CPA Alliance Programs

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May 1, 2007 6:11 am

Have any of you used this strategy to build business? 

It seems like a win-win situation for both the Advisor and the CPA, so I was wondering how receptive you found CPAs to be.  Honestly, if I was a CPA, I would jump at the offer to receive 30% of the client's fees simply for referring them to an Advisor.

From the Advisor's perspective, it would seem like 70% of something is a hell of a lot better than 100% of nothing.

So, for those of you who have offered it, what has your experience been?

Thank you.

May 1, 2007 7:29 am

I'm not sure that an agent (reg. rep) can share client fees with another professional outside your firm.

May 1, 2007 7:48 am
entrylevelFA:

I'm not sure that an agent (reg. rep) can share client fees with another professional outside your firm.



I am sure they can through a Solicitor's agreement. Most wirehouses have alliance programs for CPAs as well as attorneys.  However, whether one or both is allowed depends on the State you live in.

May 1, 2007 4:38 pm

[quote=ManagedMoney]Have any of you used this strategy to build business? 

It
seems like a win-win situation for both the Advisor and the CPA, so I
was wondering how receptive you found CPAs to be.  Honestly, if I
was a CPA, I would jump at the offer to receive 30% of the client's
fees simply for referring them to an Advisor. [QUOTE]



If I was a CPA I'd jump at the chance to violate professional ethics and lose my reputation for fair dealing in exchange for a 30% kickback.




May 1, 2007 4:50 pm

Thank you for confirming my hunch.  I'm pretty sure an alliance with a CPA consists of "I send my business to you, you send your business to me."

May 1, 2007 5:05 pm

"If I was a CPA I'd jump at the chance to violate professional ethics and lose my reputation for fair dealing in exchange for a 30% kickback."


There is no ethics violations as long as the CPA discloses that they will get compensated. 


 I'm pretty sure an alliance with a CPA consists of "I send my business to you, you send your business to me."  


This can be the case, but it certainly doesn't have to be.

May 1, 2007 5:16 pm
AllREIT:

[quote=ManagedMoney]Have any of you used this strategy to build business? 

It
seems like a win-win situation for both the Advisor and the CPA, so I
was wondering how receptive you found CPAs to be.  Honestly, if I
was a CPA, I would jump at the offer to receive 30% of the client's
fees simply for referring them to an Advisor. [QUOTE]



If I was a CPA I'd jump at the chance to violate professional ethics and lose my reputation for fair dealing in exchange for a 30% kickback.






What violation?  Everything is disclosed to the client, including the exact fee that the CPA gets.

May 1, 2007 5:18 pm
entrylevelFA:

Thank you for confirming my hunch.  I'm pretty sure an alliance with a CPA consists of "I send my business to you, you send your business to me."



An alliance with a CPA consists of, "I will refer clients to you, and if they open an managed account with you, then I will get 30% of the fees generated in that managed account.  I understand that I will not receive any fees on any other type of business that the client does with you."

May 2, 2007 3:41 am
ManagedMoney:

An alliance with a CPA consists of, "I will refer
clients to you, and if they open an managed account with you, then I
will get 30% of the fees generated in that managed account.  I
understand that I will not receive any fees on any other type of
business that the client does with you."





You haven't tried pulling this with serious CPA's have you?



CPA's greatly value their independance, integrity and reputation for
wise/unconflicted/professional advice. At a client meeting, they are not going to whip out a disclosure agreement detailing a 30% kickback for recomending you and your services.



That would cast a pall over the entire relationship and question the CPA's integrity. CPA's are very touchy about this.



If you want to have a good relationship with a CPA('s) send some
business their way and keep in touch. Pretty soon good things will
happen. Don't look at every relationship in terms of the gain it could
bring you.


May 2, 2007 7:29 am

Allreit, they do this often.   Many "serious" CPA's are also serious business people.  The fee sharing can mean more dollars than the accounting work in many instances. 


Additionally, it has become acceptable for CPA's to do the selling themselves.  Full disclosure is the key.

May 2, 2007 8:18 am

This can be beneficial to both, but most large accounting firms now have inhouse licensed advisors, so they are reluctant to send the business elsewhere.  I think one might be better off with an independant cpa, just my two cents,  mooose

May 2, 2007 9:49 am
anonymous:

Allreit, they do this often.   Many
"serious" CPA's are also serious business people.  The fee sharing
can mean more dollars than the accounting work in many instances. 


Additionally, it has become acceptable for CPA's to do the selling themselves.  Full disclosure is the key.





