What makes a “Top Advisor”?

A bearish global outlook may have reined in market sentiment, but it could not tame the trot of outperforming advisors who grew their revenues by 34%—from $581,686 in June 2010 to $781,960 in June 2011—according to a new report by Toronto-based PriceMetrix.

Underperformers, meanwhile, recorded a 4% drop—starting with $633,088 and dipping to $605,564 by the end of the 12-month period.

The top reasons outperformers forged ahead were an unwavering focus on clients, a conscious move toward fee-based models, compelling value propositions and consistent pricing.

Outperformers increased their fee-based business by 21% over the 12-month period compared to just 12% among underperformers, averaging 23 new fee-based accounts versus just 9 for advisors in the bottom quartile.

As a testament to their winning tactics, outperformers opened almost twice as many new accounts as underperformers. Furthermore, the top quartile added larger accounts to their books—the average size being 37% greater, $194,966 in assets versus $142,418. They also transitioned out of small households (less than $100,000 in assets) and into mid-to-high net worth households (more than $250,000 in assets) at a rate faster than underperformers. The move resulted in $1,565 more in net revenue for every account they replaced, as opposed to underperformers’ $55.

Furthermore, outperformers stayed disciplined about maintaining consistent pricing despite turbulent markets. An outperformer’s average millionaire household, with $5.1 million in invested assets, generated an average RoA of 0.91%, while the average millionaire household for the underperformers had $5.0 million in invested assets with an RoA of just 0.77%.

In the U.S., Multi-Financial Securities Corp., which recently surveyed 700 advisors, also identified financial software as a driver of growth for successful advisors. Those who relied on paper considerably lagged their computer-savvy peers who reported an average of $546,706 in annual revenue—46% higher than the $373,362 for paper-based practices.

The Multi-Financial Securities survey also underscored the importance of staying connected. Those who picked up the phone to check on their clients more regularly won not only their goodwill but also a bigger share of their assets—nearly a third more than those who didn’t. Calling top clients 6 to 12 times a year translated into even bigger bucks—a 22% increase in annual revenue.

Failing to tailor services to fit different client needs cost the less successful advisors dearly. Those who customized their services reported an average of $558,518 annual revenue, 33% higher than the generic brand.

Succession planning offered yet another slam dunk for winning practitioners. Firms with a written succession plan reported 31% more revenue than those without one, at $634,158 in average annual revenue.