I often hear of how successful other advisors are with establishing referral sources from accountants and attorneys. I have not had such success. I always feel like it is a one way street with me always passing along the leads to them and very little, if any, coming my way. How can I do a better job of this?
Joe, Saratoga Springs, NY
For advisors, of three main routes to business growth -- capturing additional assets from existing clients, getting new clients via referrals from existing clients, and forming strategic alliances with other professionals -- it's this third option that could be extremely productive, depending on how you go about establishing the relationship.
The No. 1 choice of alliances for advisors is with certified public accountants. Statistically, clients regularly name CPAs as their most trusted advisor so they are likely to listen to and respect any referral that comes from their CPA. I would focus your efforts on CPAs and make sure to do it well.
For the CPA, a strategic alliance with a financial advisor -- especially one framed around the "economic glue" of a formal fee-sharing arrangement -- offers the CPA a substantial revenue opportunity. A CPA can also gain a significant competitive edge without having to hire, supervise and logistically support an in-house financial services provider. In short, the right strategic alliance amounts to a win-win-win for the CPA firm, the firm's clients and the financial advisor.
I know one advisor, also in NY, who has 3 or 4 alliances with local CPAs—each has a revenue sharing agreement or solicitation agreement set up—and he has gotten almost ALL of his new business from those relationships. Another advisor I know actually moved into the offices of the CPA firm he works closely with which has allowed him to gain even more of the CPA firm’s tax clients.
In addition to the monetary structure, it is important to nurture the relationships with the alliance. Get together quarterly for lunch to see how things are going. Send a gift as a thank you each time you receive a new referral. Track results.
I am confident if you establish your relationships this way, you will see a positive impact on your new business.
I hope this helps you out,