Having a network of high-powered professionals such as accountants and attorneys can help build an advisory firm's client roster.
Take wealth management firm HPM Partners.
The firm draws 20% to 25% of clients through referrals from its advisers’ professional networks, says Karim Ahamed, a partner, senior investment adviser and a member of the firm's investment committee in Chicago.
“We’re always grateful when we get a referral from a professional, especially if it comes from one of our customers’ trusted advisers," he says.
Rose Capital Advisors in Miami Beach, Florida, even has a formal name for its referral efforts: The Center of Influence Referral Program.
“We actively go out and seek other professionals,” says managing partner Michael Rose, who is a CFP.
The firm discovered through a survey last year that most of its clients want help finding other service professionals, including accountants, estate and trust attorneys, and insurance agents.
“We got the message that we have to develop relationships and collaborate with these other professionals,” Rose says.
A whopping 70% of Rose Capital Advisors' clients said that they want new accountants.
“So, the logical place to start was with the 30% who are satisfied,” Rose says. “We reached out to them and said, 'Are you willing to make an introduction to your CPAs for us?'"
The firm had a formal process for interviewing the willing accountants, asking seven or eight key questions. If they pass muster, Rose Capital Advisors not only refers its clients to the accountants but also tries to develop a relationship such that the accountants feel comfortable referring their clients.
“We want the professionals to think of us as experts, so they’ll refer clients to us,” Rose says. “Advisers are a dime a dozen for CPAs and attorneys, so we want to relay specialty areas where we have expertise.”
Rose Capital Advisors seeks to keep its name in front of the professionals by inviting them to charitable events, conferences, seminars and sports events.
“It’s not rocket science, but a majority of advisers don’t implement this, and that’s why they never get referrals," Rose says.
Rose Capital Advisors has expanded its networking effort beyond the tried-and-true pastures of accountants, attorneys and insurance agents to include real estate agents, sports agents and ultra-luxury car dealers.
But Ahamed cautions against expecting too much from one's professional network.
“We are very mindful that centers of influence may have long lists of people they interact with and we won’t get each and every referral,” he says.
Although professional referrals have helped HPM Partners, 40% to 50% of new clients come from referrals made by its existing clients.
This story is part of a 30-30 series on strategies to boost your practice.
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