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 19^th 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.

“With the prevailing business model, the biggest risk CPAs have is client retention,” Lombardi says.” Their enormous clients have mostly come from other firms, and they’re afraid those clients are going to go to other firms. Advisors never see the upper echelon of a CPA’s clients because they’re afraid of losing that business. They refer their ‘B’ and ‘C’ clients. I was giving CPAs’ clients all the time and not getting anything in return.”

Instead, Lombardi suggests allowing a CPA to maintain the client relationships, and for the advisor to build trust with CPAs working in the same geographic area or industry sector.

“It’s a relationship model, not a referral model,” Lombardi says. “We still help the end users, the CPA’s clients, but we want to work with the professionals themselves. Our job becomes one of helping the CPA to get better at their job. In turn, the CPA wins because their best clients don’t go anywhere else for advice. It’s better for the high-end client, too. Instead of having two or more financial professionals that they have to call, they make one phone call, to their CPA.”

Under the “Perfect Client” scheme, advisors first vet CPAs to make sure their philosophies and cultures line up. If a partnership is possible, they then integrate their practice with a CPA’s over a 12-month period. The CPA partner becomes the primary advisor with the final say in any decisions.

“We teach them how to help CPAs communicate more effectively,” Lombardi says. “They learn how to help CPAs serve their best clients more, and how to develop a relationship so that CPAs find them and learn to trust them.”

Lombardi’s firm does not manage assets; in fact, Lombardi and his partners generally spend 15 hours or less each week in the office. The spare time goes to family, faith, community and recreation.

“Advisors are narrow-minded if they think all they can do to help people is risk or asset management,” he says. “There’s a million things they can do, and most of them are more efficient than managing assets. Their most valuable skills are as relationship and communication experts. There’s an enormous opportunity that’s wide open, but no one’s doing it.”

Lombardi has a few revenue streams, including marketing “The Perfect Client” and a training conference for CPAs, but most come from commissions sold to the high-net-worth end-user clients of his CPA partners.

“If an advisor has 500 to 700 clients with AUM, they’re probably making around $1,000 a client on average,” Lombardi says. “We’re averaging seven figures a client.”

Ideally, then, the relationship strengthens the business of the advisor and the CPA. Since the CPA never refers the clients out and takes the lead, he or she receives the advantage of any referrals from those clients.

At the same time, the advisor is freed from managing scores or hundreds of client relationships and can eliminate most of the overhead from his or her practice.

“The economics are stronger, the return is better, and you need only a handful of client relationships instead of hundreds,” Lombardi says. “The average CPA has 50 ‘A’ level clients just sitting there. As an advisor, you could access 50 underserved clients by helping the CPA be more effective.”