According to recent statistics, there are upwards of 200,000 wirehouse and independent broker-dealer affiliated advisors and RIAs, and there are upwards of 400,000 CPAs. I like those odds. That means there is a wide arena of potential partnerships available to enterprising financial advisors.
This is hardly an original idea; the majority of financial advisors try hard to cultivate such relationships. They readily perceive the synergy between their own marketing-oriented businesses offering investment services and the narrower but more intimate relationships that CPAs have with clients bearing all in their income-tax statements.
It seems like the ultimate client-referral solution. Yet most financial advisors report frustration with the actual results. They see CPAs as tough nuts to crack, untrusting and overly protective of their relationships. Sound familiar?
This months’ cover story, “Building the CPA Alliance,” investigates the promise and pitfalls of CPA-advisor coalitions. As Ellen Uzelac reports, such alliances — even if cemented in a formal agreement — rarely get off the ground. Like most things that are worthwhile, they require time, effort and perseverance. Once firmly established, they live up to and beyond many an advisors’ most earnest aspirations.
I would venture to offer a few thoughts of my own on these relationships: The problem is that advisors and CPAs are two very different animals. (That’s why they are such a good match!) Advisors tend to be practical, results-oriented people; CPAs tend to be more process-driven: They fill out forms and check off little square boxes — lots of them.
An advisor may therefore try to wow a CPA with a happy ending: “It’ll be win-win.” “You’ll get a stream of referral fees.” Or, “I will hold seminars for your partners and clients.”
The CPA sitting down beside the advisor may desire these benefits as much as his clients hanker for a tax refund. But he’s got his checklist. Remember the Form 1040? The total — subtracting line 71 from 63 — doesn’t come until line 76!
Question No. 1 is, “Can I trust this advisor with my clients?” The next dozen questions at least are variations on this theme. In the CPA’s mind, the answers do not come at the end of the business lunch, but are discerned through the advisor’s behavior over a period of months or even years!
For many advisors, this kind of process may seem to be more trouble than it’s worth. But the benefit is actually greater than the hoped-for referrals. By submitting yourself to this kind of discipline, you are developing the skills to be seen as legitimate in the eyes of a discerning professional. If you can master that, you will have found a key to gaining the trust of your clients and prospects as well.