Courting Centers of Influence

Getting referrals from COIs requires some strategy. Here's what worked for a few advisors.

You can take only so many CPAs and attorneys to lunch before it gets a little stale.

That’s what Mark Smith decided about 10 years ago. Of course, like many advisors, he placed a lot of emphasis on finding and cultivating centers of influence—industry jargon for guys and ladies who either provide services to or are well-connected with the kinds of people financial advisors want as clients. Financial advisors court these individuals to win referrals. But Smith, who runs MJ Smith & Associates, a Greenwood Village, Colo., practice with about $570 million in assets and is affiliated with Raymond James Financial Services, eventually realized that sitting in a restaurant and chatting over breakfast wasn’t an effective way to showcase his strengths.

So, Smith got creative. Instead of inviting professionals out to dine, he found ways to lure them to his office. For example, he’d ask attorneys over to his digs to meet with his 12-person team, ostensibly so that they could spend a half-hour finding out more about the attorney’s services and areas of specialty. In the process, the lawyers would ideally get a feel for the practice—and come away with a favorable impression. “When they see how you’re different from other advisors, how your team works, your beautiful work environment, your high-quality support staff, you’re in a much better position to display your professionalism than if you’re sitting behind a breakfast table,” he says. He gets about two or so accounts each year worth at least $1 million from such interactions.

You know what they say: You can never be too rich, too thin, or have access to too many reputable centers of influence. Such attorneys, accountants and other professionals provide a coveted seal of approval and entrée to prospects. But, finding and cultivating COIs is another matter entirely. Too often, advisors resort to the usual tactics, taking a potential contact out to a meal and hoping they can turn the meeting into the beginning of a beautiful friendship.

The solution, as Smith discovered, is to try other approaches for meeting new COIs and strengthening your existing relationships—or, at least, making yourself more visible.  Here’s a look at strategies five practices use to do just that.

Get Them to Come to You

For Smith, the key is making sure he can meet COIs on his home turf. That’s partly because it offers him the chance to shine. But, also, “When I go to their office, they’re in the power seat,” he says. “When we bring them over here, we’re in control.”

To that end, he’s developed several tactics. For one thing, there’s the strategy of inviting them over to make a presentation about their practice. The point of it, of course, isn’t their discussion of how their firm works. It’s what comes next. “If they’ve got any social savvy at all, after a half-hour, they’re going to ask you to talk about your own firm,” he says. With that in mind, Smith makes sure he’s prepared for such an eventuality with a succinct, persuasive description of his own services and how he stands out from competitors.

Smith also invites COIs he already knows to his office, as a way of strengthening the relationship. During regular client reviews, for example, while evaluating estate planning or other documents, Smith will make a point of asking whether clients would like to be referred to an attorney who can help with updating anything that needs attention. If they do, he’ll make an appointment for the lawyer and client to meet with him to go over the account—of course, at his own office. Then, during the meeting, Smith can make sure the individual gets a good feel for his team’s level of expertise.

This spring, Smith also is launching a new tactic. He’s going to invite his top 50 clients for a session using mind-mapping software, programs used to brainstorm ideas and present them visually, to do a deeper analysis of their situations. After that, he plans to invite each person’s attorney, CPA and insurance agent to come over, at no cost to the client, for a breakfast or lunch meeting, during which he hopes to share his findings and discuss how these relate to the professionals’ areas of expertise.  

There’s also the matter of his office. In a class A building, with walnut finish on the walls, well-appointed furniture, and mountain views, it creates the immediate impression of a successful practice that deals with affluent clients. “I wouldn’t do this if I were working out of a 12-by-10-foot space in a strip mall,” he says.

Become the Client Communications Expert

Last year, Richard Reyes was looking for ways to boost his business after giving up his Series 7 to become an RIA in 2008. One avenue, he figured, was to create a stronger referral network with CPAs. His solution: help them with marketing. “Accountants concentrate on the numbers, but when it comes to communicating with clients, they’re not that good at it,” says Reyes, whose Wealth and Business Planning Group in Maitland, Fla., manages about $15 million in assets.

So, he came up with a plan: He would offer to write a regularly published newsletter, as well as put on client events, for interested CPAs. Reyes produced similar projects for his own practice, so he figured he easily could do the same thing for other people. In return, he would ask to be top of the list when the CPAs’ clients asked for a referral to a financial advisor.

Each newsletter, he figured, would include two stories. One, an article with the CPA’s byline, and the other, a piece on a topic like Roth IRAs or 401(k)s, which would include Reyes’ byline and picture. He would write his own articles, but would use an outside service to produce the ones penned in the accountant’s name.

