Financial advisors often wonder whether it is better to establish a business partnership or remain completely self-reliant. Going solo is beneficial in that it allows for autonomy; however, opting for a business partnership can give you financial support and access to more resources.
Let’s take a closer look at the debate between going solo and establishing a business partnership.
Research the Ideal Business Partnership
Financial advisors who enter into a business partnership should only do so after performing extensive research. Look into the financial security of the potential partner company, and make sure this will prove beneficial for your company. Consult experts, like those at Bridgemark Strategies, in order to ensure that you’re making a sound decision. Above all, it is important to consider the potential positives and negatives of a business partnership. Though such a relationship will inevitably lead to compromises, it also has the potential to bring your business to new heights. What matters most is that you find the right partner. Bridgemark Strategies is here to help you do exactly that.
A permanent business relationship should only be established with a financial advisor who brings something meaningful to the table. Carefully review the strengths and weaknesses of prospective business partners, determine whether those pros and cons mesh well with your business and move forward accordingly.
Benefits of Business Partnerships for Financial Advisors
Pairing up with another advisor comes with many benefits, including cutting overhead costs and sharing technology and resources. You just might find this alliance brings growth to both parties, providing a fast-track to success. In particular, a business relationship with a financial advisor who has a complementary skill set will shore up your weaknesses. Iron out all the details of a prospective business partnership from the start and the stage will be set for a relationship that adds to the bottom line of both parties. The final advantage is the sum of the total may be worth much more than the individual parts. In today’s M&A marketplace often larger firms are getting more aggressive price multiples based on their size. Finding the right partner, where you can share synergies and expertise, doesn’t just provide an opportunity for better growth, but the combined entity may also be worth significantly more.
Is The Solo Route Worth It?
At the moment, just under half of all financial advisors operate as solo practitioners. The other half works in the form of a multi-advisor setup or in a peer structure. However, some financial advisors have comprehensive skill sets and services, meaning there might not be a need for a business partnership. If you are thriving in the context of managing client relationships, developing your services, and managing portfolios, the prospect of forming an alliance might seem unnecessary and possibly even destructive. Going solo is also beneficial in the sense that it allows for complete autonomy, meaning full control over operations and the future of the business.
Solo financial advisors are quick to highlight the fact that business partnerships have the potential to backfire in unforeseen ways. Some such business partnerships dissolve as each party’s vision drifts away from the original shared common vision. This process can be not just emotional, but very complicated and expensive for both parties. There are many different causes as to how or why partnerships fail, but often this can be attributed to differing goals and work schedules. This manifests in each partner’s impression or concern of the other’s contribution to the firm and its overall growth.
On the flip side, a partnership is beneficial in the event of illness, incapacitation, or death as there is power in numbers. If one partner is no longer able to work, the other partner can step in to pick up the slack. Financial advisor business partnerships can also expand the support staff to create a wider safety net. Support staff is shared between financial advisors, especially during times of need, making it that much easier for financial advisors to establish a work-life balance.
Solo financial advisors bear a considerable financial burden. Covering the entirety of monthly overhead costs weighs on the business’s limited capital. There is value in bouncing ideas off a partner along with ongoing collaboration that results in a whole greater than the sum of its parts.
Business Partnerships are What You Make of Them
The takeaway from this content is that establishing a business partnership has the potential to be a blessing or a curse. The direction of the business partnership is determined by you as well as your partners, meaning your fate is partially in the hands of others. Every financial advisor should recognize there is the potential for such an alliance to lift your business to new heights, yet also drag it down to new lows.
Choose your new business partner wisely and you will complement one another, building a potentially unstoppable momentum that helps you grow in less time than would have been possible had you remained solo. Prioritize communication to prevent the relationship from becoming toxic, maintain an open mind, and strive for ongoing growth that benefits your new partnership. Though there is always the potential for life or economy to throw a curveball your way, proper planning and the willingness to pivot as a cohesive team will make your business that much stronger.
Contact Bridgemark Strategies
Bridgemark Strategies is a recruiting, consulting, and M&A firm. We help advisors assess, evaluate and negotiate their search for a broker dealer, RIA, or strategic partner. Our experience and success is unparalleled in the industry in helping advisors find their next firm. Reach out to us today at (866)266-8823 or on the web through our contact form for a confidential discussion and more information about our services.