ELITE ADVISOR BEST PRACTICES

Reaching Out Now

In today’s challenging times, professional relationships are more important than ever.

By John Bowen, founder and CEO of CEG Worldwide

Building strategic alliances with other professionals has long been one of the most effective ways to attract a steady stream of new clients and grow your business. Of the many advisors we coach, most of those who achieve breakthroughs that propel their practices to the highest levels of success are those who build great relationships with outside advisors such as accountants. In today’s challenging times, these relationships are more important than ever.



Although many advisors struggle to make headway here, there is a process that will get you in front of the right professionals and allow you to demonstrate to them the value of a strategic alliance. The difficult environment we continue to face actually enhances your ability to put together a win-win deal between you and another professional.

The Right Way

CEG Worldwide’s research has shown that the partners formed in strategic alliances tend to recommend the best clients to top advisors (see “The Right Ally,” May 2008). But in order to get the benefits of working with an accountant, you first must learn the best way to form the alliance in the first place.

The first step is to identify and prioritize the CPA firms you might want to work with and find a partner at each firm who can serve as your cheerleader. The most effective method is to identify the best small- and medium-size accounting firms in your area. These firms would most likely have clients who are ideal for advisors pursuing affluent investors.

Read online what you can about each of these firms, talk to your local chamber of commerce and rely on word of mouth to identify the best possible local firms. You might also ask your top clients about their accountants. A referral and recommendation from a client can go a long way toward opening doors. Or you can search a free list of thousands of CPAs at www.cpadirectory.com. Once you have identified three to five suitable firms, pick up the phone and make the initial contact. Simply say that you’d like to get together and explore whether there’s a basis to create a strategic alliance. We’ve found that most CPAs are amenable to discussing how to better serve their own clients and build a secondary revenue stream.

After you get a “yes,” arrange a meeting with your contact at the firm. At this meeting, communicate the opportunity that exists in the current environment. Present the research I’ve mentioned in my recent columns showing that 81% of affluent investors intend to leave their advisors and only 2% plan to refer their friends to their current advisors. Then bring up industry research showing that about half (50.9%) of all CPA clients would be very likely to buy financial investment products from their CPAs, were they available, and about three-quarters (74.6%) would be likely to buy insurance products. That should make it clear that their clients need help-and in fact are practically begging for it.

This initial discussion should also address four important aspects of the potential relationship:

Foundational aspects. If you don’t feel you can work together from the beginning, it’s unlikely you’ll be able to develop a relationship over time. During your conversation, ask yourself if there is chemistry between you and the CPA. Do both parties value integrity?

Collaborative aspects. You will want to walk through the basics of how you would collaborate with the CPA and the firm. Collaboration is about whether you and the firm could play well together in the professional-services sandbox. So ask if the firm’s culture is truly open and ready to work with a financial advisor.

Process aspects. At this point, you should also describe the process that you use with your clients in some detail. This will demonstrate that you are first and foremost concerned with clients’ overall financial well-being. Show that you have a process that really sets you apart, such as the discovery meeting discussed in last month’s column. That’s exactly what allowed one of the advisors in our coaching program to develop a key alliance. By walking the CPA through his process and showing that it was clear, compelling and different from the norm, the advisor recently obtained a $3.5 million relationship, thanks to the CPA’s referral.

Financial aspects. Explain that there has to be “economic glue” and clear financial understanding between the two parties. Typically, CPA firms receive between 20% and 50% of the gross revenue generated from a strategic alliance, which means the financial services provider is receiving between 50% and 80% percent of the gross revenues. You can do a quick back-of-the-envelope calculation to show how financially successful this arrangement can be for the CPA firm.

On Board

You’ll need every partner at the CPA firm to be on board if the alliance is to go forward. So meet with the key partners and decision makers. Stress the value that you’ll bring to the CPA firm’s top clients, many of whom are looking for the kinds of services you can provide. Here are a few key ideas for making these meetings go your way:

  • Show you understand the needs of the firm, its partners and its clients.
  • Stress this as an opportunity to help the partners position themselves as their clients’ personal chief financial officers.
  • Suggest you can help their firm grow and increase their revenue with little additional effort on their part.
  • Make it clear that their clients will remain their clients and that they can sit in on your meetings with them.
  • Point out two examples of economic glue: You can refer some of your existing clients to the CPA firm, and if their clients make outside referrals to clients you choose to work with, the firm will get a revenue share as well.
  • Listen to the concerns that each partner or staff member brings up.

Based on these conversations, you’ll want to develop a written summary that compiles everything you’ve learned about the firm, its partners and its clients, any themes and opportunities, and any structural, licensing, legal or ethical concerns. You’ll use that information to prepare a strategic action plan.

Your plan should delineate both the ideal and minimum goals for the alliance. For the CPA firm, those goals would be expressed in revenue, while for your firm, those goals would be the amount of assets under management you acquire. The ideal goal is what it would take to make a successful program over one year. The minimum goal is what must be achieved in order to continue the alliance. These goals will help both you and the CPA firm focus on your joint efforts. The plan should also address strategy, spell out specific tactics that you’ve discussed and clarify each party’s responsibilities.

Once you agree to proceed, you can start a pilot program or begin working with the first clients that the firm identifies as appropriate. After that, you’ll set up ongoing progress meetings to discuss client reviews, the referral process and how to improve communication between you and the CPA firm. If you’ve set up a pilot program, when the pilot is done, you’ll want to discuss an ongoing relationship. In any case, after six months to a year, you’ll want to set up a more substantial meeting with multiple partners from the CPA firm to review overall progress (including revenue numbers).

Obviously this process of creating a strategic alliance doesn’t happen overnight. It requires patience and persistence on your part. But the potential economic payoff for you and the CPA is huge. What’s more, it only takes one “yes” from an ideal CPA firm to see a significant impact on your business for years to come.

Source: CEG Worldwide.

Reprinted from: Financial Planning


About the Author

CEG Worldwide’s founder and CEO, John Bowen has long been known as a leader in the area of adding value to financial services firms. Bowen started his career as an independent broker-dealer representative and then became a fee-based financial advisor. He was ultimately named the CEO of Reinhardt Werba Bowen (RWB), a money management firm that helped other financial advisors raise billions of dollars in assets. In 1998, Bowen became CEO of Assante Capital Management upon the acquisition of RWB by Assante. He left Assante to start CEG Worldwide in 2001, in order to help advisors realize substantial success through the use of CEG Worldwide’s business development systems.

He is the author of many books, including Breaking Through: Building a World-Class Wealth Management Business and The Prudent Investor’s Guide to Beating the Market.