With that plan in mind, Reyes went about the task of approaching CPAs who catered to the right demographic—individuals age 50 to 70. To find these professionals, he tried several avenues: contacting clients’ accountants, attending networking events, and visiting the offices of CPAs in the neighborhood. “People were receptive to my coming in with a box of donuts and a request for an introduction,” he says. Reyes met with about 12 accountants over a period of about eight months; as tax season approached and CPAs hit crunch time, he put that effort on hold.

He’s been doing the marketing for one CPA since early this year, mailing a newsletter once a month. In addition, the accountant allows Reyes to meet with his clients in a suite in his office. It’s added up to a lot of new business. In the past three months, he’s acquired three new clients worth $5 million in assets in aggregate. More recently, he started working with another CPA, for whom he’s going to publish a newsletter once a quarter.  

Provide a Casual Forum

It’s not just attorneys and CPAs who qualify as good centers of influence. This term can apply to anyone from a personal trainer to a nutritionist, just as long as the individual serves as a trusted advisor to his or her clients and is capable of recommending you to them. That’s what Ann Fenwick has discovered.

About four years ago, several of Fenwick’s clients came to her with a request: Organize a women-only dinner during which she, along with colleagues, could discuss their paths to success. The group wanted her to invite not just clients, but their daughters, too. “They told me their children were at loose ends and needed to learn how other women struggled to become successful,” says Fenwick, who heads Fenwick Financial Services, a Baltimore practice with about $100 million in revenues.

Fenwick agreed and, around Mother’s Day, held a dinner at a restaurant by the harbor, inviting an estate planning attorney she knew, three CPAs from the firm that does her taxes, and her business coach, to speak. Each briefly recounted her own story, then discussed some larger financial issues.

The two-hour event was not only a hit, but a revelation. Fenwick realized she could use the dinner to serve several purposes at once—provide a service to clients and their friends and simultaneously turn it into a way to get to know other potential referral sources, by inviting them to speak. To that end, she decided to make it an annual event and broaden it out to encompass other themes. For example, last year, she focused the topic on health and invited a nutritionist and fitness trainer, both recommended by other colleagues, to speak. At another dinner, where the theme was mortgages, she asked a former real estate attorney who had started a title company to tell her story and talk about refinancing.

According to Fenwick, she’s not only been able to form relationships with new COIs, but they’ve referred several clients to her. What’s more, “They get business from these events, too,” she says. “They get the chance to show they’re not just sitting behind a desk. They’re real human beings.”

Create a Brain Trust

Once or twice a quarter, the team at Quest Capital Management identifies a client facing a difficult issue and then invites the client’s CPA, attorney and other advisors to a breakfast powwow. Clients don’t attend, although, of course, they have to give permission for the meeting to take place. It’s what Kalita Blessing, a principal of the firm, which is an RIA affiliated Raymond James Financial Services, calls a “brain trust—a chance to learn from each other.”

At the same time, the sessions, initiated about five years ago, do much more. “A lot of times, professionals don’t understand what financial planners do for clients,” says Blessing. “They may see one piece of the pie, but they don’t get the full picture.” These group huddles, according to Blessing, are a way of remedying that problem, providing a forum for showcasing the firm at its best.

To identify which clients to discuss, Chris Young, an advisor and shareholder, emails the firm’s four lead planners for suggestions. Before the meeting, he sends a summary of the planning completed up to that point to all the participants.

It’s paid off.  “We’ve gotten some nice referrals,” says Blessing, whose firm has about $760 million in assets. For example, one meeting held about a year ago during which participants considered out-of-the-box gifting strategies for one client has reaped about five client referrals.

The meetings didn’t start out as a way of cultivating COIs. Instead, it was a way of educating the firm’s 20 employees about different cases the practice was working on. Impressing COIs “has been a nice byproduct,” says Blessing.

Send Them Reference Materials They Can’t Refuse

For Vance Falbaum, the key to cultivating CPAs is to make sure his firm’s name is always staring them in the face.

For the past five years, Falbaum, who heads Falbaum Investment Group, a Tucson, Ariz. firm with about $355 million in assets , has produced a 12-page reference guide with key facts and figures, everything from the maximum AMT exemption amount to the annual contribution limit for Coverdell education accounts. The last page lists his own firm’s events for that year. And, perhaps most important, the cover, in big letters, says “Compliments of the Falbaum Investment Group.”  He e-mails it to about 200 CPAs, most of them in southern Arizona. For those who request it, he’ll mail a bound and laminated copy. Lately, however, he’s found that many CPAs drag it onto their desktop, to make it easier to retrieve.

 Falbaum doesn’t think the publication is directly responsible for his forming relationships with CPAs. Instead, he sees it as a subtle way of establishing his credibility. “It’s a service that helps keep our name out in front of decision makers,” he says.     

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