Forming a partnership with another advisor can help improve your client service and business processes. But you need to be clear about what you are looking for in a partner and a business structure.
“You have to build [the team] properly,” says Joanne Ferguson, president, consultant and coach with Advisor Pathways Inc. in Toronto. You need to understand why you want to work with another advisor and how it will affect your clients and your business.
A number of team structures are used in the financial advisory business. Understanding your objectives will help you choose the structure that best suits your goals.
The following are two examples of team structures, along with the advantages and disadvantages of each:
> A “true” partnership
In an equal partnership between two or more advisors, those advisors split the responsibilities of running the business.
An advantage of an equal partnership is that you can focus on an area of the business that you enjoy, Ferguson says, such as bringing in new business or creating financial plans. Your partner can use his or her expertise to round out the services of the practice.
In order for this type of partnership to work, you and your partner must be in complete agreement and a position of trust. Each partner must have decision-making control over one area of the business, Ferguson adds. For example, one partner might be in charge of staffing decisions while the other focuses on the investment strategy.
> Senior and junior advisor
If you prefer to be in charge, a junior partner might be better for your business.
When you bring on a junior partner, Ferguson says, you remain in control of the business. The junior partner is more like a “right-hand person” to help you with day-to-day tasks.
Your junior partner could become part of your succession plan —one of the benefits to this type of partnership.
There are downside risks, however. The junior partner may want to start a business of his or her own, Ferguson says. Or he or she may simply not want to take on the practice after you retire. That is why it’s important that you speak to the junior advisor about his or her goals and career plans to avoid any surprises.
This is the first of a two-part series. Tomorrow: the advisor/associate structure, and large teams.
IE