Relatively small differences in advisor performance lead to massive differentials in productivity, according to new industry research.

Speaking at the Investment Dealers Association of Canada’s Private Client Day in Mont-Tremblant, Que., Bernard Letendre, senior vice president at Standard Life Mutual Funds in the business consultancy group, reported the results of SMLF’s research, which looks at the benefits advisors receive by following four key “best practices:” segmenting client database, using client satisfaction surveys, using a contact-management system, and having a formalized business plan.

It found a positive correlation between advisors following these best practices and the amount of time spent on revenue-generating activities. In other words, those following at least some of these practices spent more time producing revenue. Those not following any of these practices spent an average of 41% of their time generating revenue. Those who followed all four spent 55% of their time on revenue generation.

The research also found that top advisors spend about 13% more time on revenue generation than all other advisors. However, this relatively modest time difference translates to a huge revenue gap. The top advisors in the survey gross an annual average of almost $1 million, compared with just $315,136 for the rest ˜ a 316% difference.

SLMF also looked at whether tenure in the industry could account for the difference; it could not, Letendre said. The top advisors have been in the business longer, but only marginally — 9.4 years for top advisors vs 7.5 years for the rest.

Letendre said that SLMF believes that tenure is not a deciding factor in advisor productivity: the key is managing the book as a business.