Partnering like a pro

Collaborating with other professionals can help you level up your practice and increase your capacity. In this new column, we’ll feature an advisor who refers clients to another professional, examine the challenges and opportunities, and share advice from both professionals.

THE PARTNERS

• Referring advisor: Andrea Thompson, advice-only financial planner and founder of Modern Cents in Mississauga, Ont.
• Accepting advisor: Shiraz Ahmed, senior portfolio manager and founder of the Sartorial Wealth team of Raymond James Ltd. in Toronto. Ahmed is registered in both Canada and the U.S.
• Households they collaborate on: about 10
• How long they’ve worked together: Since early 2022, when Thompson started Modern Cents

Why give and receive referrals?

As an advice-only planner, Thompson doesn’t sell products, and some of her clients need referrals to professionals who do. Thompson sees part of her value as having vetted a short list so clients don’t need to do that research themselves.

Thompson’s list has about five cross-border financial advisors on it.

“Having relationships with several professionals allows me to refer them to more than one person, but also tailor who I think personality- or fit-wise will be best for that particular client,” she said. “I let the client go through the interview process, but my referrals narrow the field and save them time.”

To that end, she tends to recommend advisors who have a clear sense of what they offer. “Really differentiate yourself. Then I can say ‘Oh, I know the exact person for this client,’” Thompson said. “Otherwise, you get lost in the fray of standard practitioners.”

Growing her referral list has been part of her practice’s development. When Thompson struck out on her own, “I took every meeting and I also reached out to people,” she said.

Her pitch to other professionals highlights how working with her can help them grow their practices.

“There’s so much dialogue about how practices have to do all things, so we can wrap our arms around the client,” she said. But if an advisor doesn’t enjoy financial planning or can’t afford to hire a financial planner, “just focus on what you’re doing well,” she said. “Let me worry about the planning. You can strengthen your service offering without having to spend any money.”

Ahmed has seen the benefits of this type of collaboration.

“Working with a lot of champions similar to Andrea has been one of the best ways for me to grow my practice quickly,” Ahmed said. “You don’t always have to have 100% of everything; 50% of something’s better than 100% of nothing.”

Ahmed has financial planners on his team, but said he’s happy to work with Thompson’s clients, especially as “she is one of the best planners I’ve ever had the pleasure of meeting,” he said.

Further, having Thompson take care of planning for her clients allows his team to focus on their own clients. “The planning side of things is one of the most time-intensive component of what we do,” Ahmed said.

Why they chose each other

Prior to starting Modern Cents, Thompson was a planner with a team at Raymond James. As a result, “she was very aware of my practice from its inception, and there was no reputational risk by referring us,” Ahmed said. Thompson is also familiar with the processes at the firm.

Also, since Ahmed and Thompson share similar philosophies, “usually the folks who tend to be attracted to her practice tend to fit well with us also,” he said.

Ahmed said he understands many DIY clients gravitate to an advice-only advisor for planning first. “I think it’s often a great move — they don’t need me at that stage,” he said. However, there is no DIY cross-border solution, Ahmed points out, and clients with citizenship or taxation ties to the U.S. “often don’t know they need someone like me.”

Thompson observes that such clients benefit from working with a dual-licensed investment advisor who understands which investments won’t create negative tax consequences for the client. That’s where someone like Ahmed comes in.

Managing the client relationship

Thompson and Ahmed agree that collaboration between an investment advisor and an advice-only planner will require the investment advisor to rethink their usual position as the relationship quarterback.

“If there are two people who are trying to be the primary relationship manager, it can be confusing for the client as to who to consult for what,” Thompson said. “If the client prefers that I am the predominant relationship manager then the IA has to be OK with being the investment person.”

Ahmed stressed the importance of “learning to play in the sandbox” if you’re brought in as an expert to support another advisor.

In such cases, “I view the approach to this the way the medical community does,” Ahmed said: he’s the specialist, and Thompson is the family doctor. “I come in for a specific purpose; the client has the relationship with the family doctor.”

And just as in a medical relationship, there can be some duplication for the client.

For example, for know-your-client purposes, “we have to pretend like Andrea doesn’t exist in this equation,” Ahmed said. “We’ll provide advice more from an investment and portfolio management standpoint, and we’ll stop at that level. And if there are more planning-oriented questions, we’ll direct them back to Andrea, or we’ll do meetings jointly where we’ll be the asset manager, for lack of a better term, and she’ll be the planner.”

Ahmed and Thompson try to minimize duplication by asking clients for permission to communicate directly with each other if needed. “It allows us to collaborate as professionals to be able to figure out what’s in the client’s best interest,” he said.

Ahmed and Thompson both use client-relationship management software to keep track of the professionals they work with. “I tag every professional in my client’s life,” Ahmed said, such as fee-only planners, accountants and lawyers. “It’s in the client’s best interest for all the people they’ve hired to know who each other are and, ideally, to communicate.”

Neither Thompson nor Ahmed pays or receives referral fees, which Ahmed said supports the impartiality of advice. As a result, Thompson doesn’t usually create a formal referral agreement. Instead, “it’s more an understanding of how the relationship is going to play out,” she said.

Client examples

Thompson and Ahmed both work with a retired couple who are primarily living off their portfolio income. Ahmed handles the investments; Thompson manages the relationship, monitors the portfolio and its tax implications, and ensures the withdrawal strategy is in line with the client’s financial plan.

She attends all portfolio meetings and follows up with Ahmed afterward; she also tells Ahmed’s team about relevant developments following her planning meetings with the couple. She’ll pose questions to Ahmed’s team on the couple’s behalf.

In general, Thompson said, clients with multiple advisors can sometimes hear conflicting information, and it’s important for the primary advisor to iron out the confusion.

She had one client whose secondary advisor provided a different figure for the client’s RRSP contribution limit. Thompson’s figure was from the client’s notice of assessment, while the secondary advisor didn’t have the NoA and was estimating the limit.

Thompson explained that the NoA figure was the correct one. “The client has to understand where the advice should be coming from that’s tailored to them,” she said.  

The risk of losing a client

Thompson said she’ll listen if her client asks to work with Sartorial Wealth or another professional full time. “I say, ‘If you want to work with [Shiraz’s] planner, I’m OK with that. Whatever is the best fit for you,’” she said. “The focus should be on what is best for the client.”

Having this mindset on both sides has contributed to a smooth partnership.

“I operate my practice on the Golden Rule, whether it’s an internal or external partner,” Ahmed said. “I’ll do everything in my power to discourage someone else’s client from joining up with me. But ultimately everything is always the client’s decision.”

Ahmed adds that he prefers to focus on the long-term opportunities that come with fruitful partnerships, rather than the short-term hit of poaching a client. “I still have a long career ahead of me,” he said. “I want to make the right decision today so I can benefit tomorrow.”

If you have partnership experiences with an independent professional, let us know and you could be featured in a future column.

Melissa Shin

Melissa is the editorial director of Advisor.ca and leads Newcom Media Inc.’s group of financial publications. She has been with the team since 2011 and been recognized by PMAC and CFA Society Toronto for her reporting. Reach her at mshin@newcom.ca. You may also call or text 416-847-8038 to provide a confidential tip.