This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Financial Advisors: Characteristics of the Most Profitable Practices

By Hal M. Bundrick

NEW YORK ( MainStreet)--After gradually re-building their practices following the 2008 collapse, financial advisors will have little time to catch their breath. With slower industry growth and slimmer profit margins predicted for the next ten years, advisors will face greater challenges to maintain their profit momentum.

The business of wealth management grew by 7.8% in 2012 to a total of $135.5 trillion, according to a report by The Boston Consulting Group called "Maintaining Momentum In a Complex World: Global Wealth 2013."

"The global wealth-management industry has become increasingly complex," said Brent Beardsley, a co-author of the report. "With the mature economies of the 'old world' and the developing economies of the 'new world' moving at different speeds, wealth managers in different regions are grappling with tough sets of problems. Diverse strategies will be required to succeed on either side of the divide."

The research firm says several trends are shaping the industry for the future, including the rising wealth creation and profit pools of developing countries, the decline of traditional value propositions and increasing practice expenses due to tighter regulation.

The analysis lists the tactics advisors will need to master in a transitioning industry:

  • Exploiting high‚Äźgrowth markets and capturing high-net-worth client segments
  • Offering specific service-model value propositions and "embracing client centricity"
  • Streamlining operations and building lean front-to-back office business processes

"Regardless of their home market or principal region of activity, wealth managers globally still have much in common," said Daniel Kessler, a coauthor of the report. "All must find ways to gather new assets, generate new revenues, manage costs, maximize IT capability, comply with regulators and find winning investment solutions that lead to deep and long-standing client relationships. The battle to maintain the momentum they have achieved, amid a very complex industry landscape, will continue to intensify."

Advisors are struggling to maintain profit margins while the share of high-margin investment products has declined by 21% since 2007 as clients remain wary of managed-product solutions. Investors continue to demand more fee transparency and autonomy of their investments.

The most profitable financial advisories are reducing client segments and simplifying product offerings, according to BCG. Additional shared qualities of the top-performing firms included enhanced sales effectiveness, right-sized staffing and prudent management of costs. Under-achieving practices are clinging to traditional wealth management business models that are "no longer as robust as they once were."

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs