For the past 10 years, Rick Claydon, financial advisor and partner with Stonegate Private Counsel LP in Toronto, has been building a solid client-referral network made up entirely of chartered accountants. Today, up to 40% of the new business that comes through Claydon\u2019s door is referred by those third-party professionals. Claydon considers his CAs to be just as valuable as his clients.
\u201cThere are a number of benefits to building a relationship with outside professionals,\u201d Claydon says. \u201cThe biggest one is that it\u2019s a way to reach clients that you may otherwise never have an opportunity to reach.\u201d
Claydon himself was a CA when, 22 years ago, he decided to become an investment advisor. After a few encounters with his clients\u2019 CAs, Claydon saw the potential of cultivating relationships with those professionals, a strategy that would prove beneficial for all involved.
\u201cI understood what the accountants were looking for,\u201d Claydon says. \u201cAnd, given their position, sometimes they can be the biggest key to accessing the types of clients I am looking for.\u201d
Claydon manages $155 million for 65 high net-worth families, most of them independent business owners. When deciding which accountants he wants to work with, Claydon looks for professionals who are dealing with clients similar to his own. So, having a CA background is not the sole criterion when it comes to selecting a potential referral partner, according to Claydon.
\u201cIt is more about ensuring that your clients and your services are in tune with the professional that you are working with,\u201d he says. \u201cYou want to make sure that both parties are on the same page.\u201d
A growing number of advisors are building referral networks, and many of them treat professionals with the potential to generate referrals as prospects, says Joanne Ferguson, owner and president of Toronto-based Advisor Pathways Inc. <\/b>Like developing a book of clients, building a professional referral base takes time and planning. It requires building relationships based on trust and confidence.
The type of professional an advisor decides to network with depends entirely on the needs of the advisor\u2019s typical client. The list of professionals can include CAs, lawyers, mortgage brokers, real estate agents, residential appraisers and business evaluators.
(Advisors who use networking strategies often refer to those individuals who provide referrals as \u201cclients of interest.\u201d Some advi-sors and coaches use the term \u201ccentres of influence.\u201d Both terms denote individuals who refer clients, and share the acronym COI.)
\u201cThere is a process to this strategy, and it involves building on the initial connection,\u201d Ferguson says. \u201cYou can\u2019t just call up a contact once in a while and expect to get referrals. It is a relationship that needs to become part of an advisor\u2019s business plan.\u201d
Advisors should plan to meet with their third-party contacts \u2014 their COIs \u2014 in person at least once a quarter and maintain telephone contact throughout the year.
A joint client newsletter, in which both the advisor and the COI communicate with clients and prospects can also provide additional opportunities and be a valuable source of information to clients on various topics.
\u201cWith a joint newsletter, you can touch a number of different specialties that a single advisor may not have been able to write about,\u201d Ferguson says. \u201cAs well, the advisor gets to send his message out beyond his own client base, targeting the other professional\u2019s clients.\u201d
> Your COI Folder<\/b>
Although many advisors have a \u201cprospective client\u201d folder, you should also maintain a COI folder, which lists all the professionals who represent networking opportunities on which you should follow up. \u201cProfessionals should not be picked at random,\u201d Ferguson says. \u201cYou should research who you want to network with beforehand.\u201d
Claydon, for example, specializes in serving business owners who have between $3 million and $5 million in investible assets. For these clients, his team\u2019s family wealth-management services include estate planning, tax planning and insurance. To meet Claydon\u2019s clients\u2019 specific needs, the advisor goes through a list of criteria when choosing a professional with whom he might work.
Claydon steers clear of the single-person accounting businesses because he finds they are not progressive enough to attract the type of client that fits his ideal-client profile. At the same time, he avoids large national firms because they focus on large corporations and senior executives, also outside Claydon\u2019s ideal-client profile.
@page_break@ Claydon focuses on smaller, local and regional accounting practices that have three to seven partners who are entrepreneurial, open-minded and want to delegate their clients\u2019 investment management responsibilities.
