How Advisors Can Access Hundreds of Wealthy Clients With Just One Relationship

Anthony P. Lombardi is turning a traditional center of influence into a vital center of affluence by training financial advisors to help certified public accountants become virtual family offices (VFOs).

What’s in it for the FAs? The name of the game is leverage. As the conduit for a whole host of services provided to the VFO, they’re exposed to hundreds of opportunities to work with the accountants’ ultra-high net worth clientele, Lombardi, founder-president of The Lombardi Family Office, tells ThinkAdvisor in an interview.

CPAs limiting themselves to tax returns and other accounting matters are becoming obsolete, argues Lombardi, whose firm trains FAs to deliver a VFO platform for the CPA’s top clients. This engagement allows the accountant to continue working with all their other clients too.

Financial advisors need to become part of the CPA’s expansion to financial planner — or lose out to this new and growing competition, Lombardi, 55, maintains. The FAs he trains become part of the CPA’s team.

Indeed, the American Institute of Certified Public Accountants is encouraging members to become “personal financial planners.” It cites an IBISWorld study showing that “personal financial planning is projected to grow [twice as fast as] traditional accounting services.” Stating that “the majority of CPAs” already provide financial planning, AICPA adds that managing assets requires registration as an investment advisor.

Lombardi started in the industry as an independent FA in 1997. By 2003, he was managing assets of about $75 million. But that’s when he had a change of heart and totally restructured his practice by cutting his end-client list — of exclusively business owners — from 860 to zero.

Focusing on centers of influence instead, Lombardi’s target client soon became the highly trusted certified public accountant.

He has now trained more than 100 RIAs, independents and wirehouse advisors to be “facilitators” to CPAs that want to offer the family office experience to their best clients.

As a broker, Lombardi was working more than 80 hours a week and earning nearly $1 million a year. Meanwhile, he was frustrated over not playing a larger role in his clients’ lives.

Today he’s doing just that; he has far more time for leisure pursuits; and last, but certainly not least, he’s earning more money. Every CPA client brings with them 500 end clients averaging $300,000 to $500,000 a year. Lombardi has about 50 CPA client firms. Do the math.

The Carlsbad, California-based entrepreneur, born in Queens, New York, bred mostly in San Diego, lists a few other earlier lines of work on his resume.

First, he was third baseman for the Houston Astros’ farm team system but suffered a career-ending injury after only six months. He segued into the restaurant business. Fifteen years later he switched to a more lucrative job: stockbroker, starting at the boutique firm of Montauk Securities and soon thereafter launching his own shop.

ThinkAdvisor recently interviewed Lombardi, who explained how and why he “cracked the code” to help advisors build leveraged relationships with CPAs — and vice versa.

Here are highlights:

THINKADVISOR: Why should financial advisors pay attention to what’s happening in the world of certified public accountants?

ANTHONY LOMBARDI: In the next five years, the CPA is going look more like the RIA and CFP than the bookkeeper. So if today’s advisor doesn’t become involved in that change now, they’ll have competition where they’ve never had it before.

What do you mean by “involved”?

If you don’t take the opportunity to help the CPA become more like you, you’ll be on the outside looking in. The crazy thing is that CPAs desperately need the advisor more than ever. The CPA needs to change into a planning-type of professional. Advisors are already good at planning; the CPA isn’t.

What’s the main advantage to a CPA having an FA as part of their team?

Today’s financial advisors and RIAs are in a beautiful place to help the CPA have conversations with their wealthy-family Generations Two and Three. Advisors can give the CPA the answer for the future that they need.

The advisors you train help CPAs become a “virtual family office” (VFO) for ultra-high net worth clients. How does that help the accountant?

The future of the CPA profession is up in the air. The CEO of the American Institute of Certified Public Accountants, Barry Melancon, said that the profession will change so much in the next five years that it will be unrecognizable. He said CPAs have to become more important in their clients’ lives than just people who put numbers in boxes — they have to put an emphasis on financial planning.

What’s the big benefit to FAs to help CPAs become VFOs?

When they take the role of facilitator, or consultant, [managing the VFO] instead of working with the bottom end of referrals that they [typically] get from a CPA, they’re helping them with their largest clients. The assets are measured in the tens of millions.

You met with a number of CPAs when you decided to restructure your business. What did you discover?

They had a lot of clients but were making very little per client because they put in so many hours. And their revenue model was riddled with risk because they had to refer everything out [FO services for ultra-wealthy clients]. The only people who could help them were people who they didn’t want to help them: Advisors. They saw them as the commission-hungry enemy. So the CPAs became gatekeepers, and their very best clients were underserved.

How do CPAs feel about FAs today?

In almost 20 years of doing this, I’ve never seen the appetite that CPAs have now — warm and inviting — for wanting a conversation with a financial advisor.

Why did you become an FA in the first place?

I was working as an area manager for PepsiCo’s Chevys Fresh Mex [casual dining], making sure the restaurants were running at a certain profit margin. At one store, I ran into a guy I’d gone to high school with. He was doing some payroll.

“You guys had a pretty good year!” I said.

“This is for the month!” he said.

“What do you do?”

“I’m a stockbroker.”

I said, “I’m getting registered!” Six months later I was a stockbroker.

So why did you stop being a broker?

I wanted to be more important to my clients than just being a cog in their wheel of life. What made sense to me was to become significant in the lives of their centers of influence. So I shifted my focus from the end user to the CPA. Advisors always saw CPAs as leveraged, but we didn’t realize they needed leverage as much as we did.

Why did you start concentrating on CPAs?

Every time I brought an idea to one of my [business owner] clients, even though I was the one they trusted most as their business advisor, they’d tell me, “Sounds good — I’ll have my CPA take a look at it.” I figured: If they were going to have their CPA — who I had no relationship with whatsoever — give them the green light on what I wanted to do, I might as well start with the CPA because I was going to end up with the CPA.

What have you gained mostly from your practice makeover?

I’m managing a footprint of thousands and thousands of opportunities with very affluent people that most RIAs and financial advisors don’t even get a chance [at]. We work with the very best of the CPA’s clients.

As an FA, you were putting in 80 hours-plus a week. What do you do for fun nowadays? I have a ton of time to surf and fly planes and play travel baseball. I surfed this morning, had a couple of conference calls and this call with you. I haven’t been in the office at all.

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