Tampa: "I keep hearing everyone talking about getting referrals from CPAs," groaned Tony, "But I'm beginning to think that is all just talk - I don't know anyone who is getting much business from CPAs."
Every financial advisor I have ever encountered would love to have a handful of CPA alliances. Every firm has attempted to facilitate this process by creating various forms of revenue sharing and the like. Yet, only a small percentage of advisors enjoy a healthy working relationship with CPAs. And some of the tactics advisors have attempted to garner these CPA relationships leads me to believe that most advisors don't really know what CPAs are all about, much less their relationship with the affluent.
Just like you, CPAs who are committed to serving the affluent are the one's who are thriving. Our research tells us that the affluent are interested in a "go-to" financial coordinator to oversee the multi-dimensional aspects of their family's financial affairs and do not have a clue where to find this type of professional.
Because it's assumed that CPAs have strong relationships with affluent clients, advisors hover around them like moths to a light. Yet our recent findings paint a slightly different picture. Consider the following response from affluent investors with over $500,000 investable assets to the question...
Do you currently use any of the following as a provider of financial products and/or services?
Insurance Agent 53%
Financial Planner 42%
Financial Advisor 39%
Personal Banker 32%
Online provider 30%
At first glance you might think that maybe you should have been targeting attorneys instead of CPAs. But research can be a bit tricky—the operative part of that question was "currently use any." This question was followed by one designed to bring clarity to these professional relationships.
Who do you consider to be your primary source of financial advice?
Financial Planner 27%
Financial Advisor 13%
Personal Banker 2%
Online Provider 2%
Insurance Agent 1%
Don't have primary source 38%
The reality is that there is a big difference in the mind of the affluent consumer between using one of these professionals and considering that professional their primary source of financial advice. The opportunity for Tony or any financial professional interested in becoming the "go-to" professional for the affluent in their community is the fact that the greatest percentage above (38%) was for those who didn't have a primary source.
Also, from a statistical perspective it is interesting to note the gaps between "currently using" and "primary". There is a 16-percent gap for CPAs and a whopping 25-percent gap for financial advisors. All of this tells us that there is a lot of work to be done by all of these professionals. There is no single group that has a lock on the confidence of today's affluent investor. This highlights a tremendous opportunity for any financial professional, CPA or Financial Advisor, who is able to capitalize on this general lack of confidence amongst the affluent.
Herein lies the CliffsNotes version of what I told Tony: In many ways, CPAs are as challenged as you. They would love to market their professional services more effectively, they would love to have a strategic alliance with a small group of professionals who won't embarrass them with their clients and centers-of-influence and, much like the affluent, they are very skeptical and distrustful of the financial services industry—in particular, financial advisors.
Here's a quick action plan for setting up CPA alliances:
Re-align your practice to make certain you are the true solutions provider for the multi-dimensional aspects of your client's financial affairs. Tony wasn't quite there yet.
Determine who are the top professionals in your community—CPAs, Attorneys, Financial Planners, Insurance Agents—and make a list.
Work to have breakfast or lunch with everyone who is on your list. Start with those CPAs you know: your CPA, your clients' CPA, CPAs from your networking/social groups, your friends' CPAs, etc. This process works much smoother when you have a connection to them.
Be genuine in that meeting and work to develop rapport—after all, you are all in this together—and discuss the possibility of sharing centers-of-influence (less threatening than sharing clients).
Set up another meeting with those whose interest you have piqued and begin to establish a working relationship.
Surprise and Delight: You want to treat these professionals as a "rainmaker" treats an affluent prospect.
No longer should you be intimated by CPAs. In their own way, they are as challenged by the affluent as you—and rainmakers can run circles around CPAs. Basically, you need each other. But there needs to be a better understanding, on both sides; CPAs need to be able to differentiate between a client centric advisor and a phony. Advisors need to stop the disingenuous game of doing whatever possible with hopes of getting referrals from CPAs.
Suffice to say, the affluent are not a trusting bunch. The prevalence of recent accounting scandals and corporate malfeasance seems to have had a negative impact on the general opinion the affluent hold of the CPA profession. However, the level of distrust they hold towards individual financial professionals should be a concern for the entire industry—which is why CPAs and advisors should be working more closely together.
To learn more about affluent perceptions of financial professionals, visit our FREE download page for our Financial Professional Ratings.
Once again, we want to thank all of you who have emailed comments and questions to us. We will continue to do our best to answer each one. If you have any topic suggestions or special requests, please contact Rich Santos, publisher of <i>Registered Rep.</i> and <i>Trust & Estates</i> magazines, at <a href="mailto:[email protected]">[email protected]</a>.