• Simon Zais
  • Published: 03 November 2022


In an attempt to marshal advisors ever more productively, wealth management firms are continuing their perpetual drive to get advisors to form teams. By building a thoughtful support apparatus and considerately harnessing behavioral finance in designing team incentives, managers can turn the wheel of progress within their firms.

Major wealth managers have had aggressive teaming goals for years. Recently, Merrill Lynch’s President of Wealth Management Andy Sieg went a step further predicting that fully 100% of their advisors would be on teams inside of 10 years.1

It makes sense: advisors who are part of teams are less likely to defect to a competitor, and clients become stickier as their advisors grow sturdier roots. By scaling their practices and delegating low-value-add operational and administrative tasks, refocused advisors become empowered to provide precious attention to both clients and prospects.

There is no industry-wide consensus as to what constitutes a “team,” and combinations of advisors can take many different shapes: from two person partnerships to the multifaceted mega-team.   Prior to attempting to build structures that properly incentivize advisors to team, firms must first identify and define various team constructs.

In a changeover team, a senior advisor is looking to pass their book on. Whether this is to a familiar junior partner, or as an acquisition, firms should take deep consideration of the sensitivities around passing a career’s work to another. In encouraging this type of setup, firms need to ensure the leaving advisor does not feel boxed out or marginalized, potentially souring client relationships during the transition. Instead, the leaving advisor should be incentivized with trailing revenue based on client and asset retention, and be held to KPIs around client introductions and transitioning continuing contact to the new advisor.

In an apprenticeship team, a seasoned advisor is mentoring a junior to either become a true partner, or to take over the business at some point. Many advisors will claim to be mentoring junior partners, when in fact they are simply training client acquisition specialists. This dissension can often lead to dissatisfaction and turnover in the junior ranks. Firms looking to avoid this pitfall need to closely monitor this relationship to ensure there is a true knowledge transfer, with a clearly staked path to success and ownership for the mentee.

In a partnership team, two or more advisors work together in the management of a book of business. In a situation where advisors have built independent books of business and are now looking to go forward together, firms should be mindful of power dynamics, egos, and resource sharing, especially if advisors of different size and scale are paired together.

There exist organizational levers on which managers should be pulling to affect changes in their advisor population makeup. While many firms have already adjusted pay grids to reflect team assets and higher thresholds for dedicated support staff, additional changes in support structures can further incentivize advisors to take certain actions.

One solution is branch grouping. Grouping together teamed advisors into a separate branch with constituent compliance and operations support could potentially create a double-edged advantage for firms with an adequate headcount. Advisors on teams would feel elevated by having more dedicated staff support (an evergreen winner2), while workloads on ops and compliance personnel would be lessened by having to deal only with advisors leveraging the efficiencies and best practices of teams.

These decisions need not be made in smoke-filled backrooms. Instead, advisors should be apprised of these new incentives and how their actions directly affect both placements and payouts. Economic “consequentialism” assumes fungibility of rewards. Industry literature, however, shows that employees generally respond better when knowing that their actions — in this case, adding value by teaming — are the meaningful determinant of their lot.3

Conversely, managers need to be sensitive to a crowding out effect that excessive structure-based remuneration may play in an incentive structure. Many advisors strive from internal motivation and a love of the game. Redirecting these internalized drivers to managed metrics is dangerous fare and can distract focus from client outcomes.

Finally, firms should have procedures and checklists in place for the (hopefully) rare occasion of team dissolution. Like a mid-night tornado, team breakups can be as blindsiding as they are value destructive. Managers can attempt to mitigate damage by playing arbitrator. Clients, advisors, and the firm all lose when advisors are distracted by jostling over existing accounts, and managers should interpose with pre-existing guidance on an amicable divorce.

Clients are better serviced by highly capable teams diverse in both skillset and approach. Firms and managers can reap dissimilar yet nonetheless robust rewards by encouraging their advisors to provide that service. The endpoint has been clearly identified. Now is the time to draw the map and start the engines.