Jim Beverley, CLU, ChFC, CFP, seemed to have everything the owner of a solo advisory shop could want from a business. Operating under the Northwestern Mutual umbrella, he’d built a thriving Illinois-based general life insurance practice with more than 400 clients. And he’d done it on his own in the span of 10 years, weathering a recession and earning a comfortable living, a Rookie of the Year award from the home office and Million Dollar Roundtable status along the way.

But while Beverley may have had autonomy to run the business the way he wanted, he felt his sense of control slipping away. In the prime of his career, he found himself in one of those “Be careful what you wish for…” binds, spread way too thin and primed to make a change.

“I realized I had built myself a very labor-intensive service model,” Beverley, 51, recalls. “Trying to keep in touch with 420 people was difficult, and trying to do that while also trying to pursue the better types of clients that I wanted for my practice became overwhelming.” 

Hitting the capacity ceiling, as Beverley did around 2006, is the most common motivation for solo advisors to explore a partnership-based business model, says Maria Considine King, vice president of practice management at Commonwealth Financial Network. “They reach a point where they’re turning business away because they’ve reached their capacity.”

Having reached that point, Beverley considered his options. “I looked at other career [life insurance] shops and realized they were basically offering the same deal, just with a different name. I looked at some independents, too, but the appeal wasn’t there either.”

The course he ultimately chose represented not a career change so much as a pivot.

Beverley connected with a friend from his early days at Northwestern Mutual, a former career agent who had made Beverley an informal standing offer to join him at the independent, multi-advisor wealth management practice he had formed some years prior in the Chicago area.

Beverley called his friend and told him, “I’m in.” And the rest, as they say, is history.  Primed for partnership?

There are three basic business models that soloists might consider when weighing a move to a partnership-based practice, according to Considine King:

  1. A siloed firm, where multiple advisors share office space, staff, a single DBA name, marketing expenses and the like, but maintain their own individual books of business.
  2. An ensemble firm, where advisors share a business plan, a vision, processes, reciprocal continuity plans, firm management duties and some clients, along with an office, staff, DBA, etc.
  3. An enterprise firm, where most everything is shared, integrated and team-based, all under the firm’s brand. 

Randy Morris, ChFC, CFP, AIF, has travelled along that entire spectrum since launching his solo practice, Executive Financial Planning, in 1985. After taking on his first partner a decade later, in 1995, Morris set out to build a siloed multi-advisor practice in Mississippi, one he hoped would ultimately evolve into an ensemble firm. Instead, Morris disbanded the practice in 2002 because, he explains, he was feeling stifled by his partners’ unwillingness to let go of their siloed approach. “It didn’t go far enough in terms of sharing my long-range vision for a practice. My goal was to take the ensemble idea and eventually to move further down the path to an enterprise practice.”

That’s exactly what he has done in building Summit Wealth Group into an integrated, multifaceted wealth management firm with offices in Colorado, Mississippi and Arizona.

During his years practicing solo and in silos alongside other advisors, Morris says he realized the limitations of those models. “I saw I could take a practice only so far by myself, and with my sports background, I missed the camaraderie of sharing a vision with a team of peers and building a practice together. The idea of having partners to help shoulder the production and leadership load really appealed to me.”

The craving to be part of a team is a common trait among solo advisors who make the move into a partnership model, observes Considine King. However, not all advisors are wired to work that way. “The idea of sharing decision-making and control can be a foreign one for solos. It’s a matter of whether they can play well in the sandbox. That’s a bridge too far for some folks. ” Some solo advisors also might not take kindly to the idea of relinquishing sole control of their business and surrendering a measure of take-home pay. Research into the solo versus partnering dynamic indicates that solo advisors tend to make less money, but enjoy their jobs more compared to their peers who practice as part of a team (see the sidebar for details). “There are advantages and disadvantages to practicing solo,” Morris concedes. “Life is a little less complex when you’re solo, and you have more control and get a higher percentage of take-home pay. But I would focus less on take-home pay and more on the bigger picture: the ability to expand your business exponentially, and to share in the growth and profits of an entire organization.”

The benefits of partnership can indeed be compelling enough to warrant exploring, says Considine King. They include:

• the ability to share overhead costs and practice-building responsibilities.

• the ability to offer clients access to a broader range of skills and new areas of advisory expertise.

• redundancy of skills, so clients aren’t necessarily reliant on a single advisor.

• the ability to scale up on the client and support side.

• a heightened sense of personal accountability to your partner(s).

As highly personal as the decision is, it’s wise to enlist an outside perspective to help weigh those tradeoffs, says Beverley. “It’s important to share the decision with someone you trust, to get an audit from someone who has your interests at heart, because there are advantages and drawbacks to consider.” 

Matchmaking

No amount of soul-searching or input-gathering can guarantee a partnership will last, however. Indeed, many of them don’t, notes King. “I spend more time talking with advisors about unwinding partnerships than I do talking about creating them. These usually aren’t amicable separations, either.”

Building a successful partnership requires much more than an ability to play well with others and an acceptance of those aforementioned trade-offs, she says. “It’s not a social construct; it’s a business construct. You certainly have to get along with one another, but your values and business fundamentals have to align, too.”

Beverley knew such an alignment existed with long-time friend John Freiburger, whom Beverley had come to know during their days together at Northwestern Mutual. In 2007, Beverley joined Freiburger, managing partner at Partners Wealth Management in Naperville, Ill. “I had a foundational trust in [Freiburger’s] goodness, and in his vision for how to run a business.” Seven years later, “the trust that convinced me that joining John was the right move remains,” says Beverley. “This has been the best year of my life, professionally. I’m really in a vibrant place.”

For the soloist who’s resolved to explore life on the other side, finding the right partner advisor or partner firm with which to align requires substantial due diligence, says King. The most enduringly successful partnerships, she notes, are those involving advisors who share similar business values and a strong desire to work in a team context, and whose skill sets and expertise are “complementary, not identical.”

Morris continues to grow his firm by adding new partners. And in doing so, he explains, “we’re looking for people who have teamwork in their DNA, who are focused on what they can add to an organization and who are looking to build a business that is greater than themselves.”

Because such a fit isn’t always readily apparent or right under one’s nose, Morris says he has relied on his broker-dealer and wholesalers to “keep their ear to the ground” for partner candidates. 

Networking at conferences and other industry events is one effective way to cultivate relationships with potential partners. Broker-dealers not only offer networking events for their advisors, their practice management departments are experienced at helping advisors identify and evaluate potential partners, and at assisting them in formalizing the relationship.

Third-party consulting firms that specialize in guiding advisors through career transitions “can also be really helpful” in finding, vetting and aligning partners, King says, as can an advisor’s career coach or mentor.

For advisors transitioning out of solo practice into a partnership, there’s too much at stake to not lean on resources like these. 

NEXT MONTH: Part two of the series looks at best practices for transitioning from a solo practice to a partnership and strategies to help ensure the partnership flourishes long-term.