> Educational Seminars<\/b>
In the beginning, Claydon attracted professionals by setting up educational seminars that covered topics of interest to accountants. \u201cI would bring in an investment banker to discuss how to sell small to medium businesses and the issues surrounding those transactions,\u201d Claydon recalls. \u201cBefore I knew it, I would have 50 accountants all in one room.\u201d
Claydon would then follow up with each CA individually, to determine which accountants had similar client niches and to identify those with whom he thought he could build stronger relationships.
Today, Claydon maintains active relationships with what he calls his \u201ctop three\u201d accountants, as well as secondary relationships with his \u201cnext three,\u201d whom he sees as having strong potential for being future top-three relationships.
Claydon regularly evaluates his relationships and may promote and demote candidates in and out of his top tier.
Claydon\u2019s top three CAs are treated as top clients. They receive monthly phone calls as well as personal visits four times a year. \u201cGetting in front of my key CA relationships once a quarter, showing them how they can take care of their clients more effectively, and educating them is what leads to referrals,\u201d Claydon says. \u201cI don\u2019t treat the relationship as \u2018you give me business and I\u2019ll give you business\u2019.\u201d
In return for the referrals, Claydon offers lunch-and-learn educational seminars to the CAs in their offices. These events consist of educational sessions in which industry specialists share information of interest to accountants.
\u201cWhen I started all this, I wondered why I wasn\u2019t getting enough referrals out of it and what I was doing wrong,\u201d Claydon says. \u201cThen the relationships developed over time and it just started happening. You can\u2019t just meet an accountant once and expect [him or her] to start sending you all their clients. It\u2019s a slow process. You have to make the investment and realize this is your long-term plan, not your short-term plan.\u201d
Although many advisors may work with one successful niche of COIs, there are many benefits to also building relationships with COIs in a number of professions.
Cary Williams, a financial advisor with Edward Jones<\/b> in Edmonton, has built relationships with a variety of professionals within his community. He began building his network by looking at the people he already knew within his community. He realized that he already had a small network of business and community contacts, and wanted to continue building it.
\u201cI have always had a big belief in community and the idea of people connecting with each other,\u201d says Williams. \u201cNot only does it make our cities and neighbourhoods safer and more interesting, but it enhances my daily life. It allows me to get to meet the people around me, get to know their needs and try to service those needs face to face.\u201d
> Community Involvement<\/b>
Williams and his wife, Alana, are both involved in community organizations. Williams is chairman of the Next Gen Committee, an organization that aims to persuade university graduates to stay in Edmonton; Alana is on the board of a local arts organization. And because they attend functions together, the couple can network at each other\u2019s group events. While representing Next Gen at a local meeting about a new building development, Williams met lawyers, accountants, mortgage brokers and a residential appraiser.
\u201cThere have been a few times when clients were looking at selling their homes and I didn\u2019t have a residential appraiser to refer them to,\u201d Williams says. \u201cSo, building on that contact is beneficial to both my clients and the appraiser.\u201d
Williams recommends getting involved in a community activity you are genuinely interested in, and the networking will fall into place.
Phil Nuttall, a branch manager with Dundee Private Investors Inc. <\/b> in Peterborough, Ont., has been networking within his community for 13 years, focusing on potential referral sources such as local accounting firms and law firms. He says it is \u201calmost foolish\u201d not to try to develop relationships with accredited professionals who provide services that high net-worth clients are looking for.
\u201cWe just can\u2019t hope to specialize in every area,\u201d says Nuttall, whose office serves about 850 households. \u201cSo, it is extremely beneficial to both you and your clients for you to be able to offer those types of services while having the opportunity to be introduced to potential clients.\u201d
Unlike Claydon, who provides his COIs with value-added education in return for referrals, Nuttall has set up a reciprocal referral arrangement with his third-party contacts. Over the years, Nuttall has returned the favour to his CAs and lawyers by sending a number of clients their way.
