Agency innovations

Teaming: A One-Stop-Shop for Financial Planning

How teams are adding value for advisors, clients and the industry

by Paul LaPiana

Mr. LaPiana is executive vice president of the MetLife Premier Client Group, with oversight of more than 4,000 financial services representatives who serve several million clients nationwide. Prior to his current role, LaPiana oversaw the wholesaling of Life Insurance and Disability Income Insurance products at MetLife through both third-party intermediaries and affiliated distribution channels. Before joining MetLife in November 2001, he served in multiple roles at AXA, beginning in 1992.

A Winning Formula

Advisors and financial professionals are beginning to embrace the teaming model. Today, there are 25 percent more team-based advisors than in 2012, with 55 percent of all advisors working within a team, according to PriceMetrix’s A Winning Formula: Teams in Retail Wealth Management report.

This is not without good reason. With Baby Boomers entering retirement en masse, Generation X planning for their own post-employment futures and more Millennials participating in the workforce than any other generation for the first time ever, financial planning has become increasingly complex. Yet it is impractical and costly for a single advisor to build expertise in all the areas where clients have financial planning concerns and needs. What’s more, it can be inconvenient and potentially detrimental to clients to have services spread across multiple advisory practices.

Enter advisor teams

The teaming model – advisors with expertise in different financial planning disciplines formally working together to offer holistic solutions to their clients – helps financial professionals tackle their clients’ multifaceted needs by offering specialization in combination with a wide range of solutions, strategies and financial knowledge. For example, an investment specialist working together with a life insurance professional can help address a client’s needs on both the asset growth and asset protection sides of the financial planning spectrum.

Similarly, a client may come to one advisor on the team with a specific need, only to uncover additional ones in the process that other specialists on the team can help address. Soon, the team is serving as a one-stop-shop for all the client’s financial needs and providing a much higher level of service than any one member could offer on their own.

Apart from helping clients, teams offer significant benefits to advisors as well. Working together, advisors can enjoy increased productivity, exposure to new markets, and significant professional growth as they learn from the expertise and best practices of their fellow team members. Furthermore, advisors who form teams may experience an increase in client loyalty as a result of their ability to offer solutions that address multiple financial concerns.

The proof that advisor teaming works is in the numbers. PriceMetrix’s report notes that the average advisor team manages $260 million, generates $1.7 million in revenue and works across 280 relationships, compared to the average sole advisor, who manages $110 million, generates $830,000 in revenue and works across 140 relationships. Even when looking at individual advisors within a team, they manage more assets and take in more revenue, on average, than those who work independently, at $130 million in assets and $950,000 in revenue. On top of that, teaming allows for faster growth, with advisor teams experiencing 11 percent faster asset growth and 17 percent faster revenue growth than solo advisors.

The positive impact of teaming can also be seen among advisors within the MetLife Premier Client Group (MPCG). Since we began our teaming initiative four years ago, we’ve seen significant growth in the number of teams within MPCG to the point where, now, about a third of our advisors are part of one. In addition, our teaming advisors generate 1.5 to 2 times as much revenue as our solo practitioners, and have a 25 percent higher retention rate.

A counter-intuitive model

So, if the data proves that advisor teams are so successful, what is preventing the 45 percent of industry advisors who work independently from adopting the teaming mentality?

On the surface, some advisors may express concern with how to achieve fair and equal compensation among team members, especially when there is a mix of commission and fee-based services. Yet for many advisors, the hesitation is related to the way the industry has traditionally been structured. Historically, the advisory profession has relied heavily on individual practitioners. Thus, many financial professionals, particularly those that have been in the industry for decades, are accustomed to working on their own. After many years of successful independent work, the idea of partnering with other advisors can seem alien.

advisors who form teams may experience an increase in client loyalty as a result of their ability to offer solutions that address multiple financial concerns

Yet while some independent advisors may be reticent to join teams, for those nearing retirement, it’s an arrangement that could be of significant benefit to them. That’s because teaming offers a chance to mold and cultivate junior advisors, helping to ensure the future of their practices. With 44 percent of young advisors planning on partnering more with other advisors in the future, according to the LIMRA 2015 Young Advisor Snapshot, the outlook is promising.

In addition to ensuring the future of individual practices, teaming is also a way to help ensure the future of our industry. The financial services field can be a difficult one to break into, and it’s well documented that we need more young people and more women. By providing an easier way to enter the industry, teaming can help us bring new people into it. As part of a team, newly minted financial professionals can learn the ropes from their more experienced colleagues and enjoy some significant mentoring, without the pressure of having to immediately generate business on their own. At MPCG, women comprise about 40 percent of the professionals in our Teaming Advisor Program, which we find very encouraging.

Once they decide they want to form a team, the biggest challenge for most advisors is how they should go about finding the right teammates—those whose approach is compatible with their own—to build a partnership that successfully marries wealth and risk management solutions. Since a team functions best when members have both complementary skills and personalities, it’s crucial for advisors considering the teaming model to take deliberate steps toward finding the right partners, with the understanding that it doesn’t happen overnight.

Best Practices for Establishing a Productive Advisor Team

  • Conduct a SWOT analysis. A SWOT analysis—strengths, weaknesses, opportunities and threats—of an advisory practice identifies the gaps within current offerings and points to the kinds of partners who would best fill those unexplored areas. This analysis is also where less tangible, but equally important qualities, such as culture and personality, should be considered.
  • Identify potential team members. The most successful advisors define their area of expertise and supplement that perspective through a structured team that has varying specialties. This can range anywhere from professionals with specific experience and licenses to those with a production level and product mix that fill the practice’s gaps.
  • Define goals and objectives. By establishing tangible measurements, strategies and schedules upfront, the team ensures that all advisors have agreed upon and are aware of their responsibilities for optimal performance. Consider taking the tiered approach to advisor teaming, focusing on building capabilities incrementally. This allows advisors to grow their practices naturally by increasing commitment over time and redefining growth as each goal is met.
  • Road-test the team. A few short-term (three to six months) goals will determine the true viability and cohesiveness of the partnership, giving advisors time to explore the feasibility of joint operations and glean a better understanding of how the team works best together.
  • Monitor progress. Continue to perform SWOT analyses to identify areas of the team that are underperforming and require additional exploration, adjusting objectives when necessary. When assessing progress, clear and adequate communication is vital to ensuring that the team overcomes hurdles and moves forward in a dynamic way.
  • Independent financial advisors will always play an integral role in our industry. However, as numerous independent advisors near retirement and the industry, as a whole, continues to consolidate, those who adopt the teaming approach now will be well positioned to enjoy the most success for their practices in the future. Most importantly, they can be confident that their clients are receiving holistic solutions and comprehensive service to meet their current and future financial planning needs. ◊