So you think you’ve found the one; that special financial planner you know you deep down you want to spend the rest of your working life with. But before you get too caught up in the romance, management advisor and business analyst at MGF Consulting Group, Max Franchitto, says a business ‘pre-nup’ is an absolute must.
There are three primary risks faced by brokers constructing informal referral relationships with other financial services professionals, says Franchitto.
“First and foremost, nobody’s going to take the relationship seriously; there’s no commitment, there’s nothing on paper. I basically told you that ‘I’m going to refer you business and when I come across something that looks referable, hey, I’ll let you know’. That casualness will frustrate the relationship, because one or other of the two parties is not taking it as seriously as the other.”
The second risk, he says, is that if you don’t have a ‘dos and don’ts’ list of how you’re going to manage the clients being sent back and forth, somebody could potentially do something with your client that you don’t approve of - and the ramifications could not only impact the perpetrator of the wrongdoing, but also you, because you referred them in the first place.