(Forbes) - Just like a marriage, the early years of a partnership often reflect the initial values and ideals you shared as a courting couple. Yet people and circumstances evolve over time, so unless you grow together, you’re likely to grow apart.
There’s great value in building strong partnerships and teams in wealth management. The synergy of compatible skill sets and expertise create a foundation of what could be a long and happy marriage—with the added benefit of creating scale and a built-in path for succession.
No doubt that wirehouses strongly encourage their advisor ranks to form teams or partnerships because it works to the firms’ advantage: It makes the assets stickier and harder to move, and in general, means that clients will receive a more well-rounded experience.
Yet, like a marriage, the shared mindset that partners began with may not be the same today. And the discrepancies often come to light when they start reflecting upon the status quo and whether it still serves them best.
For example, in a recent podcast episode, ex-Merrill advisor Dan Johnson shared how his team was united in their frustrations over changes at Merrill. So as a group, they decided to explore their options.
It was through due diligence that it became apparent they each had different visions, goals and timelines. Dan’s interests were leaning towards independence, while his partners were looking at other employee models.
It’s a common inflection point that leaves the partners wondering if they are better served by staying together or going their separate ways.
Advisors in this situation typically follow one of these four paths:
1. They stay put—and make peace with the status quo at their current firm.
2. They make a lateral move to another wirehouse—which could solve for some of what was frustrating them, but likely will not make everyone happy.
3. They leave for what might be more of a “middle ground”—a regional firm like Raymond James RJF -1.3% or a boutique like First Republic or Rockefeller.
4. They go their separate ways—opting for the right solutions for their own goals.
In Dan’s case, the team decided to go their separate ways—with Dan choosing independence, three of his partners opting to go to Morgan Stanley MS -0.8% and one signing on to Merrill’s sunset program, CTP.
It’s certainly not easy to leave behind a team that you’ve worked with over the years. There’s a certain comfort and familiarity that develops which is often strong enough to withstand differences that may exist—that is, until those differences become too big to ignore.
How do you determine if it’s better to stay together or go separate ways?
In counseling advisors who’ve hit this proverbial fork in the road, we’ve outlined 10 questions that can help decide how best to move forward.
1. Are you compatible with one another and like each other?
This can be a difficult question to answer. Because even when partners are friends outside of the office, if they are not on the same page in terms of the business, it could put tremendous strain on the friendship as well as the business. So while you may like each other, you may not agree on how or where to best serve clients—and that’s something you will need to resolve.
2. Do you share similar goals and values?
This is one area where we see partners become quickly divided, particularly when they may have been part of an “arranged marriage,” in which they were united at the behest of the firm—instead of one where like-minded people come together by their own choosing. For example, there may be one partner who has the desire for greater control and ability to grow, while another is perfectly fine with the status quo. Over time, this gap in goals is likely to keep growing larger.
3. Are you synergistic professionally?
Put another way, are you the “yin to the other’s yang”? The best partnerships are comprised of individuals who have complimentary skillsets that combine to form a single working machine. For example, one may be a rainmaker, while the other has strong operational skills. Recognizing their strengths and weaknesses will enable you to find the expertise to fill any gaps.
4. Are you “better together”—better able to serve clients, manage the team and grow?
The most successful teams often act more like a basketball team than a bowling team. Players have specific roles and together they magnify each other’s strengths—and can cover more ground, grow faster and serve clients more efficiently. It should feel more like “1+1=3”—rather than separate individuals who may be serving clients, but not as a cohesive group.
5. If you are different ages, are you on the same page about your succession plans?
From the senior advisor’s perspective, it’s important to be comfortable with handing over the keys to the younger partner when it comes time. Likewise, if you are a younger advisor who is lucky enough to have a senior partner who’s considering the firm’s retire-in-place program and is offering you the opportunity to be their next gen or the heir apparent, that’s fabulous. But make sure that you read the fine print in the contract and understand what you’re giving up, and that you can live with any and all changes that come down the pike during the life of the agreement.
6. Do your visions for client service and business growth complement one another?
Much like a shared vision and goals, knowing that you are aligned in how to serve clients and grow the business is critical. For example, do you have a desire to grow through acquisition while your partner is more risk averse and wants to focus solely on organic growth? Or is the team divided on providing additional services to clients? This is a fracture point that often impacts whether a team stays together or separates—because without consensus, it can be impossible to serve clients and grow the business effectively.
7. As you think about the legacy of the business, do you have the same vision for the future?
For example, if you’re a wirehouse advisor who is close to retirement, you may be looking at this from the perspective of whether your firm is the right one for the legacy of the business and the clients. Likewise, a younger advisor or next gen may be wondering if the firm is where you envision yourself over the next 7-to-10 years should your senior partner sign on to the firm’s retire-in-place program.
8. Are you on the same page with respect to making a move?
If partners are not in agreement on their level of unhappiness or desire to make a move, that immediately can fray a partnership. In a podcast episode with former UBS advisor Robert Harris, he talks about how his partner didn’t share his feelings about the direction of the firm. And ultimately, after an intensive due diligence process, and a lot of introspection, Robert made the difficult decision to pursue what he felt was best for his high net worth clients and the business overall while his partner stayed behind.
9. If you move, do you agree on where you would go or the type of firm or model you see yourselves at?
Much like question 8, partners need to be aligned on what they see as the right option for their business. In the case of Dan Johnson, he was jazzed by the notion of building his own independent firm with his sights set on the long-term, while others on his team were less entrepreneurial and looking to monetize in the short-term. It’s not uncommon, particularly with larger teams who managed their own clients, to envision their business differently. While some teams may choose to find a middle ground option to keep the team together, others like Dan, may choose their own paths.
10. Do you share similar values about money and its importance? How important is transition money if you were to move?
Put another way, which do each of the partners value more: The short-term or the long-term? Each advisor is completely within their own right to value things differently in a transition, particularly when it comes to the financial aspect. When one partner is looking to monetize in the short-term and the other is set on the long-term potential, it can be difficult to have those two sides of the coin come together, even in an industry landscape that’s expanded so dramatically.
Just like a marriage, the early years of a partnership often reflect the initial values and ideals you shared as a courting couple. Yet people and circumstances evolve over time, so unless you grow together, you’re likely to grow apart.
That’s why it’s smart to check in with yourself – and your partner(s) – from time-to-time and ensure the direction you’re moving in is the same one.
And if you’re not then the threshold question becomes: How will we resolve the differences between us?
