By Jack J. Desemar Jr.

The concept of teaming is becoming the dominant method to accomplish comprehensive–or convergent–financial planning.

Teaming is the concept of different advisors from different financial disciplines working together to form a cohesive plan for the client that ties all areas of planning together without gaps or omissions. Team members typically include stockbrokers, money managers, insurance agents, estate attorneys, CPAs and bankers.

Ready or not, teaming is even mandated by clients or institutions. There are several reasons for this. This article looks at those reasons and also the challenges that teaming entails for the financial professionals involved.

Industry convergence. Readers of National Underwriter are well aware of some of the changes that have been afoot as a result of the convergence of the insurance, securities and banking industries.

This convergence has been energized by enactment of the Gramm-Leach-Bliley Act of 1999, which enabled firms in the three industries to sell one anothers products.

One of the effects is that the financial community now functions as the “financial services industry” instead of separate industries of insurance, investments, banking, legal and accounting, each with its own disciplines, methodology, product solutions and training.

As this converging has gone on, the roles and duties of advisors from each discipline have become blurred. Sometimes this has confused clients as to who does what. Some financial advisors feel confused, too.

A good part of the confusion results from the fact that advisors are being forced to handle expertise outside their discipline. They now have to redefine and reposition themselves and even transform their practices.

As financial conglomerates acquire and merge more of these pieces to the financial puzzle, companies are trying to figure out how to make the different pieces work together to maximize resources and marketing efforts.

Further, executive, marketing and compliance management–as well as clients–are demanding continuity, consistency and agreement at every level. (Some go so far as to say management even wants each discipline to “like each other.”)

Information overload. Advisors are realizing that it is impossible for an individual to know everything to the level required, especially in the high-net-worth market.

Clients are also now experiencing information overload and confusion and are demanding more than just disjointed, incongruent single-issue answers.

Availability of seemingly good advice is not in short supply, of course. Clients can get many (often contradicting) answers to the same question from many sources, including the Internet.

This gives new meaning to the old paradigm that “knowledge is power.” Today, knowledge is cheap and available. Enough knowledge can be quickly downloaded to become the equivalent of a Ph.D. in just about anything.

The problem is, processing that knowledge has become challenging for many individuals to the point that a new paradigm may be emerging–i.e., “coordination and processing of knowledge is power.”

Shift to advice-based planning. There is a subtle but strong movement toward advice-based solutions. There is similar movement toward holistic, wealth management and comprehensive planning compensated by planning fees and asset-based compensation.

At the same time, there is a movement away from single-issue, product-sale-based solutions and planning compensated by commissions.

These new trends will help close piecemeal planning gaps. Clients realize they cannot manage all the issues simultaneously by themselves, and so they increasingly want someone–or some firm–that can deliver comprehensive planning.

Individual advisors, coming to the same realization, will need to be able to work effectively in a teaming environment in order to meet the clients need.

Teaming. The concept of financial teaming has been around for a couple of decades. It has met with varying degrees of success, but usually it has not been perceived as very productive. There are several reasons for this.

Most teams originally started with a group of professionals forming a loose association. These professional liaisons were driven primarily by the desire to share leads and marketing, not to solve problems. This impeded the successful outcomes that comprehensive teaming promises.

Even worse, some clients tried to force all their advisors to work together as a team. This usually did not work out well, because each advisors discipline had its own beliefs and strategies. Disagreement and hard feelings often prevailed.

This illustrates a key issue with teaming: Overcoming the sincere belief of each advisor that he or she is right is essential to a productive outcome.

It is natural for all people to use their own background, expertise, experience and training to solve a problem. The plumber will attempt to use a wrench and the carpenter will use a hammer to try to solve the same problem.

However, it is imperative that the advisors involved in convergent planning agree on an integrated process. To manage all the clients issues, they must agree on theories, methodology, strategies, solutions and products that transcend each of their disciplines.

This does not mean that each advisor will agree on the outcome or come to the same answer. But it does mean that each will at least agree on the roadmap to get there without losing the advantage teaming provides of incorporating different opinions (two heads are better than one).

They will need to agree, for example, that the outcome should be one that makes it simpler and easier for the client to make, manage and coordinate decisions.

Compensation caused a lot of team problems in the past. Some team members perceived inequities in compensation per value contributed resulting in unfair compensation for one member over another. Harsh feelings over compensation splits often resulted, making it even harder to agree on planning issues.

This points up another key issue for successful teaming: Lead sharing and marketing cannot be the primary motivator for teaming.

Objectivity, consistency and agreement on compensation products, methods and sharing are imperative. With industry convergence and everyone able to be licensed to receive comp on everything, this problem should be easier to resolve than in the past.

In conclusion, when performed correctly, teaming can eliminate the problem of constantly patching and re-patching financial plans that were already “fixed” by others.

The result for the client will be a more efficient decision process, more cost-effective solutions, more freedom of choice and a new range of options.

For advisors to prosper in the high-net-worth market of the future, heeding the dynamics of teaming will be a necessity, not an option.

Jack J Desemar Jr. is founder and president of The Future Group, Ltd., Baton Rouge, La. His e-mail is jdesemar@futuregroupadvisors.com.


Reproduced from National Underwriter Life & Health/Financial Services Edition, May 26, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.