Anthony Lombardi went from 860 end clients down to … zero.
He shuns asset management. “There’s no money in it,” he says — typically just a percentage of assets under management — and besides, “it’s cumbersome and inefficient; you have to manage $100 million just to make a million bucks.”
And while Lombardi spoke with ThinkAdvisor on a Monday, he said he’s not planning on going into the office this week until Friday.
The Carlsbad, California-based advisor spends more time with his 9-year-old daughter, and surfing, than he used to back when he was managing all those cumbersome assets for his hundreds of clients.
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To hear Lombardi tell it, he’s just living a more fulfilling life that leaves time for his faith, his family, helping other people and, importantly, making a lot more money than he used to.
So how do you make money as an advisor without the nagging details of managing investment assets for end clients?
Lombardi thinks he has cracked the code of the industry’s long sought but rarely realized aspiration of profitably collaborating with CPAs.
Rather than sweat over the pressing needs of 860 end clients, Lombardi says it’s much more profitable to make the CPA your primary client.
“You can make a million dollars off of one of the client’s end users in three months,” he says.
The founder of Perfect Client, which holds training sessions for other advisors who want to learn how to work with CPAs like his own advisory firm, the Lombardi Group, eschews the standard industry push toward fees.
“Everything we do, we make a commission off of.”
Instead of the standard fee-based investment plans, Lombardi more typically helps a CPA’s high-end client whose needs might range from a defined benefit plan to an employee stock ownership plan or a large insurance policy that will shield its owner from estate taxes. He’s doing one of those, a $14 million policy, for a CPA’s 50-year-old client right now that should generate a premium of $500,000 a year, resulting in a commission of about $400,000.
While most advisors, and many an industry coach, recognize the value of developing CPA referral relationships, Lombardi says most are destined to never see a meaningful CPA referral.
“They’ll throw you the bone of a C client,” he says. “If you really work it well, if you perform, [the CPA will say] ‘I’ll give you my B-minus client.’ There’s no money in that. There’s money in A clients, and you’re never going to see them — ever — no matter how good you think the referral relationship is.”
Lombardi learned the unique power of the CPA back when he was catering to his hundreds of former clients.
“I was working … with very wealthy individuals and found that anytime [we touched on a big decision] that was outside their comfort zone, the clients had to get the approval of guy they trusted most.
“As much as I hoped it was me, it wasn’t. It was their CPA. Then I had to have a stranger [vet] these decisions,” he recalls.
He concluded that “if I have to go there [eventually], why don’t I start there?”
So, like a lot of advisors, Lombardi started meeting with CPAs. That’s where he experienced the frustration of getting suboptimal referrals, and where he learned the limitations of the many advisor-oriented CPA alliance programs.
“Even the best CPA programs out there are all teaching referrals.”
But these all necessarily fail, Lombardi says, because they all boil down to getting a CPA to tell their clients: “I’m not good enough to take care of you — so here’s this other advisor.”
And that explains why advisors working with CPAs don’t get their partner’s A clients.