I read a recent study of financial advisers and found that in comparison, my practice generates approximately the average "compensation per owner" based on several comparative criteria.

That is accomplished via a revenue number on the low end but a very high relative profit margin due to a very low overhead.

So, there are different ways to run a business that produce essentially the same result for the owner(s).  However, when shopping for an adviser, this subject should be of importance to you.

Why?  Several reasons.

• A low overhead allows me to price my services wherever I want.  I choose to charge less than the going rate because the going rate is too high, but also because I have the luxury to do so.  Low overhead makes this possible.  High overhead advisers fees are determined for them-- they must be high enough to support their overhead.
• Overhead represents deadly leverage during slow periods or economic downturns.  A profit margin of 80% means that an income reduction of 20% causes a profit reduction of 25%.  A profit margin of 40%  means that an income reduction of 20% causes a profit reduction of 50%.  I don't know many businesses that can withstand a 50% profit reduction for very long (aside:  couple this fact with the asset-based fee model that many financial advisers use and it's little wonder why hundreds of advisers practices were wiped out during 2008-2009).
• Staff often causes items to be delegated that should be automated or eliminated.  If you work for a company (or if you ever have), just think about how much of your job consists of conference calls, sales meetings, and administrative busy work that causes you to be less effective and causes the company to be less profitable?

I'm not suggesting that any financial adviser with a staff is burning money.  Just keep your eyes open, ask some smart questions and you'll be able to tell the difference between a fiscally responsible adviser and a house of cards (ie, Bear Stearns, Lehman Brothers, Merrill Lynch-- a good measure of how your money will be handled is whether or not the adviser can manage to keep his own business operation from imploding).

I work alone which causes me to think hard about every business activity I spend my time on.  It allows me the luxury of charging a lower fee than my competitors.  It makes me less susceptible to business downturns.

Good for me and good for you.

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