Behind every successful advisory firm there’s a strong partnership among the individuals who own, manage and lead the organization.
Each partner brings his or her own passion, experience, energy and capital to the business. Together they combine their talents for mutual success. But it’s also of critical importance for a successful organization to nurture these partnerships with careful attention.
Good relationships, after all, don’t grow on trees. They need work and cultivation. When partnerships are ignored, they can dissolve amid fighting, friction, aggravation, breakups—sometimes even cause an implosion of what was otherwise a good firm.
The two of us were partners for five years building Fusion Advisor Network, a group of more than 200 wonderful advisors who came together to share business resources. As we built the business together, we weathered the storm of business and personal challenges while growing the organization from the startup that Stuart conceived into a booming, productive and profitable business with 27 employees.
The point was to build a great business, but we also found that as partners, our personal relationship grew. At the same time, our families were growing, as were the many other challenges that come in life.
It’s been 10 years since we sold that business, but our bonds as partners, friends and confidants remain stronger than ever. To this day, we still meet regularly to brainstorm and share ideas, and we realized that we have learned a lot about partnerships and how they grow.
We thought it might be helpful now to share some of the things we learned—in order to help other partnerships flourish and evolve so they can manage great businesses and even better relationships.
Manage is a key word here. Many partners assume (or at least act like) their relationship will take care of itself as they focus on other things. But we suggest that every group, no matter how large or small, needs to spend some time managing it.
The Necessary And Sufficient Conditions
Most people assume that a partnership will work very much like a good friendship. We know from experience this isn’t the case. There were times when our friendship was strained and when we didn’t agree about business decisions. But even in those times, we never doubted each other as partners. In fact, we propose that you don’t need to be close friends. But you absolutely need three necessary and sufficient conditions: trust, respect and honest communication.
• Trust means you don’t doubt the motivation of your partner. That you never have to “watch your back” worrying a partner will take advantage of you. It means that even when we disagreed with each other, we knew the other person was trying to achieve the same goal, which was to make our business better. This always allowed us to “fight” over the issue at hand rather than fight each other. We also believe that the opposite is true. Without trust, there simply cannot be a good relationship.
Trust isn’t something you turn on or off. It is more like an account that either has a high positive balance (the ideal) or a low balance that can easily go into overdraft. A partner makes a “deposit” in the “trust account” when they do something unselfish, when they give up profit or status or a seat at the table to help their partner. A deposit is made when a partner takes on responsibilities they did not need to, when they rush to help someone who is struggling or when they “take a hit for the team.”
A “withdrawal,” meanwhile, is a selfish act or behavior. An act of disregard. It is a failure to control your own emotions or words that causes your partners to be uncomfortable or hurt.
The “trust account” needs to be managed actively. Every partner needs to remember to make deposits, because some withdrawals simply cannot be helped. Such is life and such is business.
• Respect means you rely on the expertise of your partners and see their decisions through with the underlying assumption they know what they’re doing. So if Philip observes Stuart doing or saying something he doesn’t understand, Philip perceives it first with the notion: “He must have a reason to do this,” instead of thinking, “He is wrong. I need to stop him.”
Respect requires confidence in the competence of your partners—and not just professional competence. You must also believe your partner will use their moral judgment well. They won’t just make good business decisions. They’ll also do the right thing.