Does this surprise you?
This finding comes from two trusted names in research: McKinsey and LIMRA. They surveyed 1,200 experienced US advisors selling insurance and financial services. There's probably some validity for other types of advisors and small businesses.
I learned of this study during an intriguing and thought-provoking presentation by LIMRA's Brent Lemanski entitled Forces of Change: Issues Facing Distribution Leaders.
Let's explore further.
Types of Advisor Teams
Advisors can work in different ways
- solo: 55%
- solo with low support (1 assistant): 22%
- solo with high support (2+ assistants): 14%
- multi-advisor: 9%
Moving from low support to high support increases income by 39% for advisors with 3-9 years of experience. Would you turn that down?
Another report shows that the average net income for categories 3&4 (multi-advisor or solo with high support) is 80% higher than categories 1&2 (solo with no or low support).
Let's define success as having 250 clients and being in the top quartile of all advisors in financial services. The likelihood of success
- more than doubles with low support (2.1x higher) or high support (2.4x higher)
- more than triples with a multi-advisor team (3.4x higher)
What's Wrong With A Solo Practice?
Here's what Brent suggested. If you work solo, you have few clients in the beginning. So you can spend plenty of time on each one. You learn inefficient techniques and don't develop systems. As your practice grows, you spend an increasing proportion of your time on administrative work. Now you're too busy to manage your smaller clients well. Adding an assistant would add revenue and increase client satisfaction at limited cost.
Have you read the E-Myth Revisited by Michael Gerber? This must-read classic advises you to build a business you can sell or franchise (even if you plan neither). You need systems and procedures that others can follow to provide consistent, quality results. A solo practice which relies entirely on you is called a job: you haven't constructed a business that anyone would want to buy.
Three Benefits from Teams
Members of teams benefit from
- building skills by getting mentored (95% agree)
- succession planning (89%)
- reducing personal expenses (77%)
As you'd probably guess, solo advisors underestimate the value of teams. They answered 75%, 72% and 54%, respectively. That's a big difference.
If you're solo --- like most advisors --- do consider creating a team. Brian Tracy says you're only working when you're prospecting, presenting or following up. An effective team frees up your time to do what matters most. Yes, there are hassles when you turn your job into a real business but look at what you can gain. Maybe you can experiment at low risk and low cost with a virtual assistant (see Marketing Reflections | Issue 3). What do you think?