I'm not saying it doesn't happen, but I've never seen it and based on
my conversations with CPA's its not something they would do. Maybe I'm old fashioned and hang around old line CPA's who wouldn't do this because of the ethical and optical issues.



There is a bit of a missmatch between the RR model (best interests of
the B/D) and CPA/Lawyer/RIA model (best interests of the client). Giving referrals based on kickbacks could be seen as compromising that.



I think most people wouldn't be impressed if their doctor referred them to people who gave him a 30% kickback, as this could be compromising their duty to give the best possible care.



IMHO the best and only way to develop this sort of relationship is to
be seen as a trusted advisor that the CPA is safe in refering clients
too. Someone who comes by with cannoli's and kickbacks doesn't seem so trustworthy as to risk client relationships with.



My $0.02

May 2, 2007 10:16 am

You would be correct if the CPA gave business to the advisor because the advisor gave a kickback.  This would not be ethical.   Therefore, showing up with cannoli's and a fee arrangement agreement won't work.  On the other hand, if the CPA knows  the advisor and the quality of the advisor's work, they may be very agreeable to an arrangement.


I have a client who is a CPA.  He has a fee splitting agreement with another advisor.   This CPA does it in a very appropriate manner.  He says something along the lines of:


"I have 3 excellent advisors whom you should interview.  Work with the one with whom you feel the most comfortable or one of your choosing.  Joe Blow, Anonymous Anonymous, and Hank Aaron.   I must disclose that Joe Blow splits 50% of his fees with me."

May 2, 2007 4:13 pm
anonymous:

You would be correct if the CPA gave business to the advisor because the advisor gave a kickback.  This would not be ethical.   Therefore, showing up with cannoli's and a fee arrangement agreement won't work.  On the other hand, if the CPA knows  the advisor and the quality of the advisor's work, they may be very agreeable to an arrangement.


I have a client who is a CPA.  He has a fee splitting agreement with another advisor.   This CPA does it in a very appropriate manner.  He says something along the lines of:


"I have 3 excellent advisors whom you should interview.  Work with the one with whom you feel the most comfortable or one of your choosing.  Joe Blow, Anonymous Anonymous, and Hank Aaron.   I must disclose that Joe Blow splits 50% of his fees with me."




Ya think?  I bet he says "Here is Joe Blow's card.  I get 50% of his fees.  He does a great job."

May 2, 2007 4:58 pm

We have a "soft" relationship with a CPA. By soft I mean we pass referalls back and forth. We have talked about him taking the 65 so he can share in the fees and make this a formal relationship.

May 2, 2007 5:28 pm

Moose is right at least in the town I am in. Most of the large firms are already in this buisness.


I came out of a CPA firm where I did the planning for high net worth clients. I had reps call several times a month asking for referals. It became a joke you would see some wirehouse hire a new rep and before long he/she would call.


I can also tell you that a CPA firm will unlikely send any buisness to a wire house or a captive agent af any firm!


CPA,Attorney's will not put there reputation on the line for a rookie. Would you?

May 2, 2007 5:49 pm
Greenbacks:

CPA,Attorney's will not put there reputation on the line for a rookie. Would you?





But what if you got a 30% kickback and some nice cannoli's?

May 2, 2007 6:41 pm

We have an alliance with several CPA and attorney firms, took 4 years to get the legalities past the Business Prevention Unit but has worked out well for those involved.  There are fairly strict guidelines that have to be followed but if it's a good fit it works out well.  You can't overcome the ethics issue however.  If that is their objection you are pretty much SOL.

May 2, 2007 7:15 pm
ExPropTrader:

We have an alliance with several CPA and attorney firms, took 4 years to get the legalities past the Business Prevention Unit but has worked out well for those involved.  There are fairly strict guidelines that have to be followed but if it's a good fit it works out well.  You can't overcome the ethics issue however.  If that is their objection you are pretty much SOL.


Congrats.  How is this working out for you?  How much business do they send you?  Is it huge or a small part?  What problems have you had?

May 2, 2007 7:22 pm

Ya think?  I bet he says "Here is Joe Blow's card.  I get 50% of his fees.  He does a great job."


Nope.  I get good referrals from him.  I refer lots of business to CPA's and attorneys.  I do the same thing.  I refer to 2-3 at the same time.  This is much better because it gives the client a choice.  The attorneys who send me business do the same thing.  They feel like they might have some liability if they just refer to one person and something goes wrong.