Philosophers will try to tell you that everything in the world is connected. It is an argument that would not be lost in the business world, where everyone knows someone in the many occupations of finance and investment. Such connections make the business world go ‘round.
People working as financial advisors connect with attorneys who have clients who need investment advice. Likewise, accountants who handle the tax needs of their clients look for someone who can advise them in investment issues beyond their scope of expertise.
The creation of those relationships was clearly examined in a Spectrem report entitled The Influence of Gatekeepers on Referrals and Wealth Transfer. The report includes interviews with attorneys and accountants who serve as the matchmaker between an investor and an advisor.
Accountants are a particular breed of Gatekeeper. Unlike attorneys, accountants have a tight focus on the bottom line for their clients, as they deal with tax issues and other immediate accounting topics. When their client speaks to them about long-term financial commitments and matters, the accountants turn to financial advisors, who have the knowledge and expertise to move the client’s portfolio in a positive direction.
While accountants and financial advisors do not always travel in the same social circles, they do have connections, and accountants employ those connections when they are in search of a new advisor they can assuredly pass their clients on to.
“Gatekeepers refer clients to financial advisors to be of service to their clients,’’ said Spectrem president George H. Walper, Jr. “Accountants have worked hard, and some for many years, to earn their client’s trust, and will not want to put that relationship at risk by recommending a bad advisor. They will go to great lengths to determine the quality of the person they are handing their clients off to.”
While some accountant-advisor relationships occur via referrals from mutual friends or business associates, sometimes the relationship has to be manufactured.
“I am active in some professional groups in Chicago, and I regularly attend some professional networking groups,’’ said one accountant when asked how she would find an advisor appropriate for her clients. “I do frequently meet people who work in the financial planning and advising arena.”
“I am more word of mouth,’’ said another accountant. “I ask around. I have a lot of contacts through various groups, then I do my homework to make sure I am happy with the recommendation.’’
The Spectrem research showed that accountants are a bit more open to cold-calling than other types of advisors (such as lawyers). While cold-calling is a difficult way for advisors to drum up business, it is sometimes a necessary evil of the industry. Accountants don’t always find those calls to be unpleasant.
“I feel the information is helpful,’’ said an accountant. “We are always encouraged to look out for our clients and we prepare those resources for them. So I am always seeking to make more contacts.”
Cold-calling is impersonal and requires the luck of getting someone to answer who is in need of an advisor. A better connecting tool, according to the accountants, is the firm-sponsored seminar.
“There is one firm I know that does that,’’ said an accountant. “They do a breakfast seminar every month. I attend, and I’m starting to get a relationship with the financial advisors from there. If I was recommending someone, I could definitely use that firm and then start to build a relationship there. That’s something I think that is good advertising.”
Obviously, Gatekeepers look at an advisor’s background and experience before making a recommendation. Many accountants said they look for an advisor with a client base similar to their own in terms of wealth.
“Be flexible in working with clients of different wealth ranges,’’ advised one accountant.
“I have a lot of different clients, and they range from people who are just small entrepreneurs who have questions about their assets to clients who have large acquisitions and have specific questions,’’ an accountant said. “I refer them to investment planning businesses that will be able to suit their needs a little bit more.”
Top Takeaways for Advisors
-Yes, accountants are all about numbers, but they are in business, and their business relationships matter to them. When approaching accountants for possible referrals, take their business and their relationship to clients seriously. In many, many cases, accountants work with all members of a family, and a relationship with that accountant would increase your client base significantly.
-Accountants are likely to have more than one advisor they recommend, and some like to have a diverse stable of advisors to turn to, with differences based on portfolio size, risk assessment or other parameters.
-In conversations with accountants, paint yourself as different from others in some tangible way to make the Gatekeeper think about adding you to the diversity of his referral base.
-Consider hosting seminars on your own areas of expertise or on hot topics occurring within the financial services industry. Often accountants are looking for a quick way to educate themselves about an issue and may be willing to attend. It will also allow them to develop a feeling of credibility and expertise about your services.
*According to Spectrem research, there are currently 29.8 million households with $100,000 - $1 million in net worth (not including primary residence, NIPR). There are 9.1 Millionaire households ($1 million - $5 million net worth, NIPR), 1.21 million Ultra High Net Worth households ($5 million - $25 million net worth, NIPR) and 145,000 households with more than $25 million in net worth, NIPR.
©2016 Spectrem Group