You don't have to go it alone

Gains from creating an advisory team are tremendous, though not without trials

Aug 15, 2014 @ 12:39 pm

By Liz Skinner

Whether its client complaints, staff rebellions or the competition turning up the heat, there's nothing better than having a business partner with whom to share the pains.

Not having to face all the difficult challenges of running an advisory business alone is just one of the reasons that more advisers are increasingly teaming together to serve clients. Others include the increased complexity of the financial advice business and the added services high-net-worth clients require of their providers today.

“Operating solo today I think would be impossible,” said James Reilly, partner and wealth manager of RegentAtlantic. “There's too much compliance, business development and correspondence for anyone to do it all.”

Advisers who are part of teams are benefitting from greater compensation compared to solo advisers, earning an average of $303,000 last year compared to $224,000 for soloists, according to a new report by Fidelity Investments. That study shows adviser compensation rose an average $7,000 last year for teamed advisers and only $225 on average for soloists.

Teamed advisers also are more likely to be personally satisfied with their career, do more business planning, work with larger clients and offer more services to clients, the report found. It's based on data from 813 advisers surveyed in August 2013.

“When it comes to teaming, the whole is really greater than the sum of its parts,” said Amanda Smith, senior vice president and head of marketing for National Financial.

Several advisers who are part of teams said the biggest benefit is having partners who are experts in different aspects of the financial advice business.

“It allows us to be the best at certain areas and the client gets the best service,” said Beth Blecker, chief executive of Eastern Planning Inc., who focuses on the planning side while her partner concentrates on investing.

David B. Armstrong, co-founder of Monument Wealth Management and one of three advisers who work as a team with clients, said one person “just can't be an expert at everything that wealth management is supposed to be addressing today.”

The upcoming 2014 InvestmentNews survey of advisory firms found that the most successful solo advisers can be very profitable businesses for the owner, but leveraging staff and operational resources multiplies profits and allows advisers to focus more on client-facing activities.

Firms with multiple advisers also grew faster from a year ago, posting an 18% increase in revenues, while firms with only one adviser grew at a slower 15% rate, according to the IN study of 300 advisory firms.

Teaming, however, isn't without its trials.

When Mr. Armstrong and his two partners created Monument Wealth Management in 2008 it was a challenge to get one partner to use the customer relationship management system the other two were experienced with and knew would be important for clients, Mr. Armstrong said. In fact, that third partner had never used any CRM system.

“We needed to be understanding to the fact that it was foreign to him, and he needed to be aggressive in adopting the new practice,” Mr. Armstrong said.

In fact, difficulties with different working styles is a challenge that 57% of teamed advisers identified in the Fidelity study. The others are: differentiating roles, adapting to different styles of communication, meshing personalities, and agreeing on compensation and revenue sharing.

Brian Dombkowski, chief executive officer of Sand Hill Global Advisors, which embraced teaming about a decade ago, said communication can be difficult when working as a team. It can be hard to know when to take the lead and when to let others show their expertise, especially in client meetings, he said.

“If you're not careful, it can create a cacophony of information for clients,” Mr. Dombkowski said.

His firm holds pre-meetings to go over who will address which topics with clients. It's sort of a “planned spontaneity,” he said.

Ms. Blecker, who partners with her son Matthew Blecker, said familial teams can be especially tricky. It's important that the advisers listen to each other's ideas and thoughts, regardless of the personal relationship, she said.

“The dynamics of the family relationship has to be ignored for the team importance,” Ms. Blecker said.

Even clients can sometimes resist the teamed approach, coming into a firm and requesting to work with a particular adviser they have been referred to by a friend, advisers said.

“We try to convert these people by giving them a positive experience when interacting with other team members,” said Mr. Reilly, whose firm has four teams with three to four advisers on each. “Once clients stop copying me on e-mails, I know that they are comfortable with the rest of the team.”

For the most part, though, clients appreciate having access to multiple resources at the firm.

“Most clients like a deep bench,” Mr. Reilly said.


What do you think of working on a team?

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