Firms Wrestling with Capacity Constraints, and Other Insights from 2025 Global Advisor Study

Dimensional’s Global Advisor Study marked its 15th year in 2025. This year’s study collected data from 868 firms across the globe. The 515 US firms represented in the survey had a median revenue of $ 2.4 million, $336.2 million in total billable assets (TBA), 6.5 full-time equivalents (FTEs), and a median of 235 households serviced. Of the 515 US firms, 129 were identified as High Performing Firms (HPFs). Exhibit 1 shows the US HPF metrics from the 2025 Global Advisor Study.

For the third year in a row, the top three cited business operations challenges were implementing workflow processes, recruiting and hiring qualified employees, and developing employees.

When it came to growth challenges, capacity remained a significant obstacle for firms, with “capacity constraints” being the top reported growth challenge. One method firms are using to address capacity challenges is to set a limit on the number of households managed per advisor (or team); however, only 24% of firms indicated they were implementing such measures. Of the firms who reported controlling their households per advisor ratio, the average limit reported was 100 households per advisor.

Another way firms are addressing capacity issues is to adjust the structure of the organization by employing more client-facing support staff (associate advisors and client service associates) to help support senior advisors. HPFs tend to have a higher ratio of client-facing support staff. This strategy supports senior advisors in spending less time servicing clients and more time on generating new business. It also allows firms to spend less on compensation (as a percentage of revenue) due to the team structure tilting toward lower-compensated roles.

Further, HPFs not only have more client-facing support staff but also more back-office staff supporting their senior advisors. On average, HPFs have 3.4 employees for every senior advisor versus 2.8 for Other Firms. More specifically, HPFs tend to have a greater percentage of investments and operations people (10% of firm headcount) versus for Other Firms (8%).

As firms add headcount, their revenue per FTE ratio rises steadily, until headcount reaches around five or six employees. Then, there is a bit of a dip, as firms add their first back-office support staff and executive team members. After that point, revenue per FTE begins to steadily rise again, as firms continue to grow.

By implementing limits on the number of households managed per advisor or team, firms provide their senior advisors the opportunity to spend more time on business development and revenue-generating activities. Senior advisors at firms with household limits manage 88 households on average and spend 19% of their time on business development. By comparison, senior advisors at firms without household limits who manage more households (98 on average) spend less time (16%) on business development.

Exhibit 2 showcases key productivity metrics, comparing US HPFs to Other Firms.

Year over year, the most common channel of growth is referrals from existing clients. Despite that, an often-cited growth challenge, especially for Other Firms, is “building/improving an existing client referral process.” Other Firms are less likely (30%) to have a defined process for driving client referrals compared to HPFs (40%). Further, HPFs were generally more successful in converting prospects into clients, with an average prospect conversion rate of 63%, compared to an average rate of 56% for Other Firms.

A new channel of growth asked about in the 2025 Global Advisor Study was “clients/assets gained via lead generation (e.g., paid lead generation, search engine optimization (SEO), paid prospect lists, etc.).” On average, only 1.5% of new clients were brought in via this channel. After referrals from existing clients, HPFs’ largest channels of growth were advisor business development (11.5%), referrals from centers of influence (COIs) (9.2%), and digital marketing (6.9%).

The study showed that 6.4% of firms gained clients via M&A this year versus 7.5% last year. Further, about 25% of the 40,000-plus clients gained by study participants were gained inorganically via M&A. This is a dramatic decrease from the 2024 study, when approximately 50% of new clients were gained via M&A.

Exhibit 3 explores which channels, according to the 2025 Global Advisor Study, bring in the largest clients in terms of average asset size.

Both HPFs and Other Firms grew their average headcount by one net employee in 2024. However, Other Firms required more turnover to get there. Other Firms added three people and lost two on average, while HPFs gained two people and lost one.

For Other Firms, “career advancing position elsewhere” was the most common reason employees voluntarily left the firm. While this is also a common reason employees leave HPFs, HPFs tend to report a wider variety of reasons for employee departure, such as “unaligned with in-office work expectations” and/or “changed industry/profession.”

