Forming strategic alliances — both business-related and non business-related — is a great way to grow your practice. You can benefit from more referrals, higher revenue and increased profitability.

In addition, says Ed Lee, vice president, institutional alliances at Franklin Templeton Investments Corp. in Toronto, strategic alliances can enable you to offer a full spectrum of services to your clients. They can complement the skill set of your team, Lee says, and help you to deliver “the best client experience.”

For example, forming alliances with centres of influence (COI) such as insurance specialists, accountants and estate planners enables you to offer more services to your clients.

These strategic alliances, which can either be formal or informal, become extensions of your team.

Conduct self-analysis
To determine the type of professionals you should ally yourself with, Lee says, analyse your practice. What type of business are you seeking to develop? Are you looking to offer a broad spectrum of services, or focus on a particular segment, niche or geographical region?

A deep understanding of the characteristics of your target market will allow you to determine what type of strategic alliances you should pursue. As with any business strategy, you should have a well documented plan.

Create a matrix
Lee recommends constructing a matrix that identifies the attributes of your target clients on one axis and the services you are planning to provide on the other.

For example, based on your business model, you might decide that you need services such as legal advice, accounting, tax planning, estate planning and insurance planning.

Populate the matrix with potential strategic alliance partners who offer those services. Lee recommends identifying at least two COIs for each product or service.

“You want to have a couple of different options,” he says, “because things can change.” For example, the COIs you identify might already have other alliances, or one might retire.

Develop your relationships
Meet with potential COIs to get their buy-in. Discuss your proposed working relationship, Lee says, which must be synergistic.

“You may wish to start out by sending COIs less complex cases, to get a sense of how effective they are,” Lee says.

Your aim is to build confidence and trust. Developing these relationships takes time. But in the end, you will be able to offer a broader range of services that meet the needs of your clients.

Ask for business
The relationship between you and your COI should be reciprocal. You refer clients to them and they refer clients to you. So, Lee says, don’t be afraid to ask your COIs for business.

Make sure they understand that all three parties — you, the COI and the client — will benefit from the arrangement, he says. You should also make sure your COI fully understands the service you offer — in your words — so they can offer your services to potential referrals on your behalf.

Don’t overlook non-business alliances
Typically, advisors see value only in alliances with professionals related to financial matters. However, Lee suggests, you should not underestimate the benefit of alliances with COIs who are not directly related to your business.

Such COIs could include charitable organizations, merchants and travel agents. They could be a good source of referrals and you could reciprocate by referring business to them.

See also: COI teamwork