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The Practice Doctor is IN

Sharing the Wealth: How to Handle Small Cases

by Al Depman, CLU, ChFC, CMFC, BH
Practice Management Consultant

Al Depman photoThe Practice Doc's inbox recently received a question from an advisor in Memphis, TN. Dave asks about splitting cases with a younger advisor in his firm. He writes:

"Hey, Al, what do you think about this? Help me determine if I am compensating myself fairly or just being stupid. There's a young, relatively new advisor in our firm, Dan, who is looking for additional activity as he completes the new-advisor training program. He has approached me (a senior advisor with 15 years under my belt) to offer to work with some of my less-affluent clients and prospects.

"My hope was that I could hand off some of the admin work on what I considered small cases; and this would allow me time to concentrate on larger cases. So I agreed. We looked at the standard case split formula of five 20 percents: 20% for the lead, 20% for the fact-finding, 20% for the case development, 20% for the presentation and close, and 20% for the ongoing service. I'd keep 20% (the lead) and Dan would have 80%.

"This was ideal as I was not looking forward to the grunt work of enrolling new SEP IRA accounts from an existing business client. I asked Dan to be responsible for processing all of the applications and any additional business that comes from those employees, and he keeps 80% of everything. We both did the enrollment meeting with the employees and I have had some of the follow-up conversations with the company controller. Dan did all of the applications and has had 35 follow up meetings with the employees to do additional business where I was not involved, but I still receive 20%.

"Of course, I know that if I did not use my time wisely to generate bigger cases that I basically just paid someone well to do admin work that an assistant could have done. How do I measure this and mange this effectively so that I don't look back one day and think, 'I gave away the farm'?"

Good question, David.

There are two things we can hold you accountable to in this relationship.

First, carefully track all the joint and solo new business going forward. Document the split percentages and revenue each of you actually received upon issue. From this record we can see if it's a break-even proposition. Has the overall volume increased enough to keep the smaller split revenues you are earning equivalent to what you have traditionally done if you did it all yourself?

Second, put the game plan in place as to what you would like to accomplish with the "freed-up" time. This is perhaps the most critical calculation, as you have stated. Draw up an action plan defining:

  • Who you'd like to contact, why and how—these people should all be in a more sophisticated and affluent market, obtained via referral or proactive outreach.
  • Projects such as seminars or client events that you'd like to plan.
  • Networks you'd like to enhance or take steps to get into.
  • Knowledge you'd like to learn—a designation or information about some advanced markets.
  • The number of cases you want to generate with higher-end revenue within a reasonable time, for example, six months to a year out.

We can monitor both of these to ensure it's not turning into a farm giveaway. Be sure you have an accountability partner for this (whether its me or someone else).

Readers, let me know if you have any additional wisdom around this issue of splitting business with a new advisor.

The Doctor is OUT

© 2015 Al Depman

Al Depman, CLU, ChFC, CMFC, BH, a.k.a. "The Practice Doctor", is's Business Practice Consultant, and contributor to "The Wall Street Journal." He is the creator of "The Practice Management Assessment" tool and materials and has authored numerous articles in professional publications on practice management, and author of the book, How to Build Your Financial Advisory Business and Sell It at a Profit, available from McGraw Hill. Al combined his Liberal Arts studies with 10 years of management experience with McDonald's Corporation to enter the financial services world 25 years ago. Since then, Al has evolved from an MDRT-level sales rep into a full-time consultant specializing in helping others engineer their business practices to the next level. Contact him at

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