The ClientWise Blog

10 Questions to Ask Before You Partner with Another Financial Advisor

Posted by Alix Purcell on Dec 8, 2014 12:24:00 PM


Teaming is becoming an increasingly popular way to provide improved wealth management services to increasingly sophisticated investors seeking more comprehensive and effective guidance with their financial planning and investments. In most cases, a partnership is as beneficial for the advisors who partner as it is for the investors who work with them. In fact, our ClientWise statistics indicate that practices with multiple partners generate on average 38% more revenue per team member and manage 97% more assets than their solopreneur peers.


And yet anyone in the industry will tell you that partnering isn’t a simple endeavor. More financial advisors choose to work alone rather than attempt to build a partnership or financial advisory team. Why? Because, like any relationship, problems arise when they haven’t fully explored how their current and future endeavors will align. Avoid this problem by asking yourselves the following questions before partnering with another financial advisor:


What is our collective value proposition? Knowing your value as a solo-producer is one thing, but in the event that you partner, it’s likely that your value proposition will change. Know this going into the partnership and make sure it’s something you collectively agree on and co-create.


Where do we place more value, in managing the book or growing the book? In certain cases opposing answers to this question are indications of a great partnership, in others you’ll want to be aligned on this front to avoid conflict down the line. Either way, know this going in.


How do we determine the split and how often does this get reviewed? Division of assets is a hot button topic for financial advisor partnerships, and an important conversation to have in terms of how this split will occur in what scenarios and how often it will get reviewed.


What is our practice management philosophy? How do you plan to address your business in terms of the different areas of The Professional Advisory Model (PAM)™? Will both people in the partnership be responsible for aspects of all, or will there be a natural divide based on each person’s previous experience and business management style?


What is the strategy for growth and human capital?: Do you plan to hire additional team members to cover all the areas required for your practice to run smoothly? What does this look like and what kinds of team members do you plan on investing in, if any?


Is our leadership philosophy the same? Understanding how you plan to lead additional team members is incredibly important. If your vision of how a practice runs does not align, especially with other people involved, it can lead to serious divisions amongst your team.


Can we walk into a meeting with a united front? Clients, prospects and centers of influence are incredibly perceptive when it comes to relationships. Each for their own reasons, they are inclined to be sensitive to your interactions with one another. You’ll also want to feel comfortable knowing that your partner can go into a meeting without you and represent you as a team.


How do our respective ages help or potentially hinder our growth? Like it or not, age is an important factor during a time period when so many baby boomers are retiring and when younger investors are changing the expectations of the marketplace. Is your partnership representative of a joining of forces or perhaps a potential succession plan and how do your ages factor into this?


What is your succession plan and enterprise value? If you are thinking about partnering it’s likely that you’re also ready to begin thinking about succession planning. What does this look like for each of you and can your visions be aligned?


What’s your exit strategy? Every plan A has a sound plan B. What is your plan if the partnership doesn’t ultimately work out? How do you plan to part ways and divide the assets acquired while you were in partnership?


Entering into a partnership is an important step for businesses looking to be successful, sustainable practices that serve their clients for the long term. However, if you fail to take into consideration the above, it could lead to more harm than good for both you and your clients. 

 

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Topics: Team Development, Succession Planning