The Enduring Advisory Firm

Chapter 10 Transforming from Practice to Business

Elite advisory firms distinguish themselves in many nuanced ways. But there appear to be three big areas in which the top-performing advisory firms (Leading Firms) have made the right decisions that helped them to truly stand out: human capital management, technology implementation, and profitable pricing.

These insights were revealed in “Mission Possible IV,” which Pershing commissioned the consulting firm FA Insight to research and write. FA Insight tracked the individual performance of advisory firms between 2008 and 2012, and then segmented the Leading Firms based on growth rate, profitability, and owner’s income as a percentage of revenue. The top-performing firms grew revenue at twice the rate of their peers!¹

Each of the Leading Firms demonstrated a level of courage and confidence that was not apparent in the rest of the advisory population. Consider where we were as an economy and an industry in 2008 and how far so many firms fell in terms of assets under management, revenue, and profitability. While there were many advisors who believed this downdraft was an aberration and eventually the markets would reinvigorate their businesses, the Leading Firms in this study went a step further by actually investing ahead of the curve while also adopting better discipline around technology selection, profitability management, and people recruiting and retention.

One data point that reveals this newfound discipline is that for the ...