I was building a referral-based business, which was good news, but I soon realized that if I kept adding new clients, I would not be able to properly serve the ones I already had. There are only so many hours in a day. So, I had to decide: Do I stop taking on new clients, or do I bring someone into the firm to whom I could transition clients to? I was not going to stop bringing in new business, but what I didn’t realize was how difficult finding the right associate was going to be.

The first associate I brought in was an experienced advisor. I had known him throughout my career, and we got along well. He liked the idea of helping me grow the business and increasing the number of clients he would service. I made it clear to him that I would transition some clients and any new referrals that were not in my ideal market, but that he would receive the bulk of my clients many years down the road, as I was a long way from retiring. He said that he was fine with that arrangement. But six months later, he bought a book of business and now had 1,500 clients to serve, which meant that he would not be able to take care of my clients the same way I did. We had a heart-to-heart talk and parted ways. 

I brought in a second advisor. He also had experience and was OK with transitioning clients a little at a time. He was a nice person and the staff loved him. But rather than proactively contacting clients, he reacted when someone called in. One day he told me that he applied for a management position, but if he didn’t get it, he’d still like to be part of my practice. I didn’t want to be his second choice. Even if he didn’t get this position, I figured he was going to try again, and where would that leave me? So, we parted ways. 

At this point, it felt like I was going through a divorce every time I parted with an associate. Plus, there was the additional work of getting my former associate and their clients out of the firm, which created more work for my staff. I was starting to think that I would never find the right associate.

Then the right person came along. Michael Allen, BBA, now a one-year MDRT member in St. Catharines, Ontario, Canada, was referred to me by my office manager. They had known each other in university, and recently crossed paths again. He confided to her that he was not happy with what he was doing and was looking for a career change. He had been working at the local casino and had no financial services experience. I agreed to mentor him for a year — basically dating so to speak — and we’d find out whether we were a good match. It took nine months to figure out that we were. 

Now that I had the right person, how do I transition? Since most of my top clients are very close to or are in retirement, my market became retirement and estate planning. Michael, who was in his late 30s at that time, took on younger clients. The new referrals were aligned to us based on our ideal market. Most importantly, the clients being transitioned knew I was not abandoning them. For two years, we did joint appointments for their annual reviews before I transferred my clients to him. That two-year period was important because I was able to transfer trust from me to Michael. When we met with clients, we basically let them know that we work as a team so that they are better served. 

As for compensation, we had our dealership set up a separate contract number. The clients we worked with together were assigned to that number, and we would split the income generated from those clients. When the time came for Michael to purchase a client, we set the value of that client at the time we first started to jointly deal with the client, and the purchase was based on that value plus 50% of the growth. The arrangement worked out well and was a win-win for both of us. 

We often think that we only need to bring in an associate advisor to make sure we have a successor, but one of the benefits from adding an associate advisor is that the firm has the capacity to take on new referrals and continue to grow.