As promised in last week’s blog, we’re spending the month of April looking at the top four mistakes advisors make in their efforts to work with CPAs and other professionals. Last week, we looked in detail at the mistake that most advisors make when offering to cross-refer clients to CPAs.
This week, we’re going to discuss the second biggest mistake advisors make, which is offering to split commissions with CPAs. At first glance, you may be tempted to think, “What’s wrong with offering to split commissions? What’s more valuable than that?” While it’s true that extra income is attractive to everyone on some level, it’s important to understand that offering to split commissions can hurt you more than it helps.
Here are three areas you need to address in this scenario:
- You sound like every other advisor.
- You’re setting yourself up for being replaced by another advisor.
- How this is perceived by CPAs in their role as fiduciary.
You Sound Like Every Other Advisor
As I pointed out last week, it’s critical when approaching CPAs and other professionals that you find a way to bring value to the relationship in a way that differentiates you from all the other advisors competing to work with their clients.
By offering to split commissions with CPAs, you are immediately categorized in their minds as being just like “all the other advisors” that are only concerned about what’s in it for them. The irony is that while you don’t want to split commissions, you feel this is probably the most valuable thing you have to offer. But the CPA interprets your offer completely differently. The key is spending time to “get inside the mind” of CPAs before approaching them and creating a value proposition that brings value to them by their definition.
So as not to repeat everything we talked about last week, let me sum up this point with this piece of advice. Never start off a relationship with a CPA by discussing what percentage of commission you’re willing to split. If this comes up in the future, so be it, but always let the CPA be the one to bring it up first.
You May Be Setting Yourself Up For Replacement