Dissolving a team practice that has been in business for years can be difficult, even when the breakup is amicable. Regardless of which partner gets custody of the coveted leather couch, the most important challenge is to ensure the process is professional and swift while causing minimal disruption for your clients.

Your main objective in dissolving a partnership should be to get through the process as quickly and as quietly as possible to increase the chances of retaining valued clients and employees, says Todd Fulks, general counsel with F.P. Transitions, a Portland, Ore.-based firm that focuses on succession planning and valuations of businesses for financial advisors in the U.S.

That’s because clients and assistants don’t want to work with a business that’s riddled with strife between or among team members. So, keeping the process civil will preserve your professional image in the eyes of both colleagues in the financial services industry and the public.

“You want to make sure that everything is done in a really professional light that’s not going to affect the clients,” says Joanne Ferguson, president, co-founder and coach with Advisor Pathways Inc. in Toronto.

Ideally, you and your partners should have written a formal agreement before the partnership began that explains how the business will be divided in the event that one or more partners leave. Having such a document makes a breakup easier — and, in many cases, preventable. A clear and detailed agreement clarifies expectations among partners and can reduce the likelihood of conflict.

Without a formal contract, the dissolution process is more difficult. In this case, your best tools will be a positive attitude and a commitment to be fair.

The following advice can help you dissolve your team if you don’t have a contract in place:



> Better Late Than Never

First, learn from your past mistakes. Write up an agreement now, as you and your partners should have done at the beginning.

Include a checklist of what you would like to see happen as the team dissolves, says Ferguson. This checklist should include how you want clients divided and what happens with the other office employees, as well as all the other items that would have been covered in a partnership agreement written before you decided to work together.

Once you have articulated your expectations in your list and have started working through the process of breaking up your team, you need to keep writing. That’s because you need to document your plan and sign a formal dissolution agreement with your partners explaining all of the resolutions made by the team, says Fulks. (Each member of the team should perform the same steps in this process.)



> Dividing Accounts

The most contentious issue in the breakup of a partnership is usually the division of client accounts.

For the process to be successful, each team member should be happy with the result and the clients need to be comfortable and confident that service will continue without disruption.

To divide client accounts equitably, Fulks suggests, go over your client roster with your partners and identify the clients that fit naturally with each advisor. For example, a client who is a friend or family member of one advisor will naturally remain with that advisor. Other matchups will be less obvious, but some clients may fit better with one advisor or another.@page_break@> Divide Remaining Clients By Account Size

Again, it’s important that each advisor feel that the division is equal and fair. If the remaining clients are not divided equally among the partners, Fulks says, separate them based on the way revenue was split when the team worked together.

If “leftover” clients remain — or team members cannot agree on the division — seek help from an objective third party. This could be a coach, a branch manager or a mediator hired by your team or your firm.

Fulks says many financial services firms provide mediation services in-house, using retired industry members or lawyers or judges who have experience in helping teams disband. “[The mediators have] seen a lot of disputes throughout their own careers,” Fulks says, “so they’ve become rather adept at helping people work through those types of disputes.”

Whomever you choose to fill this mediation role, he adds, your decision-maker must be objective and cannot be associated with any of the advisors on the team.

Of course, in some cases, you may not have any choice about where clients go. If you are leaving a large firm, you probably have no legal right to your clients.

Many advisors don’t realize that their firms own all their clients’ confidential information, says Bruce O’Toole, an associate with Crawley Meredith Brush LLP in Toronto, such as their account numbers and contact information.

Often, these advisors make the mistake of thinking they can take client files with them when they leave the firm. But, unless you know a client number by memory, you legally can’t go looking for it or take it with you when you leave.



> Informing Clients

Regardless of how client accounts are divided, all clients must be informed immediately of changes to the structure of your practice that affect them.

How much information you give will depend on the nature of the breakup. For example, if the dissolution is a mutual decision, you might explain to clients that it’s part of your growth strategy. If, however, there is animosity among partners, says Ferguson, it’s best to be discreet and diplomatic when discussing the breakup with clients.

Your relationship with a given client will determine how you inform him or her of the change. If the client has had little contact with the team and works exclusively with you, you may not have to tell that client anything, Ferguson says. Or, if you know the client will be coming in for a meeting soon, you can use that opportunity to tell him or her in person. “You want to figure out the method of communication that’s going to work for each household,” she says, “based on their relationship with the team.”

Whether you inform clients in person, by telephone or in writing, Ferguson says, you need to be sure to inform clients that services will remain the same with minimal disruption.



> Inform Your Staff

In addition to clients, you need to communicate with staff members about the changes in the practice and what they can expect.

Arrange a meeting as soon as possible to tell the staff about the breakup. “You have to sit the team down and discuss with them why the partnership is no longer going to function,” says Ferguson. “If you leave them in the dark, they’re just going to discuss it and figure out their own story.”

As with clients, you will have to decide which staff members will remain with which advisor. Some advisor/staff relationships may be close and easy to determine, Fulks says, while others may have to be negotiated.

The choice of where a team member will go rests with the individual team member. “Just like clients,” Fulks says, “employees can vote with their feet.” IE