Most successful advisors practice in partnership with one or more other advisors. This has been the trend for the past five years or so (see “Creating Your A Team,” July, 2010 in this publication). More often than not, these partners and their support staff continue working together for many years. (According to Cerulli Associates, 58 percent of FA teams remain together for five or more years.) However, not unlike a married couple that decides to look for a new home, when teams think about moving to a new firm, or changing the way they do business (for example, going independent), discord can arise.
It's often a simple problem of miscommunication between partners. To maximize efficiencies, the partners on advisory teams usually have distinct responsibilities. There are the rainmakers, the product guys, the relationship builders, and the investment strategists. When a team makes the decision to put its toes in the water and explore options for moving, generally one partner becomes the point person either by selection or by default. But the different members of the team often have different life goals or are in different stages of their careers, and that's where conflicts can begin.
Several years ago, I was working with a multi-million dollar West Coast wirehouse team that was comprised of two senior partners and several juniors and support staff. The team was producing almost $3 million dollars annually on just under $500 million dollars in assets under management. Senior producers Roger and Paul had been together for almost 10 years and seemed to work together very well. Both partners agreed that the wirehouse's size, which led to increased bureaucracy and diminished client service, was reason enough to explore options elsewhere. Paul was the self-appointed representative of the team and he was the one who met with competing firm managers and principals at other wirehouses, boutique firms, multi-family offices and RIA custodians. Paul's first choice was to partner with one of the industry's wealth management consolidators. This would have involved “selling” a portion of their cash flow to the consolidator. Senior management from the firm of choice was ecstatic that this was the case and there was a big dinner in LA to toast the fact that the team was moving forward. Unfortunately, this was the first time that Roger and Paul were together in the same room with the consolidator firm's leadership. It quickly became apparent that not only were the two partners not on the same page about the move, they weren't even in the same book.
How did this happen? Well, the team just got busy with the ins and outs of running the business. Paul was taking meetings and really never reported back to Roger. In his mind, Roger had let Paul look at some options and explore some firms but had never explicitly committed to the move. In fact, Roger's idea for the future was to take a big check from another large firm and remain there until retirement. The partners never really communicated with one another on these crucial points. I, too, failed to find this out soon enough, and assumed that Paul was speaking for the entire team when in fact he really was only speaking for himself. We also learned that there were some deep-seated animosities between the two partners that could not really be appreciated until they were in the same room. As for Paul and Roger, this experience highlighted the differences in their career goals and individual tolerance for risk. For the time being, they are staying with their current firm and although they eventually will move, I will not be surprised if they do so separately.
My experience with Paul and Roger was at least a learning experience for me and my team of recruiters. Since then, early and often throughout the process we have spoken about goals, concerns and expectations with all of the stakeholders within the team or partnership. Second, we make certain that we know who the decision maker of the team is and go to great lengths to analyze and assess the team's dynamics. We figure out who is really running the show. Third, we do our best to encourage communication between the team members. This is critical to any team that is looking to make a move to another firm. Using the analogy of the married couple buying a home, it must be remembered that one person might like ranches and want a big back yard for a swimming pool while the other wants a classic Tudor with a 3-car garage. The only way that these two visions can become one workable choice is through a clear understanding between the two, a little bit of compromise and a little bit of creativity.
is president of Diamond Consultants, of Chester, N.J., which specializes in retail brokerage and banking recruiting. www.diamondrecruiter.com