There are four basic ways to structure financial advisor teams, says Andy Martin, a senior investment advisor with Wellington West Capital Inc. in Oakville, Ont. The one you choose will depend on your objectives.



> Senior/junior

The senior/junior model is probably the most common type of advisor team in Canada, partly because it lends itself well to succession planning.

“The senior person grooms the junior to take over the book of business as [the senior partner] makes the transition to retirement or consulting,” Martin says. “The handover can be open-ended or it can occur at a predetermined time.”

Clients should usually be transferred to the junior partner within 18 months to two years of the team forming, he adds.

A senior/junior partnership is one of the best ways for the senior partner to get long-term value from the business and for the junior partner to enter it without starting from scratch, says Julie Littlechild, president of Advisor Impact Inc. in Toronto: “[Such partnerships] can create great efficiencies if done well.”

Gary and Brent McKay, a father/son advisory team with Sun Life Financial (Canada) Inc. in Simcoe, Ont., say efficiency is a major benefit of their practice. “Because everyone in the firm knows their roles so well,” Brent says, “we can minimize duplication and optimize client service.”

Over the past decade, most of the team’s clients have been transferred to Brent as Gary, 65, has reduced his workload. Gary’s retirement is not imminent, however, and he intends to be part of the business indefinitely.

“The continuity shows our clients that we’re committed to the community and the business,” Brent notes. “We’ve inspired their confidence by demonstrating that we can continue to meet their needs.”



> Specialization

Specialized practices focus on clients from a specific niche, often in a profession such as engineering or law. Team members develop expertise in areas that are specifically relevant to that group.

“The more specialized you are, the greater the expertise you develop,” Martin says. “You become a known quantity, and people in your target group learn to turn to you for your expertise.”

Ty Cooke is an Oakville, Ont.-based wealth-management consultant with Wellington West. He and the other two advisors who form
Orlic Harding Cooke Wealth Management Group — Diana Orlic and Elizabeth Harding — focus on members of the medical profession.

“Over time, we’ve learned what doctors need to know to run their businesses,” Cooke says. “We’ve become known for our expertise in this area, which has led to referrals from satisfied clients.”

Dealing with certain professions can have other benefits, says Cooke: “We are fortunate in that our primary clients’ incomes are not typically affected by economic downturns, which means they tend to continue with their savings and investment programs.”

Specialized partnerships allow team members to share specialized knowledge and share the workload, says George Hartman, CEO of Market Logics Inc. in Toronto: “The client feels that they’re being served by all the partners, which enhances the level of satisfaction.”

Efficiencies arise from working with a defined client group, Littlechild adds: “The benefits of this type of partnership include improved productivity and profitability.”



> The rainmaker and the manager

Rainmaker/manager teams are usually two-person partnerships in which one person — the rainmaker — seeks out new major clients, while the other — the manager — looks after portfolios and manages day-to-day business operations.

“A rainmaker looks for the big fish, while the manager takes care of things behind the scenes,” Martin says. ”You really need people who are comfortable with those roles to make this kind of team work successfully.”

Rainmakers tend to be outgoing and expressive, while managers are generally detail-oriented and analytical, Hartman says. Rainmakers usually have a number of years of experience in a specific geographical area where they have established contacts. This arrangement often works in a succession-planning situation, in which the person acting as manager is the junior team member.

One advantage of a rainmaker/manager arrangement is that it matches activities to skills, says Littlechild. “Some advisors are natural rainmakers,” she says, “while others are better at managing. When you focus on your strengths, your clients and your business benefit.”



> Horizontal partnerships

Team members in horizontal partnerships are typically about the same age and have similar levels of experience. And they each have an equal financial interest in the partnership.

There are two variations on this model, says Littlechild: “In the first, partners share expenses and profits but act independently. A more sophisticated model involves some sharing of client relationships. A team that consists of multiple advisors, each with a specialization, can bring a broader range of expertise to bear and attract more high net-worth clients.”

Horizontal partnerships offer many advantages, according to Hartman. “This is a great model for bringing together people with complementary talents, skills and knowledge,” he says. “It allows you to provide the widest possible range of advice and service to your clients.”

There are challenges, however. “If you’re all equals, who makes the tough decisions affecting the group?” Hartman asks. “At some point, someone must be the boss.”

Another issue is the value of each partner’s contribution. An insurance specialist may take many months to conclude an insurance sale, Hartman points out, while a portfolio or investment manager can bring in a lot of money much more quickly.

Further, if the partners share expenses equally, they must agree upon a way of placing a value on the partners’ offices and assistants. “It gets even more complicated,” Hartman says, “when you share revenue.”

— JOANNE SOMMERS