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TheStreet Open House

NFP Advisor Services Group Publishes Aite Study On The Benefits Of Multidiscipline Practices To Clients And Advisors

NEW YORK, Oct. 4, 2012 /PRNewswire/ -- NFP Advisor Services Group, which provides technology, service and asset management platforms to financial advisors, including RIAs and hybrids, and is a business segment of National Financial Partners Corp. (NYSE: NFP), a leading provider of benefits, insurance and wealth management services, today published the results of a study identifying the benefits of multidiscipline practices (MDP) to clients and advisors, and exploring the unique obstacles that these practices must overcome to achieve success. 

(Logo:  http://photos.prnewswire.com/prnh/20120515/NY06966LOGO )

James Poer, President of NFP Advisor Services Group, said, "As demand from clients and business owners drives a shift in the industry toward a more comprehensive approach to wealth management, the study finds that the most successful financial advisors are proactively evolving their practices to meet this demand. MDPs, with their diverse product offerings, are uniquely positioned to thrive in this environment given their ability to meet the high expectations of clients seeking holistic financial guidance."

The study, commissioned by NFP Advisor Services Group and produced by leading independent research firm Aite Group, reveals that investors whose financial advisor delivered comprehensive wealth management, including investment management, financial planning and at least one insurance product report higher satisfaction levels than those who work with financial advisors through a narrower, single-product or single-service engagement. For the purposes of this research, MDPs are defined as practices deriving at least 10–15 percent of revenues from each of the following products: insurance, investments, benefits and fee-based financial planning services.

The benefits of building an MDP are numerous, although the staffing and operational requirements of MDPs are complex:

  • MDPs attract affluent clients with complex financial needs: Investors surveyed who leverage MDPs to meet multiple financial needs are more likely to be business owners and have higher investable asset levels.
  • MDPs experience higher client growth during challenging market environments: In 2011, MDPs surveyed reported a 10 percent median growth in net clients while other practice types reported median growth rates ranging from 5–6 percent.
  • MDPs receive more referrals from and generate more new revenue through professional partnerships: Just under half of MDPs surveyed derive one-quarter or more of their 2011 revenue from internal partner referrals while less than one-third of other practice types derive as much of their revenue from partner referrals.
  • The most successful MDPs, based on revenue per client, have teams with wide-ranging expertise: They distinguish themselves from less successful practices with their larger staff, greater focus on high net worth and ultrahigh net worth clients, and diligent implementation of comprehensive financial planning services. Smaller firms with less diverse practices need to find a way to fill the gap as they grow.
  • MDPs face unique staffing, sales and operational challenges that they must overcome in order to achieve success: Practices must find the right balance of solution experts, generalists and support staff to carry out their vision of catering to their clients' complete financial needs in the most productive and profitable manner.
  • There is limited access to  integrated technology solutions that can support more than one wealth management area: Effective management of operating costs and enhanced advisor productivity are critical to profitability.

Poer concluded, "To best navigate the complexities of running such a practice, advisors should affiliate with a wealth management firm that specializes in supporting MDPs and has a history of doing so successfully. Advisors should consider the need for integrated technology across multiple product lines and the ability to leverage home office expertise to further enhance the range of products and services offered in their practices. The end result of an effectively-run MDP is more satisfied clients, who generate more consistent referrals, higher retention rates and ultimately, a more valuable practice."

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