From the August 2006 issue of Boomer Market Advisor • Subscribe!

August 1, 2006

Network to net-worth

"It's all about the network," says a current advertisement for a wireless phone company. This tag line can also translate to financial advisors. Those who work to build strong networks with other professionals create longer lasting relationships with clients.

Networking with attorneys, accountants, investment advisors and insurance professionals are all methods advisors use to expand the services they offer clients. Professional relationships with lenders, real estate developers and investment bankers are also increasingly common.

Some advisors are creating independent practices that include several professionals in one place. Others simply refer clients to the professional with whom they've partnered.

"Our firm is constantly seeking to build relationships with insurance and investment professionals, commercial lending officers, mortgage brokers and tax advisors," says Richard Robertson, a Charlotte, N.C.-based estate planning attorney. "We believe that the best way to protect our clients' interests is to align ourselves with other highly principled advisors."

"There are really two great ways that advisors can bring additional knowledge and expertise to the relationship," adds Russ Crooks, an advisor with Clearwater, Fla.-based Life Brokerage Equity Group. "They can network with the resources and experts of their primary carriers or back offices, or they can network with other professionals in their communities."

A number of insurance carriers and broker/dealers actively promote their internal advanced sales departments. They're often staffed with Certified Financial Planners, Chartered Life Underwriters, Certified Public Accountants, attorneys and other specialists to act as experts-on-call. Advisors are encouraged to contact these departments in order to get the support they need in areas where they lack expertise.

But it's the internal network of multi-disciplined professionals that can act as a differentiating factor for firms looking to market the superior level of service they're able to offer clients.

"We've built a team of advanced advisors that can help us deliver everything from the basic life insurance proposal to extremely complicated estate planning strategies," says Terry Garvin of Carmel, Ind.-based Marketshare Financial. "We've hired former home-office advanced marketing specialists to help better position us and deliver the highest quality advice to our clients."

Networking with tax professionals is one of the biggest trends among advisors in recent years. According to Crooks, who recruits CPAs and other tax professionals for his firm,

"Most CPAs already own the trusted relationship with their clients. We show them how to create new revenue streams from those relationships."

A 2004 CEG Worldwide study of 394 CPA firms supports Crooks statement. It found that over the past several years there have been "a substantial number of CPA firms that have added financial services to their traditional accounting and tax practices. In their ongoing efforts to meet their clients' needs while ensuring their own profitability, these firms have made financial products an integral part of their service offering."

Insurance companies and broker/dealers are taking notice, and some have gone so far as to create and or buy practices that are dedicated to the network concept.

Firms like Northwestern Mutual Financial Network have built their organization around the networking concept. NMFN positions its companies and subsidiaries as a network that its career agency force can rely on to meet their clients' diverse needs. Along with Northwestern Mutual Life Insurance Company, their advisors have access to subsidiaries like Northwestern Mutual Investment Services, Northwestern Long Term Care Insurance Company, Strategic Employee Benefit Services, Russell Investment Group, Northwestern Mutual Wealth Management Group and The Todd Organization. This strategy allows the advisor to access needed expertise without having to build the network himself.

Broker/dealer giant LPL Financial Services offers its reps the LPL Partners Program. LPL Partners helps advisors market their business through strategic alliances with attorneys, CPAs and other professionals who have clients that may benefit from working with an experienced financial advisor. As with Northwestern, the company believes that by forming these strategic partnerships, advisors benefit from enhancing the services they provide to their existing clients while potentially attracting new business.

"These arrangements add tangible, long-term value to the professional partner's business by creating new income streams and strengthening their relationship with their clients," says Joseph Lyons, branch manager with LPL's Walnut Creek, Calif., office.

For advisors, building professional networks provides opportunities to tap into previously unavailable referral sources while providing levels of service previously unavailable to the boomer market. By leveraging these strategies, advisors have the potential to increase assets under management, access larger accounts and build solid client relationships.

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