Adding advisors naturally drives additional revenue to the firm.  But research from Kehrer Group demonstrates that increasing advisor headcount increases revenue exponentially.


In the chart we’ve plotted the number of number of advisors per million of core deposits and the revenue per million of core deposits for 196 banks and credit unions.  Moving from left to right on the chart demonstrates the impact of increasing advisor coverage – adding advisors to an institution of a given size.  Plotting the line that best fits the data indicates that revenue increases exponentially as a firm adds advisors.  That means that each new advisor results in more revenue to the firm than their own incremental production.


How does this happen?


As firms add advisors, they generally are reducing branch deposit territories and shifting branch referrals from existing advisors, some of whom are relocating to a second story environment.  These structural moves actually increase the productivity of the existing advisors, who are freed from some branch activity and windshield time, and managing too many clients.  They can now focus on developing deeper relationships with their remaining clients and opportunities. That’s why adding an advisor increases the firm’s revenue by more than the advisor produces.


Continuing to add advisors creates a virtuous circle as the existing advisors focus on higher priority opportunities and the new advisors ramp up their own production.


This was one of the many findings in a recent Kehrer Group study, Margin Mismatch: Why Financial Institutions Should Stop Managing Investment Services Business on Profit Margin.  The study was sponsored by Cetera Investment Services, and is available for complimentary download here.


About Cetera Investment Services

For nearly 40 years, Cetera Investment Services, part of Cetera Financial Group, has empowered financial institutions to deepen client connections and expand their services with customized support that helps financial professionals meet their clients’ full lifecycle needs. Learn more about Cetera’s resources and support for financial institutions.



About Cetera Financial Group®

Cetera Financial Group, which is owned by Cetera Holdings (collectively, Cetera), is the premier financial advisor Wealth Hub where financial advisors and institutions optimize their control and value creation. Breaking away from a commoditized and homogenous IBD model, Cetera offers financial professionals and institutions the latest solutions, support, and services to grow, scale, or transition with a merger, sale, investment, or succession plan. Cetera proudly serves independent financial advisors, tax professionals, licensed administrators, large enterprises, as well as institutions, such as banks and credit unions, providing an established and repeatable blueprint for scalable growth.

Home to more than 12,000 financial professionals and their teams, Cetera oversees more than $475 billion in assets under administration and $190 billion in assets under management, as of December 20, 2023. In a recent advisor satisfaction survey of more than 21,000 reviews, Cetera’s Voice of Customer (VoC) program vigorously measures advisor experience and satisfaction 24/7. Currently, it’s ranked 4.8 out of 5 stars.

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“Cetera Financial Group” refers to the network of independent retail firms encompassing, among others, Cetera Advisors LLC, Cetera Advisor Networks LLC, Cetera Investment Services LLC (marketed as Cetera Financial Institutions or Cetera Investors), and Cetera Financial Specialists LLC. All firms are FINRA/SIPC members. Located at: 655 W. Broadway, 11th Floor, San Diego, CA  92101.

Individuals affiliated with Cetera firms are either Registered Representatives who offer only brokerage services and receive transaction-based compensation (commissions), Investment Adviser Representatives who offer only investment advisory services and receive fees based on assets, or both Registered Representatives and Investment Adviser Representatives, who can offer both types of services.