Rick Claydon, a financial advisor and partner with Stonegate Private Counsel LP in Toronto, says understanding the nature and needs of chartered accountants has turned those conservative professionals into his best source of new clients.

At the Top Advisor Summit held in Toronto last month, Claydon outlined his strategy for turning CAs into sources of referrals.

Before joining the financial advisory business more than 20 years ago, Claydon was a CA himself, working on the books of small and medium-sized businesses. He knows first-hand that CAs have a deep familiarity with their clients’ business affairs. He also understands the concerns CAs have in expanding and developing their own businesses. By helping CAs in a variety of ways, Claydon has been able to develop the solid relationships that bring business his way.

“The big thing is to understand a CA’s concerns,” says Claydon, who manages a book of 65 high net-worth families. “I can relate to CAs, as our brains are wired similarly; I understand their caution in recommending clients to another professional. You can’t just show up at an accountant’s door and expect to get clients. It’s about adding value and building a mutually beneficial relationship.”

Claydon has identified areas in which he can add value for CAs. The financial planning business is years ahead of the accounting world in terms of strategies for marketing, business development and building client relationships, he says. By sharing some of his techniques with accountants, he becomes a “quasi-coach,” helping accountants expand and increase profitability.

In conversations with CAs, for example, about whether they have a specialty or an ideal client profile, he finds that most CAs have not focused their businesses strategically.

“I show them the ideal client profile that I have constructed, and it becomes a useful tool for them,” he says. “For CAs, it’s a value-added service we can offer.”

Claydon chooses his CA centres of influence as carefully as he chooses his clients. His ideal client is a business owner with investment assets of $3 million to $5 million. He looks for CAs who do business with this type of client and who can refer his ideal client to him.

“You need to target the right kind of accountants,” he says. “Then you need a process that will persuade those CAs to refer clients to you.”

Claydon’s ideal CA is employed with a regional or local firm with three to seven partners. He finds that one-person operations are typically not as progressive as the slightly larger firms and don’t attract the type of client he is seeking. Advisors looking to cultivate senior corporate executives, on the other hand, might do better to target CAs at the large national firms.

“If you’re an advisor who works with a lot of dentists,” he says, “look for CAs who work with dentists and are mining the same niche.”

Claydon has built expertise dealing with people in the music business, and — because there are only a handful of accountants dealing with a large base of musicians, producers and writers — it’s easy to zero in on his target market.

Another consideration: keep in mind that the services and products you offer must suit the temperament of both the prospective clients and the CAs.

“CAs are conservative. If your specialty is high-risk hedge funds, CAs are not a suitable source of clients,” Claydon says. “CAs like products that offer tax savings and limited risk. They tend to worry about worst-case scenarios on behalf of their clients. You must address those concerns.”

Once Claydon has identified a potential CA reference, he has an initial meeting with the CA to probe whether the relationship will be a good fit and a “win/win.” He likes entrepreneurial, open-minded CAs who are willing to delegate investment-
management responsibilities.

“If the CA does not have a client or two that fits my criteria,” he says, “I don’t spend time cultivating the relationship.”

Claydon makes a point of discussing Stonegate’s conservative attitude toward investment with CAs, and deliberately covers risk management. Stonegate’s clients are invested in balanced global portfolios consisting of privately managed pools and individual securities. Asset allocation is based on individual risk tolerance, but, typically, client portfolios are at least 40% in fixed-income — any client losses this year will be significantly less than stock market averages.

@page_break@“I take CAs straight to the section of our offering memorandum that lays out the risks and talks about everything that could go wrong,” he says, “It’s a discussion of Armageddon. I then take them through the safeguards we have in place. If you talk about risks and how you address them — and not just the high points — it gives you a lot of credibility.”

Claydon gives his top three referring CAs special attention, as they typically are the source of 50% of new business. These CAs receive from Claydon a monthly phone call, emails with useful information and occasional educational material. He also holds quarterly lunch-and-learn sessions, in which he visits a CA’s offices, provides lunch and brings along an educational speaker. For example, he recently did a session on the “tricks and traps” of life insurance. Each year, he holds two “entertainment meetings” with his top CAs, which involve either breakfast or a round of golf.

“There’s an element of leverage,” he says. “If I can convince one CA that I have the right process for the client, and I provide some additional value to the CA, I can usually get up to 10 clients from a CA.”

When a good client comes his way through other means, such as a referral from an existing client, Claydon will make a point of meeting with the new client’s CA. This often leads to additional referrals or a new CA relationship.

“As I expand my clients, I expand my CA network, too,” Claydon says. “Clients love it when their various professional advisors are talking to one another.”

Claydon keeps the CAs with whom he works in the loop but is careful not to encroach upon their turf. Every quarter, he sends each CA a copy of their client’s investment statement, along with a personal note. And every other quarter, he goes to each CA’s office to walk the CA through the statement. The personal touch and extra effort make a good impression, he finds. When he does a favour for a CA, such as finding a misplaced client statement or income slip, he makes sure he emails the client. This courtesy underlines his value by showing the client an extra service was provided.

“In the market downturn, our client portfolios have been down an average of 15%,” he says. “This was not an accident; it was based on our conservative process and the way we manage money.

“We let CAs know that if they have other clients who lost a lot of money, we’re here to offer a second opinion on their investment strategies,” he adds. “Our conservative style is a comfort to CAs. They don’t want to refer a client to someone who will embarrass them.”

The goal is to work as a team, and to involve the CA in the financial plan when accounting expertise is required. The CA receives a copy of the client’s entire financial plan at the outset of the relationship, and is typically involved in the execution of tax- and estate-planning strategies.

“We act as the ‘general practitioner,’ and bring in the specialists when necessary,” Claydon says. “We do not go down a path that cuts out the CAs. They are involved in the execution and fine-tuning of many aspects of the plan. It’s not about competing with the CA; it’s about collaboration.”

Former accountant says CA’s are accessible

Part 4 of an 8-part series shot on location at the 2009 Top Advisor Summit. Rick Claydon, an advisor and a partner at Stonegate Private Counsel LP, dicusses the referral relationships he forged with accountant, and how it helps his business.