Some of the most successful financial advisory practices are partnerships.
“There’s an increasing number advisors who are entering into partnerships and I think that’s generally a good thing,” says George Hartman, CEO of Toronto-based Market Logics Inc.
But is a partnership right for you? Here are seven questions to ask yourself before “tying the knot.”
1. Do I work well with others?
Before you enter into any agreement, decide whether you are the “partner type.”
“If you work well alone and not well in teams, I wouldn’t even consider going into a business partnership,” says Joshua Zuchter, a business and life coach in Toronto.
In order for a partnership to work for you, Zuchter says, “you have to be very open to working with others. You have to be open to positive and negative criticism from others, without taking it personally.”
2. What kind of partnership do I want?
Think about why you want to enter into a business partnership so you can identify clearly the qualities you’re looking for.
“If I want a partner simply to share expenses and resources, then I’m going to look for one type of partner,” Hartman says. “If I’m looking for one so that we can share clients, then I’d want a different partner. So, I’d want to define that a head of time.”
3. What is my business philosophy?
Make sure your prospective partner shares your outlook on business. No two people will agree on everything, but your partnership will be more successful if you share a common business philosophy and attitude.
“That could be [a shared] investment strategy, a belief in the way clients should be managed or the belief in comprehensive planning vs. transactions,” Hartman says.
4. What skills am I looking for?
Compare your prospective partner’s skills to your own. How will you compliment each other?
Working with someone with the same skills as yours would be easy, Zuchter says, but may not yield the results your looking for.
Instead, look for a partner whose skills compliment yours. For example, if you are good at prospecting, perhaps your ideal partner is good at managing clients’ accounts. In an ideal partnership, Hartman says, “together you can do something that would be greater than the sum of each of you trying to do your own thing.”
5. Will this work?
Once you have selected a prospective business partner, don’t make a binding agreement right away. Take your proposed partnership for a “test drive” over a specified period. Hartman suggests a 12-month trial period before entering a formal agreement.
Or, if you prefer, you could try collaborating on a project to gauge how well you work together, Zuchter says. “If that project goes well and you find that you work well together, then you can decide whether to continue on with something more meaningful or longer.”
Whether you make a verbal agreement or a memorandum, be sure to outline a set of rules, including what will happen should you decide to end the partnership.
• Advisors that built a team discuss pros, cons
Elizabeth Harding and Diana Orlic, advisors at Wellington West Capital Inc. in a team of three, describe some of the pros and cons of their partnership, how they got together and a couple of tips for advisors considering the arrangement. They spoke with Dan Richards, owner and president of clientinsights.ca at the TMX Broadcast Centre in Toronto. WATCH
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