Many advisors have “referral relationships with professionals” on their wish lists. The results of a discussion I had recently with a team of chartered accountants might help you shape an effective strategy to make such referrals happen.

I met with three partners in a small accounting firm located north of Toronto. Over lunch, we talked about their experience in dealing with financial advisors and about providing referrals to advisors.

Some background on these accountants: ranging in age from their late 30s to their mid-50s, they focus on mid-sized businesses and farmers, a good number of whom over time will sell their properties to real estate developers and have the “sudden wealth” issue to deal with as a result.

These accountants each get regular calls from financial advisors. Sometimes, advisors are referred by a client or someone they know. On other occasions, the calls are cold. Typically, the focus of the call is the advisor’s desire to set up a meeting to discuss the process and the approach he or she has used successfully to manage investor portfolios.

Here are some useful suggestions from these accountants to help you establish referral relationships:



> Get Introduced

In these CAs’ experience, the chances of you getting in the door as a result of calling cold are virtually zero. The only way these CAs will meet with you is if the CA already knows you, if you work with a mutual client or if you are referred by someone the CA knows and trusts. The one exception might be if one of the CAs has heard you speak at an event put on by the local accounting society and you have said something that really captured the CA’s imagination.

I asked how these CAs would react if they got a call from an advisor saying: “We have a client in common — Bob Smith. I’ve heard great things about you from him and am calling to see if we can schedule time for a coffee to learn more about you and the kinds of clients you work with.”

All three CAs said that chances are they’d make time to meet — the key words being “we have a client in common.”



> Understand Perceptions Going In

All three CAs emphasized that to establish a referral relationship, you need to be perceived as being as professional and client-focused as the CAs are.

This can be a challenge. Many accountants view most financial advisors as glorified salespeople rather than as true professionals. The bar to becoming an advisor is seen as being dramatically lower than what it takes to get a CA designation or a law degree, these accountants said. And knowing that advisors are compensated directly or indirectly by their sales puts them, as a whole, only slightly above someone who sells high-end cars or real estate.

In fact, the suggestion was made that many accountants see advisors in the same way as some advisors view real estate agents. Some real estate agents are excellent, but many are primarily motivated by the immediate commission on a sale. For that reason, just as many advisors would be cautious if approached by a real estate agent about the possibility of establishing a referral relationship, so are CAs cautious when approached by financial advisors.



> Build Trust

All three CAs made the point that most accountants are innately conservative. If they refer a client to a financial advi-sor, the cost of the client getting bad advice and becoming unhappy dramatically outweighs the reward of the client getting good advice and experiencing a good outcome. As a result, the critical first step for you in seeking a referral relationship with a CA is to build trust. That’s why that initial introduction is so important.

Credentials help as well, especially a CA or similar designation. In fact, the financial advisor to whom all three accountants refer clients is a CA. Regarding designations, one of the three accountants was familiar with the chartered financial analyst designation and regarded an advisor holding a CFA as being a cut above average. The other two accountants didn’t see designations as useful in differentiating among advisors.

Another strategy to build trust is to employ the portfolios of common clients to demonstrate your conservative approach and build confidence. This assumes that your clients have signed off on sharing this information. The CAs said it would be helpful to arrange joint meetings with the clients that you have in common.@page_break@Something that can get a CA’s back up is if you are too flashy — the car you drive, the way you dress and your general demeanour can all position you as a “salesperson” rather than a professional.

The final point is to know your audience. Some CAs are so conservative and risk-averse that they’re unlikely to refer someone, no matter how hard you work to build trust. To avoid wasting your time, you need to identify these cases early on.



> Focus On Creating Value

To obtain referrals, the first question you need to ask is: how am I going to create value for a CA? Accountants clearly see the benefits to advisors when they provide referrals, but often, the benefit to the CAs is less clear.

Here’s where knowing your audience comes in. For some CAs, being confident in the quality of advice their clients will receive is sufficient. In other cases, value comes in different ways.

The advisor these three accountants refer their clients to was originally introduced by a common client. What impressed the CAs initially is that this advisor scheduled a time in January to come in with his client-service manager and to discuss how the advisor’s team could facilitate the preparation of that year’s tax returns — what information the client’s CA needed and how the CA would like to receive it. Then, this advisor persuaded the client in common that the three of them should meet to discuss tax-planning issues — something the CA had tried to do, but without success. In advance of that meeting, the advisor came in to see the CA to talk about some of the strategies they could explore.

Other advisors use different strategies to create value. For example, one advisor organizes an annual one-day, due-diligence trip to New York during which six key accountants meet with some of the money managers the advisor uses. The CAs pick up the cost of their own flights, but the advi-sor handles all arrangements and other incidental costs.

The three CAs I consulted also agreed that if they receive a quality referral from an advisor, they would be open to meeting to learn more about that advisor’s approach as it might apply to their clients. “We all have a conscience,” said one. “If I received a referral from an advisor, I would feel obligated to at least listen to what he had to say. And, provided that I felt good about him, coming out of that meeting, the chances would go up of my thinking hard about clients who aren’t happy where they are and might be a fit for him.”

One final note on what creates value. All three CAs agreed that receiving email updates from an advisor doesn’t represent value; that said, such an email program can be part of the process of building familiarity and trust that can subsequently lead to the opportunity to demonstrate value.



> Don’t Rush

The final ingredient in a successful referral strategy is patience. “There are two ingredients to being patient,” said one of the CAs I consulted. “The first is not rushing things, and allowing us to build our comfort level gradually. And the other is to maintain sustained contact over time, even if it doesn’t seem like you’re making much progress.”

This accountant said one new client is someone he’d been talking to casually at a local golf club they both belonged to for over five years.

As we wrapped up our discussion, I described a successful initiative in which a financial advisor, an accountant and a lawyer teamed up for three separate sandwich lunch sessions, with each professional hosting in turn and to which each professional invited clients. Whomever hosted moderated the session and delivered a short update, but the other two professionals had 15 minutes each to talk about something that the people in the room might find interesting.

The turnout at the three lunches ranged from 10 to 15 clients, and each of the three professionals got at least one lead. Beyond this, the feedback from clients was excellent, so the professionals have decided to repeat the lunch sessions next year. IE



Dan Richards is CEO of Clientinsights (www.clientinsights.ca) in Toronto. For other columns by this sales expert, visit www.investmentexecutive.com.