Coupling up, in the business sense, can increase income by 32% or even more, according to a recent Fidelity study and Financial Planning interviews with teamed planners.
Just ask planners Jeremy Kisner, 43, and Robert Luna, 38, of SureVest Capital Management in Scottsdale, Ariz. The two say they have both more than doubled the size of their previous separate practices since joining forces about five years ago.
“If you want to get the $2 million to $5 million accounts,” Kisner says, “you have to have a team. You have to have credibility.”
The Fidelity study identified advisor teams as a trend that will become increasingly important to “the future of the advice industry.” The survey of 1,207 advisors in all types of firms (RIAs, B-Ds, banks, insurance companies and wirehouses) found that although the majority (52%) still work alone, advisors in teams were “generally more successful,” with both higher revenues and AUM.
SPURRED TO ACTION
One possible reason: The survey also found that advisors in teams take more action, from participating in industry groups and networking events to adopting new business strategies and firing low-margin clients.
Although just 13% of respondents told Fidelity that they were working exclusively in teams, another 35% were working in teams part-time. “Our thesis is that [they] were trying it out,” says Alexandra Taussig, a senior vice president of marketing at Fidelity.
There’s also a generational component to the shift, she adds: Teaming up is also becoming a significant trend as Gen X and Gen Y advisors emerge as a real force.
Childhood friends Derek Holman, 40, and Brian Parker, 39, started out as a team, co-founding EP Wealth Advisors in Torrance, Calif., 14 years ago. The partnership has proved so successful that the firm, which has $1.3 billion in AUM, has since added a third “spouse”: planner Patrick Goshtigian, now the firm’s president.
“At the end of day, it’s more than just a marriage,” says Holman. “We spend more time with [each other] than we do with our spouses.”
Wirehouses discovered the partnership payoff years ago. Wirehouses routinely urge their advisors to work in teams, pairing up individuals and, sometimes, directing them to engage in “daily huddles” to discuss strategy, says Winnie Sun, 39, the cofounder of rapidly growing Sun Wealth Group in Irvine, Calif.
Sun and her cofounder, Brandon Chang, 36, met more than a decade ago at Smith Barney, where they became friends and discovered they had complementary skill sets. At Smith Barney, both Sun and Chang were expected to find their own clients -- and Chang, a natural analyst and number-cruncher, knew he needed help, recalls Sun, who comes off as a natural people person.
“He had a prospecting opportunity that he knew he needed a partner for,” she recalls. She accompanied him to that meeting, and then others. The two ultimately found they worked so well together that they decided to start their own firm, with Sun as the majority partner. Today, Chang is director of investments for the five-person firm, while Sun spends most of her time on business development.
“We are almost complete opposites in every way,” Sun says, “except that we have similar ethical standards and a similar value core. We get along and we have a lot of trust in one another.”
Sun and other advisors offered several pieces of advice for planners looking to build their practice by finding a partner:
1. SHARE VALUES & PHILOSOPHY
As with romantic relationships, successful business partnerships require real trust, planners say.
Christina Mangino, 34, became a third partner at SureVest a couple of years ago, after leaving two other failed partnerships. In both of those instances, she had teamed up with older planners in insurance firms who had promised mentorship.
“They said, ‘I’ll do the investment planning and you can do the financial planning,” Mangino says. “Come join me and kumbaya.’”
Over time, however, the relationships fell short; one partner didn’t actually want to share control, she says, while in the other she felt like she was doing the lion’s share of new business development. “I was bringing everything in,” she says.
Mangino says her partnership with Kisner and Luna has been a big improvement. “With previous firms, I thought there was trust there, but there wasn’t,” Mangino says. At SureVest, “we all respect each other immensely for our talents and our knowledge I know that they really know what they are doing, so there’s definitely a confidence there in their skills.”