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Financial Planning > Tax Planning

Let me introduce you to my clients

By Carrie Le Grice

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Forming professional relationships with CPAs, estate planning attorneys, tax attorneys or anyone else you want to throw into the mix can be exponentially profitable for your business and theirs. In an industry that thrives on referrals, what better way to increase your client base than through other professionals who have already established trusting relationships with their clients? Through these alliances, trust is transferred, making your job easier and increasing client satisfaction all around.

But where do you even begin this process? How do you meet these sorts of professionals? How do you establish trust? And how in the heck does it work with commissions?

The value
Seminars, marketing campaigns, cold calling, direct mail and door-to-door visits are all ways you can make new clients – some more painstaking than others. But in such a competitive industry, you have to ask yourself, “Is it worth my time and money?” If it’s not, then what is?

All of these methods have one thing in common, says Lee Hyder, president and founder of Lee Hyder & Associates in Akron, Ohio. “They all attempt to take a cold prospect and turn them into a client.

“True profitability in today’s market will come when you are able to align yourself with other professionals who you do not compete with, but who share the same demographics in your client databases, such as CPAs, attorneys, and property and casualty agents. By working with these people, you not only enhance the professional’s credibility with his clients by offering services he currently does not offer, but, more importantly, you immediately pick up an endless supply of prospects who give you respect without reservations, due to the respect they have for their advisor who has made the introduction for you.”

In fact, most advisors seem to agree with Hyder’s assessment. Catie Fitzgerald, founder of Financially Savvy, a Henderson, Nev.-based company that conducts public seminars and one-on-one coaching to help investors gain confidence in making their own financial decisions, is one.

Fitzgerald says the advantages to forming professional alliances can be narrowed down to three distinct things: You deepen the relationships with your clients, you save time building your business and you expand your knowledge. Your clients will look at you as the resource they turn to first for all matters concerning their finances, she explains.

But if your clients regard you as a financial resource at their disposal any time they need you, isn’t this time consuming? Do you really want to get caught up in helping them with financial matters that don’t concern you? The answer to these questions is a resounding “yes.”

Janine Wertheim, chief marketing officer of Securities America, breaks it down into dollars and cents. The advisors at her company that form relationships specifically with CPAs “are able to attract a higher-net-worth client,” she says. “These clients have high-end planning needs and bring with them higher assets under management.”

And that says it all.

The people
CPAs, estate planning attorneys, tax attorneys, realtors, local businesses? Where do you draw the line? The key is to affiliate yourself with professionals who are not competitors.

C.J. Brott, founder and president of Capital Ideas, a registered investment advisor, specifically likes to work with CPAs who specialize in taxes and small business and estate planning attorneys. He chooses to work with them because they’re not typically interested in selling financial products and therefore do not present competition. As far as estate planners go, Brott recognizes that they often need a trusted financial advisor to help with the transfer of capital – often large sums.

“Estate attorneys are an excellent source of potential referrals,” Brott says, “and because a large number of our potential clients are experiencing life changes, such as recent death of a spouse or retirement, they find themselves in need of a good lawyer, and this makes for a good two way street.”

But finding professional affiliates is not simply a matter of flipping through the Yellow Pages and calling the first guy whose name begins with “A.” You have to weed out the prospects who don’t share your ethics, your values and your goals. And let’s be honest, no one wants to work with the stereotypical used car salesman. You need to align yourself with people like you.

Jim Hill, an independent financial advisor with Investors Capital, suggests that you can never be too scrupulous when evaluating a potential professional affiliate. “One must be careful with whom they align since the client they gain through that referral will tend to view them similarly to the one who referred them,” he says.

Hill’s point should be well taken. In essence, your affiliate’s reputation becomes your reputation, so choose wisely.

Fitzgerald, who prefers to work with women partners since her practice is focused on financial planning for women, uses the Yellow Pages, but only as a platform to see who the professional women in her area are and what they do. From there she checks out the Chamber of Commerce membership directory and the directory for the National Association of Women Business Owners. Based on her research, she creates a prospective list of potential alliance partners and invites the most appealing prospects to join her for coffee, a drink or lunch to discuss how they could help leverage each other’s businesses.

During this discussion, whether it be over a drink or at the office, both you and your prospective affiliate will evaluate each other to determine, first and foremost, if trust can be established and if working together can work. To be perceived as a trusted companion and advisor, Hyder says, you must show that you are an expert in your field. He suggests providing testimonials from other professionals you work with or from satisfied clients, who are witnesses to your expertise and your character. He also suggests that – despite the cost – marketing materials are an absolute necessity.

“In today’s market, you have to invest in the tools to reap the benefits,” he says.

Part of presenting yourself in a professional way is through having professional materials and tools, from quality brochures and supporting materials to technologies and advertising firms, he explains. “I feel that without a commitment and expenditure to these important sales and marketing tools, it becomes very tough to differentiate yourself from the countless others who want nothing better than to get at the same database that you are trying to utilize with this companion marketing campaign,” Hyder says.

It is equally important during the initial meeting to explain your approach to planning to help your prospect get a better idea of how you conduct your business.

“They want to see that you have a system and process for identifying the needs of the client,” Wertheim says.

Her take on the matter: “They do not want to affiliate with a product salesperson.”

She suggests using questionnaires, agendas and a financial planning software package as presentation tools to help explain the planning process. From this point on, the discussion is open to how you and your new affiliate will go forward with the relationship.

The way
The big question is: Do you work on commissions or fees? As you would probably guess, there is no concrete answer. Every advisor deals with this matter in his own way, based on the relationship with his affiliates.

At Securities America, Wertheim explains that the process is somewhat informal. In situations where a professional contact refers a client to an advisor, the professional will generally receive 20 percent of the advisory fee. In more formal relationships, where the professional schedules meetings for the advisor and client at the professional’s office, generally there is a 50-50 split.

Marc Sussman, president of M.H. Sussman and Associates looks at it differently. He calls finder’s fees a “gray area.” Sussman says that many professionals feel uncomfortable with the idea of fees or commissions – him being one of them. Rather, he prefers to refer clients to the appropriate parties and call it good.

Many advisors agree.

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