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In my 1,000+ interviews with financial advisors over the past 15 years, frustration with a lack of COI referrals is one of the most common refrains I hear.
“I can’t get my CPA partnerships to pay off for me.”
“I end up referring business to them and get little in return. It is not worth the time and energy.”
Independent financial advisors know that CPAs have trusted relationships with the types of clients they would like to work with, including the lucrative high-net worth segment. But they can’t tap into this fountain of qualified prospects.
For this article, I sat down (virtually) with John Daley, partner at RIA Lifestyle Freedom, a Florida-based firm that helps independent advisors structure their existing relationships with CPAs and establish new strategic relationships.
As John said, “A go-to CPA partner for our advisors has enough relationships with high-net-worth business owners and families such that at least every quarter one of their clients raises their hand with a big wealth management issue that needs solving.”
CPA firms are likely to have loyal clients, bring expertise in the tax impact of any project, but don’t want to build-out a full wealth management/family office services division.
“Through the CPA, we become their de facto family office services division, a bench of experts at the ready to solve whatever issue arises,” says Daley.
“The advisor manages the relationship and initial engagement and is positioned for future work with the clients and often times gets assets to manage or additional projects before the first engagement is complete.”
Casting a wider net for big fish
Common solutions in the family office category include financial planning, investment management, and estate planning.
A broader range of services would include risk management and insurance, business strategy and business exit planning, family governance, and advanced tax solutions.
Some advisors narrow their focus to specialize in homogeneous markets that have similar problems, like entrepreneurs, athletes, business owners, or families with concentrated stock positions.
The types of problems higher net worth individuals and families experience range from developing a succession plan for the family business, selling a sizable investment property, creating a comprehensive estate plan and family governance strategy, or liquidating a concentrated stock position in a tax-advantaged manner.
Together, we sketched out a five-step success system for independent advisors to unlock their CPA channel and be that single-source wealth management professional.
The five-step system
1. Paint a picture of the ideal client
The best advisors seek go-to partnerships with between one and three non-competitive CPA firms in their geographic area or niche.
For example, an independent advisor in a tech hub city may specialize in clients who start and sell businesses and seek CPAs who work with these business owners and executives.
2. Cultivate relationships with a small number of non-competitive CPA partners
Many advisors make the mistake of trying to partner with as many complementary wealth management professionals as possible.
Daley’s best advisors, “seek go-to partnerships with between one and three non-competitive CPA firms in their geographic area or area of focus.”
That practice fit means both the advisor and CPA are targeting the same ideal clients.
3. Maximize your engagements and new ideal clients
Advanced wealth management and financial planning are an entry point to add value to higher net worth clients and fill in the gaps in expertise for the CPA firms who largely specialize in tax strategy and filings.
While investment management is a part of the advisor’s solution set, a wide range of planning capabilities are a door opener with CPAs and high-net worth clients alike.
An advisor who specializes only in exit planning for business owners will often struggle to create enough engagements and is losing out on solving any one of over a dozen common issues that business owners have with their ongoing concern.
4. A team approach with the CPA in “lead chair”
Daley stresses that a team approach where everyone is synchronized and aligned to solve the clients’ issue is in everyone’s best interest.
The CPA has a lead chair at the table with their clients and reviews and implements the tax aspects of the solution.
“Because the CPA likely has the trust of the client already and has brought them to the engagement, you want to make sure they shine in the end-client’s eyes, says Daley.”
5. Develop a joint, go-to-market strategy
“Look, the CPA and high net worth segment are saturated with financial advisors begging to manage money or do basic wealth planning.”
“That will not differentiate your practice or get your foot in the door to prove your worth to either CPAs or high net worth individuals,” says Daley.
Daley argues that having a full range of family office capabilities at the ready is one proven formula to demonstrate your ability to solve a broad range of problems.
Bob Hanson is a fractional marketer and author of Marketing Power for Financial Advisors. Get his checklist, Nine Questions Advisors Must Ask Before They Hire a Marketing Agency, Fractional or Full-Time Marketer, click here.
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Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
