Business Partners Need Special Care at Inflection Points
Fed up with wirehouse bureaucracy, and itching to try your hand as an independent entrepreneur? If you’re contemplating such a move with a partner in tow, be sure the relationship is on solid ground, warns WealthManagement.com.
When undertaking the necessary soul searching for the move, “issues that may have seemed like minor irritants or petty annoyances between partners get placed under the proverbial microscope,” the publication says. “Then, sometimes, these trivial frustrations turn into full-blown conflict.”
For example, the article tells of two Merrill Lynch advisors, partners for a decade, who decided to split when they couldn’t agree whether to stay, join another big firm or go independent. Although the advisors were initially attracted by offers from wirehouse competitors, the idea soon took a backseat to one partner’s desire to start an RIA, while — just as forcefully — the other decided he wasn’t interested in the risk and grind of a new venture. And when the RIA starter finally made his move, it was amid acrimony between the two former friends over some of their former clients and a key support worker.
It isn’t hard to see how this kind of strife could rear its head at other inflection points, and for advisors in other channels. Imagine the emotions that come to the fore when an older partner decides to retire or drastically trim her workload — or when one partner insists on hiring a relative, perhaps with a leadership role in view.
Point is, partnerships are tricky, and things that figured as minor irritations in calmer times can seem like insurmountable deal breakers when things get stressful.
Besides make-or-break issues around overall business strategy, friction points WealthManagement.com lists include workload imbalances; disparities in equity ownership and pay; and tolerance for frustration born of bureaucracy, business setbacks and workplace interaction.