Among financial and legal professionals, it’s commonly recognized that cultivating centers of influence is one of the most, if not THE most effective business development strategy available. This is especially true when it comes to sourcing affluent clients. In fact, the wealthier your preferred clients, the more important centers of influence are in reaching them.

What we repeatedly find is that even though financial advisors generally strongly believe in the value of cultivating centers of influence, most of them are doing so in anything but an effectively systematic fashion. Instead, when focusing on centers of influence, they’re taking actions that—while sometimes periodically effective—are sorely suboptimal.

Common (But Pretty Ineffective) Approaches To Cultivating Centers Of Influence
There are many ways to go about cultivating centers of influence. The real issue is how effective is the approach you’re employing and can you be even a little bit more effective and efficient. Based on extensive empirical analysis, the following approaches are some of the more common examples of how many financial advisors are trying to gain access to affluent clients by working through centers of influence.

Intensely communicating your expertise and processes. Many financial advisors make great efforts to explain their abilities and the way they work with affluent clients, believing their approach will win over centers of influence.

Consider, for example, a money manager explaining to an accountant how his investment philosophy works and how it translates into specific allocations. While this information might be important, by itself—in today’s hyper-competitive environment—it’s rarely enough to motivate the accountant to introduce her high-net-worth clients. The considerable emphasis the money manager is placing on his approach probably isn’t what the accountant is very interested in.

Think about it. How many financial advisors can talk a really good game when it comes to the way they manage money? There’s a very good chance you, like us, know quite a few who can, and that severely mitigates the value of this approach. Moreover, there’s a high probability that high-caliber accountants and other viable centers of influence have a lot of experience hearing investment management pitches that, in one way or another, sound an awful lot alike.

Socializing with centers of influence. It’s certainly important to be top-of-mind, so when a center of influence has a client for your services, you get a call. The issue is how most financial advisors stay in front of centers of influence.

Social outings such as going to a sporting event or playing golf are often used as a way to stay top-of-mind. It provides you the opportunity to talk to the center of influence and build rapport. While there’s some merit in creating situations to interact with the center of influence, there has to be a whole lot more underpinning the relationship than sharing a common social interest.

Again, it’s useful to think how taking an attorney to a basketball game will differentiate you from another financial advisor who has courtside seats. There are many ways to facilitate interaction with centers of influence, but doing so by itself is usually not going to motivate them to send affluent clients your way.

Promoting new ideas, strategies or products. Many financial advisors seek to win over centers of influence by demonstrating their “brilliance.” Their objective is to educate accountants, for instance, on the latest creative investment products and methods.

A major issue is the degree to which the new ideas, strategies or products are not being presented by you and a slew of your competitors. It’s a matter of the extent to which they’re connected meaningfully to you as opposed to every other financial advisor.

This approach has some merit, and its effectiveness is predicated on their pitch being new and creative, but not overwhelmingly so. Many times, high levels of complexity will work against you, driving away centers of influence. Moreover, the centers of influence need to recognize a fit with one of their affluent clients and believe that you’re the best one to implement. There are a lot of “maybes” here which tend not to pan out.

Trading affluent clients. The essence of this approach is for financial advisors to give centers of influence their affluent clients in order to receive affluent clients. Usually the objective is to “give one” to “get one.”

How many affluent clients do you have that need new accountants? How many accountants are you possibly considering as sources of affluent clients? What’s the likelihood of being able to trade affluent clients with these accountants? Most likely, you’re not going to be able to.

While it makes sense to provide high-caliber centers of influence access to your affluent clients when their services are needed, this is usually ineffectual in growing your affluent clientele. The math rarely works.

Connecting centers of influence with other professionals. Many financial advisors try to become “matchmakers” to win over centers of influence. As they cannot themselves generate meaningful revenues for the centers of influence they are looking to cultivate, they hope that by introducing them to other professionals and the like, the centers of influence will find opportunities to provide their services.

Have you ever introduced an accountant to an attorney with the expectation they’ll share clients? Lots and lots of financial advisors repeatedly try this approach. How did it work for them? Did you get any affluent clients along the way? Most likely you didn’t.

Keep in mind that most professionals already have a Rolodex of other experts. So for an accountant meeting a new attorney, unless that attorney has a client for that accountant all primed and ready to take action, the accountant isn’t likely to be all that interested.

Matchmaking between other professionals, unless there’s a clear set of business opportunities for all the parties, doesn’t prove to be all that effective of a business-development approach. Furthermore, most financial advisors who do this are presuming the two professionals will connect, which is ofttimes a mistake.

Generating revenues for the centers of influence by becoming clients. Some financial advisors may very well avail themselves of the services of the accountant or attorney they’re looking to refer them to affluent clients. Unfortunately, this rarely works, particularly because the amount of revenue a center of influence will likely get from doing work for you is many times inconsequential. Additionally, this severely limits the number of centers of influence you can use with this approach.

Of course, many financial advisors use a combination of these approaches as well as some others. We’ve determined that each and every one of these (as well as other) approaches can indeed result in centers of influence introducing you to affluent clients. Unfortunately, when they’re working very well, you manage to be referred to new affluent clients on a very restricted, erratic and commonly not-so-preferential basis. More often than not, the results are sporadic, and the quality of the affluent clients is many times questionable.

What Centers Of Influence Want
Based on this brief review of what many financial advisors are doing to cultivate centers of influence, we can see what they don’t want. For example, few high-caliber professionals are all that interested in being introduced to other professionals. Unless they’re asking for a specific introduction, they commonly have enough of their own contacts.

What they strongly want is to know that you can add value. First and foremost is your ability to provide your expertise at the highest levels to their clients. Concurrently, they want to be able to work with you effectively and comfortably. This translates into rapport combined with professional recognition between you and the centers of influence. These two “givens” are just that, “givens.” They’re necessary (or certainly should be necessary), but if you’re interested in a steady stream of new qualified affluent clients for your services, they’re woefully insufficient.

Almost universally, what these centers of influence strongly want—above and beyond these givens—is business success. They’re motivated, as you probably are, to create more revenues that turn into profits—thus, their interest in your affluent clients. However, as noted, trading clients rarely works.
What you need to do is evaluate what the nature and opportunities are with different centers of influence and then provide the appropriate value-added.

There are a number of different frameworks that will enable you to develop a deep understanding of particular centers of influence and facilitate their success. A proven framework and the one we’ll be detailing in the next column is known as street-smart networking.

Street-smart networking is a combination of the best networking practices of self-made millionaires coupled with leading business development strategies of ultra-successful financial advisors.  

Russ Alan Prince is president of R.A. Prince & Associates Inc. and executive director of Private Wealth magazine.

Brett Van Bortel is director of consulting services for Invesco Consulting, the sales consulting group within Invesco Distributions Inc. The opinions expressed are those of Russ Alan Prince and Brett Van Bortel, and are based on current market conditions and subject to change without notice. These opinions may differ from those of other Invesco investment professionals.