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Christopher S. Sargent and Pamela Bolanis didn’t take the decision to commit lightly. Indeed, they held countless discussions over a period of two years before forming a financial advisory team together.
“The advantages of having more than one person can be enormous, particularly if you have a good-size practice,” said Sargent of Wells Fargo Advisors. “You only have so much time in the day, so it becomes a necessity in my opinion, to get someone in to help you.”
The brokerage industry is placing more and more emphasis on teams these days for a number of reasons. For starters, the advisory business is increasingly complicated and requires a broader skill set than it did in the past. Having more than one person working together provides clients with different perspectives, better coverage in the event one advisor is away from the office, and the potential for better service. For older advisors, like Sargent, who is 69 years old and nearing an age where he’d like to retire, it is also a way to transition the business to a younger advisor.
Of course there are downsides to joining a team. Being part of a team requires more practice management, more coordination, and success relies heavily on the personalities involved. Problems, for example, can come up when one member of the team isn’t pulling his or her weight, or isn’t perceived to be.
“You need to take it just as seriously as getting married because if it doesn’t work out, it is just as vicious as getting a divorce. When it goes bad, people’s livelihoods are at stake. It can get very nasty,” said Allan Flader, a financial consultant with RBC Wealth Management in Phoenix. “This is not going steady. If you fully merge your books together, it is very hard to undo easily.”
When it comes to teams, there are many things to consider. For starters, no two teams are the same in how they work. Financial arrangements vary as do division of responsibilities. Also, some partnerships are formalized in writing, while others operate under a gentleman’s agreement of sorts.
It’s also important to understand the commitment level associated with forming or joining a team and the importance of finding the right partner, precisely because it is so much like a marriage.
Sargent of Wells Fargo Advisors, for example, had been looking for a partner for at least 10 years before joining forces with Bolanis. She also turned down many previous opportunities. “There were at least five to 10 other times that I could have joined another team, but it wasn’t the right team, or the right time or the right location,” said Bolanis who moved her family from Richmond, Va., to Washington in order to join the team.
For the team to work, it has to be the right mix of people, Bolanis said. It’s okay to have different investment philosophies, for example, but it’s important to make sure you have similar philosophies about client servicing, work ethic, and lifestyle. If for example, all your clients were people you’d met through hunting, you probably couldn’t effectively partner up with a vegetarian, she said.
When building a team, you’ll want to find people who have different strengths and synergies. For example, Brett Bartman who works in the Beverly Hills, Calif., office of RBC Wealth Management is more of a stock picker, while his partner Patrick Severo, is more of an asset allocator. “It offers our clients both depending on what their needs and wants are. You can’t be an expert in every part of this business,” Bartman said.
Trust is also a very important factor. Flader, for example, had his own practice for 12 years before starting a team in 2000 with his younger brothers. For many years he was told he should join a team, but never considered it too seriously because of the trust issue. When the opportunity came up to work with his brothers, however, he jumped at it, later taking on another financial advisor whom he also knew and trusted.
“The practice just kept growing and when you’re growing you either do one of two things. You stop servicing clients well—which was not an option—or you bring someone else on board to help service the accounts,” he said.
Of course, not everyone is comfortable with the idea of a formal team. Christopher Turoci, managing director of C.K. Cooper’s private client group in Irvine, Calif., for example, was part of a formal team for many years at Merrill Lynch, but the group dissolved over what he describes as “marital issues.”
Instead he advocates forming a virtual team because it gives you a leg up against a solo advisor, yet you can replace team members as necessary. For example, he has a menu of people who are specialists in certain areas whom he can call on as needed. He doesn’t keep an attorney or accountant on retainer, but has other advisors in the office he can bring in as the situation dictates. The same is true for outside professionals. “It can be just as effective, but you maintain the control,” he said.
Regardless of the type of team you choose to form, good communication is crucial to making it work, said Maribeth Kuzmeski, founder of Red Zone Marketing, a marketing services firm in Libertyville, Ill., who has worked as a consultant to dysfunctional teams. For example, she advises teams to have regular weekly meetings to talk about the business, even if it’s only for 30 minutes over the phone. “Nothing really falls through the cracks if you’re meeting that regularly,” she said.
Kuzmesk said it’s also really helpful when you’re building the partnership to discuss how you will break up. Having the clarity of what is going to happen, and having it out in the open, as opposed to being buried in a legal document, is important because if you can’t agree on the fundamentals before you enter into the agreement, it can be a red flag that perhaps it’s not the right fit, she said. “What I’ve found is that having that conversation might determine whether you should have the team or not.”