Partner Up With Other Advisors

By Anthony A. Martin

Selecting the right financial advisor to approach for a professional partnership is a little different from selecting an attorney or an accountant.

It is likely that the only attorneys or accountants with whom you would approach to develop a professional partnership are those attorneys and accountants with whom you have already done business or shared a client relationship. By working together to help solve a client issue, you had an opportunity to watch that attorney or accountant and see how he performed, what his style was, and if you would want to work together.

Meeting other financial advisors typically occurs at industry meetings or the occasional social outing. At industry meetings, you have an opportunity to meet a number of different people who all have different personalities, practice compositions, target audiences, and strengths.

However, most advisors at these meetings are on their best behavior, so it is hard to get a sense of who they really are and how they operate. Plus, aren't we all salespeople?

What we look for

To help you in your search, here are some of the questions we ask and things we look for in a potential professional partnership with another financial advisor:

•             Location: Do you want to create a partnership with another advisor who is located in your city or a convenient distance away?

•             Client Profile and Numbers: What does her or his typical client look like and how many does she or he have?

•             Ideal Client: What are the characteristics of her or his ideal client?

•             Client Acquisition: How does she or he acquire new clients? Is it a repeatable process?

Dan Sullivan has a saying: "People want to do business with those they know, like, and trust." I think that saying provides excellent advice to us when selecting another financial advisor to create a professional partnership with. If any one of those three elements is missing, it is likely that the partnership will not work.

One item of note in considering a professional partnership with another financial advisor is any regulatory concerns. I'm not a lawyer and can't even begin to understand all the regulatory issues in the countries represented at MDRT. My suggestion is for you to talk with your compliance person or qualified legal representative prior to making any agreements.

The other factor to consider in moving forward is what your company, carrier or broker-dealer allows you to do. These institutions can provide additional restrictions over and above what the law allows. If you determine that your company has additional restrictions, then it becomes a question of value moving forward.

Consider imitation

People say that imitation is the sincerest form of flattery, and I agree. If you survey other financial-related industries and advisors, you'll find that the most successful have engaged in developing internal professional partnerships for a long time. Attorneys, accountants, money managers, and hedge fund managers all primarily work as part of different professional partnerships.

Financial advisory, insurance, and financial planning are somewhat unique in that we rarely work together to generate additional revenue for everyone through professional partnerships.

This subject is particularly near and dear to me as over the past three years, professional partnerships with other financial advisors have made up between 30 to 50 percent of our practice revenue.

This situation was not a fluke. It was the result of a lot of hard work and time that was invested in these partnerships. However, the investment has paid off for all of the partners as the revenue generated is in excess of what either of us would have generated on our own.

During this time, we've utilized all three types of professional partnerships [expert partnership; the mature or succession partnership; and the efficiency partnership].

Under the expert arrangement, we've been on both sides. For LTC, BOLI, and some non-qualified plans and executive benefits, we've created professional partnerships with other financial advisors to assist us and our clients. These relationships have allowed us to provide excellent service and advice to our clients on topics while still allowing us to focus on what we do best.

My focus is on assisting medium-size businesses to integrate their business, tax, and financial solutions. We've also created professional partners with other financial advisors where they brought us in to assist in servicing and advising their clients.

One opportunity that was generated by a professional partnership was started in first class by Agent C. He and the prospect struck up a conversation that resulted in the two of them deciding to have a business meeting to determine if Agent C could add value to the prospect's situation.

As the prospect had shared with Agent C that he was an owner in a business, I was invited to attend the meeting. After seeing limited opportunities for individual planning during the meeting, we started asking about the business that the prospect was involved with. It turns out that he was a 51 percent owner of a business doing $300 million of revenue with a significant amount of business planning needs. Due to our professional partnership, we have been working through these opportunities….

Anthony A. Martin, CFP, MBA, is a partner in Martin Financial Group (MFG), Savannah, Ga., where he is works with his father and brother, both MDRT members, and where he specializes in business, tax and financial strategies for privately held businesses. He and MFG have created multiple professional partnerships with financial advisors that have resulted in 30 to 50 percent of their firm’s revenue. An 11-year MDRT member with two Top of the Table and four Court of the Table qualifications, he has qualified for MDRT every year in the business.  His excerpted remarks above come from his MDRT 2013 presentation in Philadelphia on “The Untapped Frontier Professional Partnerships with Financial Advisors.”