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Practice Management > Building Your Business > Young Professionals

Partnership Warning: Do You Know What You're Getting Into?

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A few (what seems to be) ages ago, I started my consulting business by giving career advice to young professionals and career changers entering the planning profession. It was, and still is, one of the most enjoyable things I do.

The questions asked by you have changed over the years. In the past, they were like the following: How do I find a job in the profession? What type of business should I work for–fee-only, brokerage, independent? What should I expect for a starting salary? How do I add value to the firm I am working for? How do I ask for a pay raise?

Today, economics have helped answer those questions. For example, with the current shortage in supply, it’s not as hard to find a job, and most people want to work for independent advisors. We now have lots of research on what constitutes acceptable salary ranges and how to determine your value to the firm. However, there is still little information about being a partner in a firm.

Recently, I received several e-mails from readers asking me to help you sort through a partnership arrangement that you have been offered. While I think it’s great that the industry is finally coming around and realizing that partnership is the best retention tool for your talent, I have seen only one good arrangement and a lot of really bad ones. To put it bluntly, ones I would never consider taking myself or offering to anyone else. What scares me about these arrangements is that many young professionals believe they are good.

The detail of what should be included in a good partnership deal is a discussion for a much larger forum. But the one piece of advice I can give you is the following: Don’t sign on the dotted line without first consulting your own advocate. It’s worth the money in time, effort, and emotions to hire an attorney to review and represent you in any partnership arrangement. This is your future too, and unraveling a bad arrangement is much harder and emotionally draining than signing a good one to start with.

I welcome any of your thoughts on the partnership deals that you have been offered or offered to others. Together, we can work through what is good and what could be better for all parties involved.