Nuttall\u2019s office, which consists of five investment advisors and one insurance specialist, has a reciprocal referral agreement with a local law firm. The law firm passes inquiries from Nuttall\u2019s clients on to its lawyers based on the lawyer\u2019s area of specialization, be it wills, powers of attorney, succession planning, trusts or real estate. Similarly, Nuttall passes requests from the law firm\u2019s clients on to his colleagues based on each team member\u2019s specialty.
\u201cIf I get a call for critical illness or life insurance, I refer it to someone else on my team because I don\u2019t handle that,\u201d Nuttall says. \u201cEssentially, we are a team using another team for referrals. We are not in competition with each other.\u201d
> Know Your COI<\/b>
Referring your client to a professional with whom you are familiar ensures your client will receive good service. \u201cYou don\u2019t want to be nervous or unsure about introducing a client to an accountant or lawyer,\u201d Nuttall says. \u201cYou want to have confidence that they are going to provide your client with the same standard of service [the client] receives from you.\u201d
You may also find COIs through your own experience as a client. Williams used a local mortgage broker to secure a mortgage for himself and his wife. Knowing first-hand what this mortgage broker had to offer, Williams discussed with the broker the mutual benefits that a referral arrangement would provide their businesses, and added the broker to his referral network.
\u201cIf you have personal experience with a professional, it is always easier to refer a client to them, because you know exactly what their work ethic is like and you know how they treat their clients,\u201d Williams says. \u201cAt the same time, building trusting relationships also gives me confidence that my networking contacts will do the same for me and recommend clients who fit my business model.\u201d
Using a referral source with whom you already have a personal connection can be reassuring for both parties, says Ferguson: \u201cIt\u2019s almost a \u2018done deal\u2019 because clients not only get a recommendation from someone they trust, but they also get to hear first-hand about the services you can provide them.\u201d
> Personal Relationships<\/b>
When Penny Petroff, a senior advisor with Scotia McLeod Inc. <\/b> in Toronto, went through a divorce, she found that the personal relationship she had developed with her divorce lawyer represented a great business opportunity.
\u201cI find it is easy to relate to clients who are going through a divorce,\u201d Petroff says, \u201cbecause I\u2019ve been through it myself, stood in their shoes and understand exactly what they are going through.\u201d
Building a referral network helped Petroff establish her advisory practice, which serves 220 households, many of them headed by divorced women or widows.
Petroff helps these clients face the challenges common to divorcees, such as setting up financial plans; planning monthly expenses, including alimony or support payments; paying down debt; establishing lines of credit; and building up retirement and education savings. Petroff has helped her clients set realistic goals and make life-changing decisions, such as returning to work or downsizing a home.
Petroff\u2019s referral network has helped her build this specialized book of business. Over the years, Petroff\u2019s own lawyer has referred a number of clients to her \u2014 and Petroff has been able to return the favour by referring clients to the lawyer. \u201cI am able to set my clients up with a lawyer I trust and rely on,\u201d Petroff says, \u201cjust the same as they are able to refer clients to me with confidence.\u201d
Further, Petroff has built her referral network by contacting the lawyers of new clients \u2014 introducing herself and mentioning that they have a client in common.
\u201cI find my relationships, both with my clients and the lawyers I deal with, are very close-knit ones because we all have common ground,\u201d Petroff says. \u201cThis business isn\u2019t just about managing money; its about helping people manage their lives.\u201d \tIE<\/b>
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For the past 10 years, Rick Claydon, financial advisor and partner with Stonegate Private Counsel LP in Toronto, has been building a solid client-referral network made up entirely of chartered accountants. Today, up to 40% of the new business that comes through Claydon\u2019s door is referred by those third-party professionals. Claydon considers his CAs to […]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[3013,3018],"tags":[3090],"yst_prominent_words":[],"acf":[],"_links":{"self":[{"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/posts\/320706"}],"collection":[{"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/comments?post=320706"}],"version-history":[{"count":0,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/posts\/320706\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/media?parent=320706"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/categories?post=320706"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/tags?post=320706"},{"taxonomy":"yst_prominent_words","embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/yst_prominent_words?post=320706"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}