With tax season now in full swing, many life insurance professionals are bringing a heightened focus to planning opportunities. They needn’t search far afield for client prospects: the certified public accountants with whom producers regularly collaborate on cases are a veritable font of quality leads.
Yet, many advisors are wont to turn to CPAs more for the expertise they provide on tax questions than for the new business they can also offer. These advisors, sources tell National Underwriter, would do well to follow the lead of fellow professionals who are successfully marketing their practices by partnering with CPAs.
“Having a relationship with CPAs is important, especially during tax season, because that’s when they see their clients,” says Peter Chung, an AVP of professional partnerships at Partners Financial, Austin, Tex. “And CPAs are uniquely positioned to convey the message that clients need to get together with a financial advisor to explore ways to take advantage of tax law changes.”
Chung should know. For he is helping to spearhead an alliance program that, since its launch 12 years ago, has yielded more than 400 revenue-sharing arrangements with CPAs for the 200-plus participating advisors. And the effort is backed by the resources of an industry titan: New York-based National Financial Partners, the company’s parent, which boasts some 170 affiliated advisory firms in North America.
Among other initiatives, says Chung, the program’s advisors are encouraged to present case studies to help allied CPAs identify planning opportunities during client meetings. A discussion of the client’s potential estate tax liability, for example, might prompt the CPA to suggest exploring a life insurance-funded wealth transfer strategy with a partnering advisor.
“Significant life insurance sales are regularly written based on these case studies,” says Chung. “CPAs see our insurance professionals as subject matter experts who are vital to meeting the client’s needs.”
Tax Form Triggers
Also helping insurance and financial service professionals forge partnerships with CPAs is Pacific Life. Keith Buck, a director of the advanced design unit for the Newport Beach, Calif.-based insurer, says the company offers a range of aids–data mining tools, a “tax form triggers” checklist and quarterly webinars to which both the CPA and the financial professional are invited to attend–to help CPAs in the program ferret out planning opportunities that may be referred to the financial advisor.
But Buck stresses that such partnerships are a “two-way street:” The CPA must benefit as much as the producer from the alliance, either via referrals to client prospects or additional billable hours from existing ones.
“The advisor needs to approach CPAs with a review to helping them grow their revenue,” says Buck. “CPAs will be interested to know, for example, that the life insurance professional can broaden the services and expertise they offer the CPA’s clients, such as financial, business, and wealth transfer planning.”
How many CPA alliances should a life insurance professional have? Bill Mercer, a Pittsburgh, Pa.-based general agent for Ohio National, thinks that one really good relationship should suffice. Mercer says his CPA partner of 20 years has sent him a “ton of clients,” most of whom are in need of retirement planning.
Pacific Life’s Buck believes that from three to five alliances is optimal, but observes that not all will be “primary” relationships. Those CPAs (and estate planning attorneys) who provide only the occasional referral may be categorized as “secondary” partners.
One advisor who has more than one alliance is Mercer Morrisette Jr., a Myrtle Beach, S.C.-based financial professional. Mercer, who has collaborated with as many as five CPAs in prior years (but now does business chiefly with two) says the partnerships account for about 40% of new business. And he credits an initiative of his carrier, Prudential Financial, Newark, N.J., with helping to give him broad exposure to CPAs in his community.
Morrisette speaks twice yearly to more than 150 CPAs affiliated with the South Carolina Tax Council. Sponsored by Prudential, the two-day gatherings avail him of opportunities to discuss insurance and financial planning topics; and to plug Prudential’s 10-year old Alliance Program, which helps Prudential advisors build relationships with CPAs and other tax preparers, plus commercial property and casualty agents. To date, the program’s 78 advisors have developed 84 alliances.
“The alliance program lets me share commissions with partnering CPAs,” says Morrisette. “The terms of the partnerships are all in writing, including what’s required of the CPAs. They must have, for example, the same FINRA licenses I have. When I receive a referral that leads to a sale, I handle the paperwork and Prudential cuts a commission check to the CPA.
“The arrangement has worked out very well for the partners,” he adds. “And it’s made a big difference to my practice: This week, I have 12 client appointments that my CPA partners set up for me.”
To be sure, not every tax preparer is keen to enter into a revenue-sharing arrangement. Case in point: Andy Cohen, a CPA and vice president of Norman Jones Enlow, Zanesville, Ohio. Specializing in business, estate and life planning for family-owned and closely held firms, Cohen outsources the implementation of plan recommendations requiring the purchase of the insurance to one of a handful of agents with whom he has allied informally. The reason: By limiting compensation to fees, Cohen avoids potential conflicts of interest associated with the product sale.
In place of commission-splits, Cohen says, he asks only that partnering advisors provide contacts that might lead to additional corporate tax work in exchange for the referrals he sends their way.