Teaming up with other advisers or practitioners — like attorneys, estate planners and accountants — offers compelling benefits to financial advisers, in the form of broader specialization, attraction and retention of more clients.
Generally speaking, teaming is a formal or informal arrangement by which an adviser joins together with another practitioner, either inside or outside the firm, to offer client services.
"There isn't simply one model or approach," Charles Phelan, vice president of practice management and consulting at Fidelity Investments, said Thursday afternoon during an
InvestmentNews
webcast about expanding advisory practices through partnerships.
Mr. Phelan cited Fidelity research showing teamed advisers earn 21% more revenue than solo advisers, and 83% of advisers say they work better as a team than individually. Teaming also helps advisers deliver 13% more in services, he said.
Teaming is most prevalent among wirehouse firms, according to Fidelity research — 61% of wirehouse advisers are part of a team, compared with 59% of registered investment advisers and 44% of advisers at independent broker-dealers.
"The investment piece is becoming
so much more commoditized," Ryan O'Donnell, co-founder of The O'Donnell Group, a wealth management firm with about $250 million in assets, said. "There are a lot of online services that do a good job at managing money now."
Specialization becomes particularly useful to high-net-worth clients with roughly $5 million-$10 million in assets, who typically have more complex issues than the average client, Mr. O'Donnell said. Often, taxes become the No. 1 driver, he added.
Mr. O'Donnell's practice was formed through a team partnership with his brother; while Mr. O'Donnell works mainly with entrepreneurs and business owners, and devotes more of his time to tax and real-estate issues, his brother works primarily with surgeons and others in highly specialized employment positions.
"You start realizing certain advisers have a little bit better knowledge in certain areas, and why not have them be that specialist," said Joseph Fusaro Jr., director of operations at SEIA, a wealth-management firm that manages over $8 billion.
Teaming can also help from an image standpoint among clients, who may wonder how one adviser can deliver the breadth of services that may be advertised, the webcast panelists said.
Through teaming, advisers can say they have specialists on their team who cover particular areas, Mr. Fusaro said.
"If not, you'll outsource it," he added. "But you'll be that [relationship] quarterback."
Further, partnering a junior and senior adviser together within a firm helps ensure there's a "logical succession plan for that adviser's business, and it provides business continuity," Mr. Phelan said.
"Teaming is a wonderful way to
address a succession planning need if there is one for an adviser," he added.
There are some inherent challenges to teaming, though. One primary one is determining revenue splits from clients who receive services from multiple practitioners.
"When it comes to money, there will always be a little bit of an issue," Mr. Fusaro said. Bringing in like-minded and fair partners is a way to minimize that tension, he added.
The split won't always be 50-50, due to a different commitment of resources and time from various parties, said Mr. Phelan, adding that technology can help track each party's contribution to the client relationship.
"There are plenty of platforms out there that do this," he said. "Make sure that infrastructure is in place."
