“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.