In 2008 we conducted a study of million dollar advisors affiliated with independent broker /dealers that became the basis for our whitepaper The Next Level: Building a Million Dollar Practice. Click below to see the ten traits of million dollar advisors as discussed in our original study.
Recently, I have been updating some of the data from the study to see if any of the main characteristics of million dollar advisors changed over the last three years. Though most of the original findings remain true today, one item stands out like a sore thumb. Million dollar advisors are moving even more aggressively towards a fee based business model.
In 2004 advisors received 20% of their overall revenue from fee based business. In 2007 the number jumped to 31%. At the end of 2010, the number increased again to 41%. For the purpose of our study fee based business consists of business done in accounts where there is an advisory agreement. Though it is incorrect to do so, many times fee based business is used synonymously with recurring revenue. If we use this definition and look at growth in recurring revenue as a percentage of the advisor?s revenue we see it has grown from 60% in 2007 to 71% at the end of 2010.
So the numbers paint a clear picture. Million dollar advisors clearly prefer a recurring revenue business model and are specifically focusing on growing the fee based portion of it within their business. If you are interested in assistance in transitioning to fees contact your broker / dealer. Most of they will have specific programs put into place to assist advisors. To learn more about our JumpStart Advisory program contact Paul Lofties by going to our ?Contact Us? page.