Regardless of the reason, employee turnover can be costly and time consuming for firms. Providing career paths and development opportunities helps employees visualize their long-term role within the firm. Further, offering equity and/or ownership opportunities can have a positive effect on employee retention.  

HPFs tend to have broader ownership across their employees. A total of 31% of employees at HPFs have an ownership stake in the firm, compared to 24% of employees at Other Firms.

Looking at the universe of firms that completed both the 2024 and 2025 Global Advisor Studies (311 firms), we saw a 12% increase in firm headcount. One role that saw a significant uptick was paraplanner. HPFs saw a 41% increase in the total number of paraplanners, while Other Firms saw a 21% increase.

When comparing compensation trends across the 2024 and 2025 studies, there were also significant increases. Exhibit 4 showcases the median total cash compensation change across various roles reported in the 2024 and 2025 studies.

Human capital is by far the largest expense for firms. Looking at human capital spend as a percentage of revenue, HPFs reported spending 42% of their revenue on human capital expenses compared to Other Firms, who reported spending 47%. It’s worth noting that HPFs are not necessarily paying their employees less, but rather that the same number of employees are generating more revenue and, in some circumstances, HPFs are structuring their teams with a higher number of employees in lower-compensated roles.

Consistent with the previous year’s study, most firms (71%) did not change their fees in 2024. Of the firms that made a change, fees were raised more often than they were lowered. Correspondingly, the average fee schedule rose slightly year over year. Data from prior studies shows that there is little difference in average client retention rates for firms that raised fees relative to firms that lowered fees (around 97% for both groups). HPFs are less likely to have a formal process for making fee exceptions (HPFs: 34%; Other Firms: 46%).

Nearly all firms (95%) kept their fee structure the same in 2024. The average fee schedule is very similar for HPFs versus Other Firms. However, a greater share (70%) of HPFs’ clients pay the full fee schedule relative to 63% of Other Firms’ clients.

Looking at the universe of firms that completed both the 2024 and 2025 Global Advisor Studies, operating profit margins increased significantly, from an average of 29% last year to 34% this year. Exhibit 5 showcases operating profit as a percentage of revenue as reported in the 2022–2025 Global Advisor Studies.

HPFs reported generating higher profits per client, with an average operating profit per household of $5,655, which is significantly higher than the average of $4,109 of Other Firms.

Consistent with last year, we see no statistically significant relationship between revenue growth rates and profit margins.

Other Firms were twice as likely as HPFs to select “rising age of client base” as one of their top operations challenges (22% versus 11%). Further, Other Firms tended to have a higher percentage of clients above the age of 70 compared to HPFs. HPFs have a smaller percentage of clients with decumulating assets (HPFs:  31%; Other Firms: 34%).

Loss of clients by HPFs was more often due to the firm’s decision (“we terminated”) or because of a life event (death or divorce). Comparatively, Other Firms were more likely to lose clients to an advisor who left the firm or because of fees or investment performance.

HPFs are quicker to onboard new clients, taking 8.5 weeks on average compared to 10.3 weeks for Other Firms. Further, HPFs generally onboard new clients at a lower cost. Only 21% of HPFs require more than $5,000 to onboard a new client versus 28% for Other Firms.

There is not a significant difference in the number of services offered by HPFs and Other Firms. However, HPFs are generally more likely to offer certain services that Other Firms do not, namely offering advice on closely held stock/options and advice on business valuation/exit strategy.

71% of all firms offer more than one formal client segment. Firms are most likely to designate clients to different segments based on the client’s asset level, but other common reasons include referral potential and level of delegation/involvement. Exhibit 6 showcases the top six reported criteria firms are using to align clients with a segment.

Approaching the process of client segmentation by assessing factors like demographics (e.g., age, gender, income) and psychographics (e.g., personality, lifestyle, interests) can help firms better understand their clients’ unique needs and values and tailor the firm’s service model. Resources like Dimensional’s  allow firms to gain client-based insights into what their clients value in an advisory relationship and gauge client expectations, areas of opportunity, and more.³

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