Not everyone can be a great hitter, fielder and pitcher. That's why teams work. And not just in the realm of baseball. Over the last several years, there has been a decided trend for financial advisors to practice in teams of two or more rather than individually. It's clear that team practice is the wave of the future, and is here to stay.
Teams almost universally generate more revenue for their members than their single producer counterparts do. In fact, a recent wirehouse study published on Horsesmouth.com shows that advisors who work within teams pull in approximately 25 percent more production, and up to 35 percent more assets per team member, compared to advisors practicing alone.
Basically, teams are able to be more things to more clients because individual members can focus on different aspects of the client experience, and provide better and more specialized service. The team environment also allows for further specialization, and provides a vehicle for succession planning for the older members of the team. Plus, in this hyper-vigilant compliance era, it's always nice to have someone watching your back.
In general, advisors who are partnering with one another can have either a loose or formal relationship. All it takes to form a team is two or more advisors (usually with one support/administrative person) who share similar goals and work ethic and have complimentary personalities. There are a number of different shapes this can take: A rookie and a veteran; an older advisor and a younger advisor with fresh new ideas; or two advisors with different specific talents or product specialties.
Specialize And Focus
Michael Zinn, a Merrill Lynch advisor in New York City who has been practicing as head of the Zinn-Ray Group since 1999, says that he wanted to form a team because he realized that there were three elements of his business on which he wanted to focus all of his attention. As a solo practitioner he just didn't have the time.
“I wanted to focus on the marketing side, the investment side and the service side, and I wanted to put a structure in place that allowed me to deliver all of these functions supremely well to my clients,” he says. By partnering with Brad Ray, a younger advisor with just three years in the business, and an individual whom he felt he could trust and with whom he could get along, he was able to structure a team that would allow him to make those things happen.
Another factor that played into Zinn's decision to form a team was the realization that he could not possibly develop sufficient expertise in all of the products and services Merrill had to offer by himself. Accordingly, he and his partner have developed different areas of concentration that enable them to make a broader and more detailed presentation to their current clients and prospects. “Brad and I have complementary skill sets that allow us to connect more strongly with our clients by showcasing individual strengths. Brad has an engineering background, and is more focused on quality control, attention to details, completion, execution and fulfillment,” says Zinn. Meanwhile, Zinn is better at forming relationships and connections, and prides himself on understanding individual client needs.
The team structure has definitely paid off for Zinn. Production and assets under management have increased dramatically since he put it together, but the “biggest improvement is just in retention” of clients, says Zinn.
Teams are great for branch managers too. “Ken,” a wirehouse manager who has hired several teams over the last few years, says working with self-sufficient teams frees him up to do other things like recruiting and mentoring less-experienced brokers. Plus, managers feel that they are better able to retain teams because it is less likely that all members of the team will be motivated to move at the same time. Ken has found that teams work best when individual members take responsibility for very specific functions such as a particular product type, client type or household size. He also believes that the best teams have a leader in place — a person who “is strong, and who can make the tough decisions.”
The only downside is that sometimes there can be a “clash of egos” between members of a team, says Ken. When this happens, without being checked in a timely fashion, the team can “implode, and then we are left cleaning up the pieces, dividing assets and clients and, of course, a decrease in production.”
Trevor, a West Coast partner in a large wirehouse team, agrees. “When I was alone, I did what I wanted to do, whenever I wanted to,” he says. “Now, I have to get everyone on board, and people have different feelings as to their value and contribution to the team.” Team members know that there are always going to be awkward or tense situations within a partnership. “However, we try to be vigilant in communicating about them because we fail if we don't; it will only lead to bigger problems down the road,” he says.
For Zinn, perhaps the most powerful reason to be a part of a high-producing team is that practicing in this industry “can be a lonely business,” and the prospect of being part of team and of “having a second family of sorts can be really helpful.” One person can “come in and have a bad hair day, and the others can pick up the slack.” Having a support network at work increases everyone's longevity in the business.
A team can offer a sense of security for its participants. However, like with any business association or personal relationship, each prospective member should look at his or her reasons for wanting to join a team, and take the time to do appropriate due diligence to determine if it will be a good long-term decision. Remember, it is always easier to enter into a partnership than it is to exit one.
Writer's BIO: Mindy Diamond founded Chester, N.J.-based Diamond Consultants, which specializes in retail brokerage and banking recruiting www.diamondrecruiter.com
