesson to all advisors. By focusing on those things that drive a business to a higher level of success, advisors at any stage of their life can maximize their success for years to come.



John J. Bowen Jr., a Financial Planning columnist, is founder and CEO of CEG Worldwide of San Martin, Calif., a global training, research and consulting firm for advisors.

Register or login for access to this item and much more

All Financial Planning content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access