Accept Differences
You shouldn’t assume that your partners’ cultures will function like yours. Most advisory firms have very little staff turnover, and their leaders might work at their firms for their entire careers. This stands in stark contrast to the worlds of private equity, custodians, technology and broker-dealer services, where the staff changes often and a tenure of five or six years is the norm. Advisors often panic when relationship managers or executives leave their partner’s company, suspecting it’s somehow a sign of mismanagement. In reality, it’s normal.
Similarly, advisors are used to receiving quick and convenient support from their own teams. They can simply walk over to the operations area, receive immediate attention and priority and resolve whatever problems they are dealing with in minutes. Their strategic partners don’t give them the same immediate attention, and they often think wrongly that it’s bad service. In most cases, nothing could be further from the truth. Advisors must get accustomed to these differences, especially when work that was previously done internally has been taken over by the strategic partner.
Treat Their People With Respect
There is some malfunction in human nature that leads an otherwise polite individual to go into rant-and-rage mode when communicating with a service professional. Airline employees and restaurant servers can readily attest to this. It can also happen when CEOs and other advisory firm leaders approach junior relationship managers or service professionals at their broker-dealer, custodian or private equity partners. Suddenly, people who pride themselves on their communication skills can turn into red-faced “beraters,” betraying their impatience in both their tone of voice and poor choice of words.
It’s not only right but profitable to treat the entire team of your strategic partner firm with respect. Those junior employees can make a lot of difference when it comes to finding creative solutions and spending the extra time and effort to help you.
Let People Meet People
People who know each other will generally be much more friendly and understanding when things go wrong. This is why it’s a great idea for your service team to meet your strategic partner’s service team.
We learned this one from our friends at Kestra Financial. James Poer, the CEO, started bringing employees on his service team to the annual advisor conferences and encouraging advisors to bring their operations people. When the operations teams met, the number of complaints and service issues dramatically declined. Suddenly, the voice on the other end of the line was not just an anonymous employee but Meghan, whom we met in Austin, and who has two kids and likes mountain biking. While it is easy to let your frustrations erupt at an anonymous voice, it is much harder to do that to Meghan. She is such a nice person.
Share Your Plans
If you have a truly strategic partner, it only makes sense to let that partner know what your strategy is. Unfortunately, advisory firms don’t often let their partners in on the construction of their plans or even listen to their perspectives and ideas.
Strategic partners can really add value to a planning session or process. They see the industry and can point to competition or new ideas and opportunities. They are also very aware of case studies of success and failure and can provide valuable perspective. Finally, many of their people are highly trained MBAs who have a lot of experience in management decision-making and can be skilled facilitators in the process.
Never Blame Your Partners
It’s perhaps human nature to express frustration with “higher powers,” whether it’s the government, the airlines or the banks. When a firm is struggling to grow, it is particularly tempting for its leaders to blame the big company that it’s working with for its issues, particularly a strategic partner like a custodian or broker-dealer. This is toxic behavior that always leads to long-term damage.
And when you train the next generation to also blame the partners, you’re setting them up for a long career of frustration and dissatisfaction. If you tell your kids daily that their school is full of incompetent teachers, don’t be surprised when they don’t earn the best grades and struggle to graduate. Where there are problems, it is best to share some of the responsibility and seek a constructive tone rather than spend years in frustration.
Reboot, If Needed
Relationships sometimes go south. Partnerships can sometimes involve emotions, which means that when they malfunction it’s often painful. It can be difficult for human beings to wipe the slate clean, but we must try, and those who can do it successfully have a valuable skill. A reboot is sometimes needed and is much better than the alternative: years of protracted toxicity, damaging to both businesses.
It’s especially true when the relationships are permanent—if a firm has been acquired and the sale of equity can’t be undone. It’s better to improve a relationship that’s damaged and spend the time and energy necessary to recover than to spend years in a bad dynamic that saps a firm’s energy.
Leave, If Necessary (And If You Can)
Unfortunately, some relationships can fray beyond repair: If that’s the case, it may be better to just part ways rather than endure additional years of frustration and poor results.
But can you really leave? Most equity deals are irreversible. Once they are done, there is usually no mechanism for a firm to acquire its equity back. This means that if you are entering into such a relationship, you should a) be very careful about choosing your partners, and b) manage the relationships accordingly, knowing that the partnership will never be dissolved. In other words, spend even more time taking every step we have discussed here.
Mutual Empowerment
A partnership is a relationship of mutual empowerment. Being partners with a person or an organization means they can help your success or impede your progress. Institutional partners are still partners, and they need the same attention, communication and cultivation required by all long-term relationships. Advisories that fail to approach their strategic relationships in such a manner are likely to suffer frustrations and obstacles. Firms that do spend the necessary time and attention will build and maintain partnerships that last and foster the success these pairings sought in the first place.
Philip Palaveev is the CEO of the Ensemble Practice LLC. He’s an industry consultant, author of the books G2: Building the Next Generation and The Ensemble Practice and the lead faculty member for the G2 Leadership Institute.
Stuart Silverman is the CEO of Bluespring Wealth Partners, an M&A firm focused on acquiring and partnering with high-end wealth management firms.