Pro Tips

The Do’s and Don’ts of Strategic Alliances

by Tiffany Markarian

Strategic alliances can give you the opportunity to expand into new markets, access resources, or share referrals to clients. A well-structured alliance may help you grow faster by leveraging each other’s capabilities. Without proper due diligence; however, a strategic alliance could have the opposite effect. It is critical to consider the do’s and don’ts of strategic alliances prior to engaging in any relationship.

Strategic Alliance Definition

The first step in forming a strategic alliance is to understand the definition. A strategic alliance is an agreement among companies to leverage or promote each other’s services or resources. Each party remains an independent entity. When done properly, you gain advantages in serving clients or can expedite growth in a particular business area.

Strategic alliances can take several forms, including:

  • Co-marketing or co-branding services in a niche market
  • Leveraging resources to manufacture / distribute a product
  • Rendering services to each other’s clients for compensation (i.e., referral fees, solicitor agreements, commission sharing, revenue sharing)
  • Rendering services without compensation (i.e., referral sharing to enhance each other’s client experience)

Each entity fosters their own client base but may collaborate to bring additional resources to their model. Strategic alliances allow you to work with professionals who share similar values, yet, come from different aspects of the business.

When forming a strategic alliance, particularly in the financial services industry, it does not mean you need to share in each other’s compensation or have a formal solicitor agreement in place. In today’s regulatory and growing fee-based environment, it is more important to focus on relationships that deliver value and enhance your client experience. Revenue sharing can often create more headaches than opportunities for solo practitioners.

That being said, revenue sharing or capital is a key factor in alliances where manufacturing or product development may be involved. The appropriate structure depends on the nature of the alliance.

Once you solidify your ideal alliance parameters, you then need to consider the do’s and don’ts.

The “Do’s”

Define Your Ideal Alliance

The ideal strategic alliance should enhance your business model, competitive advantage and brand. As such, prior to engaging in any formal relationship, you need to ask as many questions as possible to determine initial alignment, such as:

  • Does the entity have proven expertise your firm lacks?
  • Do you have expertise needed for their clients or business?
  • Do you both have enough ideal clients for regular referral sharing?
  • Is the entity targeting the same niche market as you or working in markets you don’t want?
  • Are the parties looking to share revenue or just refer clients? You need to clarify what is best for each entity and supports each other’s regulatory environment.
  • Will the relationship be exclusive or deprive you of working with other professionals?
  • Do they have a documented approach for managing and cultivating their own clients?
  • Will you be required to follow regulatory requirements for their respective business?
  • Will you be exposing your intellectual property to a potential rival?
  • Is the person you are engaging with the real person in charge?
  • Do they have legal rights or patents to share the resource they are offering you?

Protect Your Brand

You need to thoroughly vet the business practices, financial standing and reputation of a potential alliance. You also need to vet any market opportunities presented by the other party. If a potential alliance talks a good game about markets they have access to; yet, cannot articulate the exact relationships, results or organizations they are involved in, you should be skeptical.

You don’t want to co-brand or market with other companies that might tarnish your reputation, waste your time or become your rival. You want to protect the value of your brand and proprietary resources.

Some additional questions you need to answer include:

  • Does the potential alliance have client complaints, regulatory issues or financial liens on record?
  • Is their social media presence or website something you would feel safe referring or aligning with?
  • Are each of you willing to do a personal credit and criminal check on each other?
  • Have they been in the industry long enough to have a favorable track record?
  • Do they share your values?
  • Are they willing to share their services on a test case so you can see how they work?
  • Do they have affiliated parties involved in their business that also need to be vetted?

Leading the Relationship

Once you have passed the initial vetting, the next step is taking initiative. Often the other party is waiting for you to initiate the first steps and set the marketing plan. You need to take the lead in outlining a series of protocols and marketing strategies to help the relationship move forward.

Many professionals are not marketing experts and may rely on you for direction. If you do not take the lead, you could be delaying opportunities to grow your business and attract mutually beneficial clients.

It is enticing to expand your network, but you may soon realize that setting up a strategic alliance does not automatically turn on the flow of referrals or business. There needs to be a business development strategy, clear expectations and accountability.

Written Legal Agreements

It is imperative to have clear written agreements with proper legal review. You need to outline who has primary ownership of the client relationships or products generated, how revenue will be structured, protection of intellectual property, and who is responsible for suitability and liability in your work together. You also need to document dissolution or termination parameters, to name a few.

The “Don’ts” 

Capacity Issues

You need to consider that there is a finite number of alliances you can personally handle – particularly if you are a solo practitioner. For example, a financial advisor may want relationships with 5 to 10 CPAs or estate planning attorneys. The problem with that model is you may not have enough clients to refer back to each party. The other party will most likely expect referrals from you in the process. Further, you may not have the capacity to manage a proper marketing strategy. A strategic alliance should be mutually beneficial and efficient.

Egos and Personality Clashes

Sometimes one’s enthusiasm for a potential relationship might cause them to overlook the other firm’s culture. Strategic alliances require you to work with different personalities. You need to be open to different points of view, have good communication and outline parameters that benefit all parties involved.

If you suspect ethical issues, egos, or misaligned motivations, things will end badly. One party may not be given their fair share – be it money, effort, or simple appreciation and respect.

No Action Plan

An action plan is a critical step in your marketing strategy. This involves determining how clients will be introduced, products or services will be launched, and managing through compliance and regulatory protocols. You need to have an action plan that outlines what each party will focus on with due dates.

Each party should have measurable accountability to keep the process moving. Even if you are not the person who initiated the relationship, it is still a best practice to have an action plan to advance the process. This will allow you to mutually steer and manage the results of the relationship.


Although it could be beneficial to have an exclusive alliance, do you really want to be deprived of working with other professionals? It depends on the nature and scope of the alliance and the parties involved.

For example, if two companies are sharing technology resources to launch an innovative product, exclusivity may be paramount. However, if a property and casualty insurance firm requests an exclusive alliance with a financial advisor, and that advisor is registered with a broker/dealer, the broker/dealer may restrict exclusivity.

Some regulatory environments require you to provide the names of multiple service providers to clients if they ask for a specific referral. This prevents endorsing any one firm that could pose inherent risks.

The Bottom Line

It is important to remember that for every 10 potential alliances you meet, only 1 or 2 might be the right fit for you and your business. Finding a good strategic alliance takes time, but the process has a better chance of advancing if you consider the do’s and don’ts.


The concepts and content discussed in this article are meant to be educational in nature and are not to serve as specific business, financial, tax, legal, or regulatory guidance. Individuals are advised to seek the counsel of such licensed professionals as it relates to their specific business.

Tiffany MarkarianThe Do’s and Don’ts of Strategic Alliances

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