These findings, released by the Ensemble Practice in late June from the“ Growth & Profitability” portion of its 2026 Data Insights report, describe an industry that’ s absolutely thriving financially, but also struggling operationally.

“ This marks the lowest level in our 10- year dataset,” the report said of the level of organic growth, noting that the S & P 500 returned nearly 18 % by comparison.

But the fault doesn’ t lie entirely with advisors, the report said, as a rising stock market can mean people don’ t feel they need professional advice and are less likely to be prospects, a phenomenon that hampers organic growth.

“ The correlation between prior-year market returns and current-year organic growth is-0.64,” the report said.“ Advisors are not failing to prospect in strong markets; the market itself reduces the number of people looking for them.”

Client selection is one of the most important factors in firm performance, the report found. The firms that saw the strongest combination of growth and profitability were those serving clients with $ 500,000 to $ 1 million in manageable assets— clients who generate $ 5,000 to $ 10,000 in annual revenue. Such firms saw a 40.4 % profit margin and 4.3 % organic growth, the consulting firm found.

Firms focused on the highest end of the spectrum, serving clients who generate more than $ 20,000 annually, reported 35.6 % margins but just 1.6 % organic growth— figures no better than those of the smallest firms serving the least affluent clients.“ The data suggests that moving upmarket is not, by itself, a growth strategy,” the report said.“ For many firms, it is simply a harvesting strategy with a prestigious label.”

The growth divide also shows up in how firms staff. The revenue per employee when all staffers are taken into consideration fell 28 %, from $ 459,655 to $ 329,401, the report found. That’ s primarily because firms hired significantly more support and administrative employees in 2025 without adding advisors to match.

A firm’ s growth picture was further determined by its size. Small firms, those with less than $ 500 million in assets under management, posted the strongest organic growth at 5.6 %. Large firms achieved 3.4 %, while medium firms came in at 1.8 %, the report said. The so-called“ super ensembles,” those firms managing more than $ 3 billion, posted just 0.7 %— despite theoretically having the most resources to put behind business development.

The report suggested that advisor capacity may help explain some of the gap. The fastest-growing firms served an average of 141 client households per relationship manager, below the industry average of 153. The slowest-growing firms averaged 171— 18 more than the industry norm— leaving advisors with little bandwidth to pursue new relationships.

The fastest-growing firms generated 10.9 % in net new AUM from new clients; the slowest-growing lost more to departures than they added, finishing at negative 0.2 %.

The fastest-growing firms also shared one consistent marketing behavior: They generated leads from multiple channels and did not rely on client referrals alone. Referrals remain the highest-quality lead source, the report said, and the fastest-growing firms still received 58 % of their leads from existing clients. The slowest-growing firms, however, actually received more leads from referrals: 70 %. That 12-point gap in channel diversification had a direct influence on growth outcomes.

“ The definitive implication is that referrals are the highest-quality leads, but they cannot be the only lead source if a firm wants to grow at scale,” the report said.

It helps if there is accountability for business development. Firms that formally tracked leads and managed a sales pipeline were more likely to land in the faster-growing cohort. About 62 % of the fastest-growing firms tracked leads, compared with 54 % of the slowest-growing. Among firms that set individual business development targets, senior advisors carried an average goal of $ 20 million in new-client AUM; lead advisors averaged $ 10 million.

The Ensemble Practice survey was conducted in partnership with ActiFi. Of 382 firms that responded, 173 submitted complete financial information. The survey covered fiscal 2025.

— Jennifer Lea Reed

JULY / AUGUST 2026 | FINANCIAL ADVISOR MAGAZINE | 11