Could referrals from centers of influence, a tried-and-true method of client prospecting, be working against advisors?
Anthony Lombardi, of the Lombardi Group, a Carlsbad, Calif., financial consulting firm, thinks so, and that is why he’s trying to change the relationships between advisors and certified public accountants.
“The referral system isn’t broken, but there are better ways to use the professional relationships to serve the end client,” Lombardi says. “Why not create a model that brings people together to serve clients instead of pushing clients out to another professional for advice?”
Lombardi started to seek partnerships from CPAs instead of referrals. Now, instead of working with 860 individual clients, the Lombardi Group works with a handful of CPA firms in Southern California, using the accountants as lead financial advisors. He’s named his model, which he offers to advisors and accountants through training sessions and published materials, “The Perfect Client.”
“We’ve made the CPA our client now,” Lombardi says. “Our goal is to help them run a better, more efficient, more profitable business. Since advice is going to CPAs anyway for the final decision, why not target the relationship skills there?”
When working with individual clients as a registered rep, Lombardi found that CPAs were used as a sounding board for his advice.
“I had one of those ‘elephant’ clients, an affluent individual with a big account,” Lombardi says. “I brought in a plan that I thought was perfect for him, laid it all out for him, and he told me, ‘I need to have my guy look at it,’ and he meant his CPA. He was ‘the guy’ that my client ran everything by. So the advisor can have all the education, credentials and experience to give advice, spend time and energy on client relationships, but at some point the CPA still has to give the blessing for any investment plan or advice.”
Lombardi looks askance at the industry assumption that advisors and CPAs work well as sources of referrals for each other.
“Referring clients to advisors doesn’t really strengthen the CPA’s position with their best clients,” Lombardi says. “They give a great reference, pray that the advisor does a good job and then the advisor gets all of the credit for the advice. The end client is telling the story of the solution provider to their friends at the 19th hole, not the CPA. So CPAs are taking on a lot of risk for no reward.”
When advisors are concerned, CPAs aren’t sending over their best clients, says Lombardi, if they’re referring clients at all.