For several years the financial advisory industry has trended toward the creation of ensemble practices. This is primarily due to the increasing complexity of properly servicing wealthy clients and the need for more specialization. The travel advisory industry is experiencing a similar trend due to the surge in post-COVID travel, enabling travel advisors to team up to properly service an ever more demanding clientele.
But is the team ensemble right for your travel advisory business? Here are key issues to consider.
Travel advisors can follow a number of different business models, but there are two that sit on either end of the spectrum: A solo practice in which the travel advisor oversees a sales team but runs the show by themselves, or a team ensemble comprised of multiple advisors sharing leadership and management functions.
You can find several models in between consisting of loosely formed partnerships. However, they tend to function as several solo practices operating separately as silos, failing to achieve the scale and efficiencies of running a true team ensemble. Let’s examine the differences.
Sales Team Model
Travel advisors who value total control over their business with the opportunity to capture all the profits tend toward the sales team model. The way to grow your solo travel advisory business is to attract more clients and increase sales. As sales increase, you can add a sales assistant or two, but you are responsible for overseeing them. You are operationally essential; without you, the business can’t function.
With you as the solo advisor, the business will reach peak capacity in terms of the number of clients you can effectively service, so additional sales can actually diminish your effectiveness and decrease customer satisfaction. It’s a good model if you are satisfied with hitting a revenue ceiling and then staying there.
Team Ensemble Model
At its core, a team ensemble model is a team-based multi-advisor firm with shared vision, values, operations, branding, and overhead expenses. The idea behind the model is that the firm can achieve faster growth and scalability when talented and experienced advisors combine their knowledge, resources, and staffing.
Advisors in ensembles establish and pursue team strategies with the goal of building a firm versus the individual practices of the advisors. However, this shift in focus to the collective can benefit advisors more through greater synergies and economies of scale. It can be liberating for advisors who no longer have to bear the sole burden of the firm’s success.
Another critical difference is that with a team ensemble, all revenue flows to the bottom line before expenses are paid, and profits are doled out to advisors based on their stakes in the business. The ensemble model allows equity ownership through a formal agreement. This structure is appealing as a draw to younger advisors, creating a foundation for building a multigenerational firm.
The major caveat to creating a team ensemble is if the partners don’t work out because of a conflict in vision or philosophies. Breaking up a partnership can get messy and has the potential to derail the business. The critical takeaway is to choose your partners wisely, performing as much due diligence into backgrounds and past business associations as possible. Potential partners have to know they share the same values and philosophy if they are to have any success.
Which is Right for You?
The key question to ask is what you want to achieve for yourself. Do you want to build a business that creates enduring economic value for you, your family, colleagues, employees, and community (team ensemble)? Or are you only interested in creating an income source that stops when you do (sales model)?
If you feel more empowered going it alone and making all your own decisions, the sales model will suit you. However, if you want to leverage your knowledge and experience into something bigger than yourself with no ceiling on the amount of business you can bring in, you should take the team ensemble path.
Building a team ensemble is not an easy endeavor. However, when it comes together, with like-minded professionals joining forces for a singular purpose, your potential growth can be exponential.