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Strategic Alliances: Quantifying the Opportunity

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While there is certainly no shortage of ways to market your practice today, I can’t think of a better one that offers a bigger opportunity than building strategic alliances with other professionals. But how do you quantify that opportunity? And how do you know how much business you can expect from a relationship with another professional? Let’s answer this question. Before you implement any new marketing strategy, you should know upfront what to expect it to yield for you.

A Simple Equation

The number of clients multiplied by the average amount of investable assets per client equals the size of the opportunity.

When I began building strategic alliances in my practice I set the following guidelines for myself. Before I formed an alliance with anyone I first had to ask, “How many clients do you have, and how many of those are over the age of 50?”

The primary reason for asking these questions is because this is the market I work with, the baby boomers. For me, to justify the level of relationship I was going to put in place, the CPAs, enrolled agents and accountants I approached had to have at least 300 clients over the age of 50.

Why 300 Over the Age of 50?

I stumbled across a study online done by the Nielsen company in 2009 that revealed the average couple in the U.S. over the age of 50 has approximately $150,000 in investable assets. It made sense to me that someone over the age of 50, who was paying a professional to prepare their taxes, should on average easily have $150,000 in investable assets. This then meant that each alliance I formed with a CPA who had at least 300 clients in this category represented a $45 million opportunity.

Armed with this knowledge, I went out and formed alliances with four local CPAs and accounting firms, all of which had at least 300 clients over the age of 50. I did this within my first 60 days of implementing my new Strategic Alliance model within my business. In fact, the first firm I partnered with had 327 clients over the age of 50, the second had 758, the third had 450 and the fourth had around 375. That meant within 60 days, I had built up a pool of nearly 2,000 potential clients. And I was now being promoted to them as the advisor of choice by their CPAs and accountants. 

Here’s the exciting part. Let’s go back to the Nielsen study. If each of these clients had an average $150,000 of investable assets, that meant I would now be positioned to work with potentially $286 million in new assets. Now you can see why this is such a big opportunity. It’s also why advisors working in banks easily write $20 million to 30 million annually in annuities. They are positioned where the clients and money are already.

So here are the questions to ask yourself:

  • “What types of marketing strategies are you implementing currently?
  • “And how many prospects are those strategies getting you in front of?”

If you’re still depending on methods of growing your business that worked 10 to 15 years ago, it’s time to start thinking strategically. As you consider forming your own strategic alliances, look at the research, do the homework and then ask yourself, “What is my ideal client’s age? And how many clients over that age must a CPA have for me to justify a strategic alliance with them?” This is the beginning of building your own Strategic Alliance model within your own business.

ou may be thinking at this point, “Who cares how many or how few clients a CPA has? If they want to form an alliance with me, let’s do it!” The problem that you’ll quickly run into if you move forward with this attitude is one that I myself ran into early on. You’ll find yourself overcommitted to smaller firms with less opportunity while struggling to find the time to spend with the larger firms that will also want to work with you. Just like you set account minimums with clients you spend your time planning with, spend some time this week thinking through what your ideal strategic alliance looks like so you’ll know it when you find it.

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