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Why Don’t CPAs and Attorneys Refer More Often?

Why Don’t CPAs and Attorneys Refer More Often? by Dan Allison

Prior to becoming the president of Brokers Clearing House, I spent 10 years as the owner of a consulting firm that helped thousands of financial advisors and wealth managers to better understand the referral behavior of their clients. For example, we explained why some clients take the risk of recommending advisors and why other clients are unwilling to take that step.

Referring is simply a behavior. It is something that people either do or they don’t do. Some freely recommend things to people in need, while others avoid putting themselves out there by making a recommendation.

During our conversations about how to get more referrals from existing clients, many advisors have asked us a different question: How can I have more effective referral relationships with accountants and attorneys?

For decades, financial professionals have discussed the benefits of forming collaborative relationships with other financial professionals. It just makes sense. Comprehensive wealth management requires a concerted effort among investment professionals, legal professionals, accounting advisors, and many others. With this in mind, why is it so difficult to find true collaboration and more importantly, reciprocity, when it comes to referring clients? For the purpose of this article, I will focus on what is required for an accountant or an attorney to successfully refer their clients to a financial advisor.

In the past decade we have interviewed many accountants and attorneys to better understand why they shy away from recommending financial advisors even though they serve clients every single day who desperately need this kind of professional guidance. The conversations are fascinating, as are the excuses that we often hear. In reflecting on everything I have learned from talking with these professionals, I have boiled it down to five things. If you work with an attorney or CPA and your relationship has all five of these things in place, you will have a very successful relationship. Take a moment and think of one CPA or attorney that you currently work with and ask yourself the following questions.

1.) Does the attorney or CPA believe that the value that their client would receive from you would exceed the risk that they perceive in referring them to you?

I cannot overstate the importance of this question. Notice that there are two critical words in that question: value and risk. Each attorney or accountant places different values on those things. Before they will send a client to your office, they must feel confident that the value experienced by their client will far exceed their perceived risk in making the referral. If you line up 10 accountants, they will all define risk differently and have different experiences with it. Therefore, the only person on earth who can tell you whether a given attorney or accountant will see enough value in what you do that they will confidently take the risk of referring clients is the person you are thinking about. Only they can tell you how they perceive the risk involved and how they perceive the value that you can deliver. You will have to pull the answer to that question out of their head. If the risk they perceive is too great, they will never be an effective referral source for you.

Action Step – Block time to sit with the accountant or attorney you are thinking of and get honest feedback about the value that they are looking for in the relationship with you and what they perceive to be the real risks in referring. Only when you can define value to them and reduce risk will you have an effective referral relationship with them.

2.) Do they fully understand all of the services that you are capable of providing to their clients?

When we interview an accountant or an attorney, I always ask them to write a list of all the services that the advisors they work with can provide to their clients. Their list is typically alarmingly short. When you provide comprehensive wealth management services it is not always easy for people to understand the depth of your value proposition and the full extent of your capabilities. I believe that advisors need to become much more effective at continually cross-educating the people that they have relationships with. Think about it: if I walked into your office today, there are likely a plethora of valuable services that my family could get, but they are all invisible. We can’t see your products and services. As a result, if you don’t frequently re-educate the professionals you work with about everything that you are a resource for, their paradigm of you will become limited and they will stereotype you based on the service their last referral received from you.

Action Step – Block time to re-educate the professionals that you work with about everything that you are currently helping people with today. Chances are the attorney or accountant you work with is unable to describe more than 35% of the services you provide, which means they are unable to recommend 65% of your services. Re-educate them so that they understand the full scope of your capabilities.

3.) Do they really understand who you work well with and which clients of theirs would benefit most from your specific value proposition?

When I interview accountants and attorneys, I ask them the following question:Imagine that you and I were to walk into a room full of people and get to know everything about everyone in the room. At the end of getting to know them, we could extract anyone out of that room and hand them to your financial advisor as an ideal client—someone who can really benefit from the services of this advisor. Now, would you describe for me who I am looking for in that room full of people?

Most of the time the accountant or attorney will look at me and say that they don’t really know the answer to that question. To be an effective referral source, CPAs and attorneys have to clearly understand the profile of the people that you serve most effectively so that they can identify clients they work with who have a clear need for your services. If they don’t fully understand your ideal client profile, they won’t recognize potential clients who may be sitting right in front of them.

Action Step – Create a well-defined description of the kinds of people who need your help most. Ensure that this description will allow the professionals that you work with to think about clients they serve today who match that description. Next, sit down with the accountant or attorney you work with and re-educate them on this profile.

4.) Do they know how to effectively make introductions?

Everyone reading this article has been informed at some point that someone “gave their name out the other day” to a person who might need help. The problem is that those people rarely end up reaching out to you and as a result don’t end up getting the help that the referring party was trying to obtain for them. In order to have effective referral relationships with CPAs and attorneys, you must make sure an “introduction action plan” is in place so that when they have a client who needs your guidance, they will know what to do to ensure that the person gets in front of you. Too often accountants and attorneys make “soft” referrals and simply tell someone “call this guy” or even worse, hand out multiple business cards to reduce the risk to themselves.

If an accountant or attorney genuinely values the services and support that you give their clients, they need to become more intentional about ensuring that their clients get introduced so that you have an increased likelihood of actually helping them. Again, each accountant and attorney will have a specific confidence level, perceived risk in referring, and ability to make introductions. Without a customized introduction action plan in place, it is unlikely that an effective referral will happen.

Action Step – Have an honest conversation with the CPA or attorney that you work with to ask them how you can work with them in a way that is comfortable to them to ensure that introductions occur when they have a client in need. Develop a plan of action that focuses on making an introduction.

5.) Is the accountant or attorney comfortable having conversations with you about referrals?

You may be surprised to hear that many accountants and attorneys simply are not comfortable referring and they never will be. Some have been burned in the past when a referral caused problems for them. Some are simply not confident enough to make a recommendation. Still others see guiding their clients to a financial advisor as something that is outside the realm of their responsibility. Regardless of these facts, some accountants and attorneys are great referral sources. The key is to truly understand how the professional you work with feels about referrals in general. Having a format for getting truly open and honest feedback from these professionals will help you understand their perspectives and let you know if you can truly have a reciprocal referral relationship or if you are simply kidding yourself.

Action Step – Sit down with your CPA or attorney and get their honest feedback about the idea of having a referral relationship with you. Learn their opinions about referring, find out how they see their role with their clients, and assess how comfortable they are with the perceived risk involved in actually introducing clients to you. It is critical that this conversation be open and honest, as everyone has a different comfort level with this topic.

In closing, ask yourself these questions about the professionals in your life:

1.) Does the attorney or CPA believe that the value their client would receive from you would exceed the risk that they perceive in referring them to you?

2.) Do they fully understand all of the services that you are capable of providing to their clients?

3.) Do they really understand who you work well with and which clients of theirs would benefit most from your specific value proposition?

4.) Do they know how to effectively make introductions?

5.) Is the accountant or attorney comfortable having conversations with you about referrals?

Referral relationships with other professionals can be incredibly rewarding for everyone involved, especially the clients that you mutually serve. It is important to remember that no two relationships are created equal and having an open and honest dialogue with those you intend to work with is often the easiest way to develop effective relationships. Lack of communication is normally the reason for dysfunctional relationships, while good communication can be the reason for successful ones.

For more on this topic, join us for a 45-minute webinar on Monday, May 18th at 10:00am CDT. Click to register: