The number of merged practices deciding to end their relationships will continue to increase in the months ahead due to the lack of clear conflict resolution arrangements, according to Seaview Consulting director David Fotheringham.
Fotheringham said the firm had became aware of five practice partnership arrangements across the financial planning and funds management space in dispute over the future direction of the businesses last year.
With some financial services businesses looking for exits in the face of increased operational costs and compliance obligations, Fotheringham said the process becomes that much more difficult when it involves two or more parties.
"It's just like a marriage — there's good intentions when you start out but five years on circumstances change and you need to look forward and ask what's the best proposition to go down," he said.
He said in a low growth environment, the ability of financial practitioners to manage a good business was as vital as being a good technical adviser.
"That's what's triggering the troubles, because one or both parties are simply not getting enough out of it given the effort they're putting into it," he said.
Organisations need to ensure their exit provisions have a clear process for conflict resolution as well as dissolution should the business partnership disintegrate, Fotheringham said.
