As an advisor, have you ever had a business relationship with a CPA or an attorney that is the professional equivalent of unrequited love? Do you find that there are some business professionals to whom you have provided multiple introductions, yet receive very little in return? Generally, are you dissatisfied with your network, or lack thereof, of other trusted advisors?
You are not alone. If fact, these conditions are pretty commonplace in the dynamic between advisors and other business professionals. At ClientWise, we have conducted our own research study into how financial advisors interact with other professional advisors, and have identified five specific misconceptions:
Misconception #1: The primary reason to build a network of professionals is to receive reciprocated introductions.
Reality #1: The primary motivation to build a network is to comprehensively support clients and thus allow you to fulfill your role as a wealth advisor. Introductions are a byproduct of this effort.
Misconception #2: CPAs and attorneys are the primary professionals with whom you should network.
Reality #2: The network of professionals that you work with should be a function of your clients served, which may or may not lead to networking with CPAs and attorneys. For example, we work with one advisor who is raising $30 to $40 million annually by working with business owners who have recently sold businesses. His professional network is skewed to business brokers and business valuation specialists, because that's what his type of clients need.
Misconception #3: When you offer up referrals of your own clients to another professional, they will reciprocate in kind.
Reality #3: Until you have had the larger conversation about how both parties might benefit from collaboration and the protocols are in place, you cannot have a bilateral advocate relationship.
Misconception #4: There are certain times of the year when contact with other trusted advisors should be avoided at all cost, e.g. CPAs in April.
Reality #4: In truth, your clients will need other trusted advisors throughout the year and a growing number of clients expect you to facilitate those connections as a wealth advisor.
Misconception #5: With regard to your network of business professionals, the more, the merrier.
Reality #5: In fact, building a small, close-knit group of professionals is far more effective as each of you will have a better understanding of one another's practice.
New Clients Come From Introductions
Our own ClientWise research is conclusive with regard to the important leverage that one gains by working with professional advocates. Among the advisors whom we have surveyed, 80% to 85% of new client relationships are said to be the result of introductions from professional advocates, and client advocates. In 2008, the Spectrem Group surveyed a group of ultra-high-net-worth households and discovered that referrals from business associates, as well as referrals from friends and family, are the two leading ways that affluent investors prefer to meet their advisor.
The more interesting finding is from a McKinsey study that explored investors' willingness to provide introductions, assuming they have been asked. It turns out this was a presumptuous assumption: Only 18% of respondents have even been asked by their advisor to provide an introduction. Equally interesting is the revelation that the willingness of investors to provide introductions increases with age and affluence.
Make It Your Intention
As a byproduct of our ongoing research, consulting, and coaching experience with selected top advisors, we have developed the ClientWise Professional Advocate Approach. In order to successfully build your own network of other trusted advisors so that you can more effectively serve clients in a comprehensive way, you must have an intentional approach to building and nurturing this network.
While many advisors understand the importance of having their own professional network, have benefited from "referrals" received, and have seen first hand the significant benefits to their clients, few advisors invest the appropriate time and energy building their own network properly. Additionally, advisors frequently admit they don't feel confident in their approach. Those who have been most successful consistently dedicate the appropriate number of hours each week to ensuring they have the network to fully serve their clientele. (See "Ask These Questions" sidebar, below left.)
In addition to the definition of an advocate in the sidebar, there are many other words that describe what an "advocate" is, and does: champion, promoter, backer, proponent, and supporter are some of the key descriptions.
We have observed that financial advisors who consider themselves "wealth advisors" must assemble a collection of other trusted advisors and business professionals who work together in a mutually defined, collaborative relationship for the benefit of the client. Put another way, for a wealth advisor to properly address the full spectrum of their clients' concerns and needs, they must have an established network as a resource for themselves and their clients.
Therefore, this Professional Advocate approach serves two purposes. It establishes the advisor as a wealth advisor in the eyes of other trusted advisors, clients, and potential clients. Just as important, the alliance building that flows from this professional advocate network can become a critically valuable means to generate leads, and develop new business.
Ray Sclafani is founder and president of ClientWise LLC (www.clientwise.com), a full-service executive coaching firm that helps its clients optimize growth, maximize revenue, and manage risk. He can be reached at email@example.com.