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Quality advice program raises the bar: Axa - Column

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The most successful advisers working in strategic alliances are doing so because they recognise these alliances represent a win-win-win situation for the adviser, the strategic alliance partner and most importantly, the client.
The most successful advisers working in strategic alliances are doing so because they recognise these alliances represent a win-win-win situation for the adviser, the strategic alliance partner and most importantly, the client.

Strategic alliances:

-enable you to offer more services to your most valued clients - the complexity of your quality private clients' financial challenges today calls for comprehensive, often multifaceted solutions.

-open up new markets - both parties in a strategic alliance win by gaining access to quality private clients that they would otherwise not have, and in an extremely cost-effective way.

-improve your ability to satisfy your clients' needs - increased client satisfaction means clients are more likely to provide you with both additional assets and referrals.

So what is industry practice, and what's the link to business growth? Strategic Consulting and Training's Dashboard Reports show Australia's most successful advisory businesses source at least 50-75 per cent of their new business from referral sources, with the majority coming from centres of influence.

For those practices that did receive more than 75 per cent of their new business from referral sources, their income per active client was approximately 30 per cent greater than the income per active client of other practices. Alliances with referral sources, therefore, not only generate new business but also provide greater quality prospects.

Strategic alliances take a number of different forms, from relatively simple revenue-sharing agreements to more complex and formal joint ventures. But they all have one thing in common: they are built upon a set of genuine benefits to each professional - typically the additional services or expertise that result in additional revenue to the other adviser.

There are two keys to building effective strategic alliances:

1. Rigorously research potential partners in a number of 'exploratory' interviews. It is only by closely looking at the business opportunities, and by openly discussing objectives and expectations for the future, that you'll be able to fully appreciate how your service might fulfill a need. Utilise this research phase to identify gaps in the potential partners' service offering. By providing a solution to these gaps you?ll help your potential partner achieve success.

Steve Garrett of Avenue Capital Management, Newcastle, has formed arrangements with centres of influence in the past, both informal and formal. It was when he was participating in CEG Australia's Cultivating Advice program that he realised that he hadn't been as rigorous in researching potential new partners as he could have been to ensure that there was a close match between the potential partner's needs and his service offer.

"It was not only about determining if there was a cultural fit between our businesses, but whether we shared the same values in terms of our holistic service offer to clients," says Garrett. According to Garrett, "some accountants put client requests for financial planning advice in the 'too hard basket', electing the simple 'referral out' option. But this can do the accountant more harm than good. If the accountant sees financial advice as an extension of their service offer there's a real win-win opportunity for all."

2. Document your joint work philosophy in a detailed plan for the strategic alliance. This needs to cover strategy, goals and the steps to achieve those goals. Specifically, it should describe:

- The financial services philosophy and approach that will be used,

- Minimum and ideal revenue goals for the alliance for the next 12 months,

- Each partner's specific tasks and responsibilities,

- How revenue and expenses will be shared,

- The communication channels that will be used,

- Registration and licensing issues,

- How governance and compliance issues will be handled,

- How marketing efforts will be shared, and

- The exit strategy.

Garrett says "the missing link in strategic alliances can be around the setting of expectations re client referrals. Rigour around documenting the process means that both parties are clear about the outcomes to both parties". Recently, during the exploratory stage of a potential alliance, Garrett has had some real open discussions with potential accounting partners about the economic glue part of the equation to ensure there was "fair and reasonable reward" to both parties. The intention is to clearly document these outcomes in the ensuing strategic alliance plan.

Ideally this plan should be presented to potential partners' stakeholders with a view to modifying the document to address any concerns and, ultimately, gaining consensus prior to implementation.

Brigid Asquith-Hunt is a consultant with Strategic Consulting and Training, the Australian affiliate of CEG Worldwide

 

Quality advice program raises the bar: Axa - Column
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