When you strike up a professional relationship, you may be pleased to make a new friend. But you'll be really happy if that friend brings you business. Which brings us to this month's topic: Why financial advisors should get to know estate attorneys.
A new book by fellow Registered Rep. columnist Russ Alan Prince, entitled The Private Client Lawyer — Now and in the Future, shows why the relationship between rep and attorney can be so rewarding. Russ surveyed 619 trusts and estates lawyers. And the point of most interest in it to our readers is the statistic on referral to investment professionals.
The number of referrals per 10 clients was 0.9. That compares with 0.8 for accountants and 2.1 for life insurance agents. The average investable assets of each client referred to an investment professional, however, was $2.7 million. The aggregate amount of investable assets of clients referred by the 619 lawyers surveyed in terms of their referrals to investment professionals totaled $2.4 billion. What this tells us is that there is an enormous pool of wealthy investors who can be tapped through referrals from trusts and estates lawyers.
Equally significant, since many of our readers are licensed to sell insurance, was what Russ found about the trusts and estates lawyers' referral pattern to life insurance professionals. Most impressive is this: Each referred party had average investable assets of $8.1 million. In total, the 619 lawyers referred $13.9 billion in estate value to life insurance professionals.
Another number tells us that the referrals by the trusts and estates lawyers are of the highest quality; 73.2 percent of the referrals were, in fact, engaged by the party to whom the referral was made. In effect, when a trusts and estates lawyer makes a referral it is extremely likely that that investment professional has a new client. It is also interesting that 24.7 percent of the trusts and estates lawyers in the study are actively looking to make referrals to financial advisors.
What does a trusts and estates lawyer look for in a referral? How can you make sure you measure up? Uniformly, the No. 1 criterion cited in the study was absolute integrity. Running a close second was the requirement that the party being sought was most proficient technically in his or her field of specialty. Other qualities essential for the referral were that the trusts and estates lawyer was kept both informed and involved by the party to whom the referral was made.
What turns a lawyer off? No surprise, the death knell for any referral relationship is when a client is “cut out” from the lawyer. The attorneys also said they won't deal with a referral who does not understand the lawyer's ongoing role, and who keeps “proprietary strategies” from the lawyer's attention.
In short, a collaborative relationship is essential. The lawyers cherish the sharing of new ideas and approaches, and even expect that result. It should not be shocking that trusts and estates lawyers expect reciprocal referrals — what is good for the goose, is good for the gander.
Trusts and estates lawyers can be located most easily in directories such as American College of Trusts and Estates Counsel (ACTEC) and Best Lawyers in America. You can also contact national, state and local bar associations, which list members according to their specialties.
A good way to get your ticket punched and get on the train with lawyers in your community is to offer to speak at a luncheon or other meetings. Or, you can send regular mailings or e-mails to these groups. What should be obvious from this research is that the trusts and estates bar is a fertile source for expanding your client base. I know — some of your best friends are lawyers. Well, make it trusts and estates lawyers and that will make all the difference.
Roy M. Adams is a partner in Sonnenschein Nath & Rosenthal in New York and chairman of the editorial advisory board of Trusts & Estates.