four essential concepts for leveraging the referral network you already have.
by anthony glomski and russ alan prince
your $5-million high-net-worth practice
most professionals, including accountants, get most of their client referrals from satisfied clients. the complication is that if you want to work with wealthier clients, the likely best way to source them is from other professionals they are currently engaging.
more: maximize referrals from wealthy clients | what the wealthy want | the essential process for building a high-net-worth practice | 4 components of a high-net-worth practice | the coming boom in tax services for the super-rich
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if you aim to work with the ultrawealthy and even the super-rich, be aware that as you move up the wealth hierarchy, they are less and less inclined to refer you to other people. it is something of a catch-22. in general, the better you are, the more the very wealthy are disinclined to share. that is, they are less likely to refer you to their financial peers. also, if you are maximizing your wealthy client relationships, there is hesitancy by these clients to make referrals because of a strong preference for extreme confidentiality (if not secrecy).
one more consideration: the wealthy do not commonly discuss the professionals they rely on, while other professionals working with the wealthy concentrate on matters that directly deal with what your firm can do. they are therefore well positioned to direct new wealthy individuals and families to you – provided it makes sense for them to do so. by employing the everyone wins process, you can often first determine if it makes sense and, if so, help them send you their best clients.
to build a $5 million high-net-worth practice with wealthy client referrals from other professionals, you need to embrace a few foundational concepts.
foundational concepts
in applying the everyone wins process to working with other professionals, resulting in them referring you to their best clients, you need to know a few foundational concepts.
1. the rule of transitivity
what is critical to realize is that if the professionals you are looking to for referrals are indeed influential with their wealthy clients, these clients can more readily become your wealthy clients. there are many ways to unobtrusively gauge the quality of the relationships professionals have with their wealthy clients. but, presuming they are indeed influential, in a word, their power to make introductions that deliver is the transference of goodwill. this is referred to as the rule of transitivity.
the hard-earned, high-quality business and personal relationships these professionals share with their wealthy clients through strong introductions are transferred to you to varying degrees. there are significant business risks associated with transferring their goodwill. but, by using the everyone wins process, you can often mitigate the risks and create a pipeline of new wealthy clients.
2. n.e.x.t.
crucial to building the types of relationships with other professionals that will help you build a $5 million high-net-worth practice is knowing when to walk away, referred to as n.e.x.t. … never extend extra time.
it is difficult for many accountants to walk away from another professional who could potentially send them wealthy clients. this is the case even when things are evidently not working. you need to overcome any trepidation you might have about dropping a professional who cannot provide the referrals you are seeking.
what proves useful for many accountants is to think about all the professionals in their community working or striving to work with the wealthy. there are hundreds, if not thousands, of them. to build a $5 million high-net-worth practice, you need to develop strategic relationships with very few of them.
3. the law of small numbers
in researching extremely successful professionals who do a phenomenal job of sourcing the wealthy, we consistently find that while they have extensive business contacts, they rely on a handful of professionals to give them the great majority of their wealthy client referrals.
it is not the quantity of your relationships that makes the difference; it is the quality of the relationships you have with a few hand-picked professionals. these carefully selected professionals will likely be central to enabling you to build your $5 million high-net-worth practice and become seriously personally wealthy.
the research reveals a striking fact. for most accountants, five professionals (at most) is the magic number. when accountants with high-net-worth practices are working closely with more than five professionals, the relationships become deleterious because the overall number of wealthy client referrals they receive actually goes down.
it takes a lot of concerted time and effort to help these professionals achieve their self-interests. you cannot possibly – even with a strong team supporting you – meaningfully help more than five reach their goals. think of it this way: how many new best friends can you handle?
if you are like most people, five new best friends is a lot. five professionals who introduce you to their wealthiest clients are all you are going to need to achieve your professional self-interests.
4. leverage your partners’ wealthy client relationships
when you think of the professionals who can refer you business, do not forget about your partners at the accounting firm. depending on the work they do, they may be able to send you wealthy clients.
to facilitate these possibilities, as opposed to waiting for one of their wealthy clients to ask for your expertise and hoping your partner thinks about you at that moment, you use the everyone wins process. it is often useful to think of your partners in precisely the same way you would a lawyer or banker. your aim is to understand and help your partners achieve their self-interests.
your self-interests
you need to specify what you want to achieve – as precisely as possible. we usually hear from accountants that they want to be introduced to wealthy individuals and families. unfortunately, this answer – which is quite common – is too vague if you sincerely want a $5 million high-net-worth practice.
let’s get more specific: you want to be introduced to the wealthy who recognize the need for your services and are inclined to take action now.
these wealthy individuals and families are primed to do business with you. this way, the distance from prospect to client is very short. you can even get more specific.
you can refine your self-interest by going back to what clients you previously calculated you’ll need to build your $5 million high-net-worth practice. if you concluded you need 20 wealthy clients generating, on average, $250,000 each (after you subtract what you already have and the referrals you anticipate getting from highly satisfied clients), you know what you require in referrals from other professionals to hit your goal.
let’s keep going. to generate $250,000 from a wealthy client, you need to have some ideas as to what expertise you and your firm will provide and the accompanying fees. you will most likely need to maximize most of these relationships to reach this number. your resource grid can come in handy at this time. moreover, if you choose to adopt the family office model (assuming you have not already done so), you might find there is a longer sleeve of additional services and conceivable financial products you could provide. this possibility then makes it that much easier for you to generate significant revenues.
by working through this exercise, you become very clear on the number of wealthy clients you need and their characteristics that will enable you to build a $5 million high-net-worth practice. it is not about taking any client referral provided. instead, you must communicate the nature and characteristics of the wealthy clients you want to be referred to you by other professionals. by educating these professionals on the wealthy clients you want to be referred, you save yourself a lot of time and energy and get much better results.
to make this work, you will also need to educate these professionals on how to refer you. saying you are a good accountant might be enough, but rarely helps you assuredly win the business. the more you can help these professionals focus on and customize your introduction, the greater success you will have.
identify potential professionals: to have professionals refer their best clients to you requires you to reach out and identify them. there are many types of professionals who are possible candidates, such as lawyers, wealth managers, bankers and others. also, do not leave out your accounting firm partners as potential professionals who can refer you business.
at this point, all you are doing is determining who might be able to refer you to a fair number of wealthy individuals and families. until you understand them and their self-interests (the next step), you are only making a somewhat educated guess.
most accountants see sourcing the wealthy from other professionals as though these professionals are doing them the biggest favor when they send business their way. for some accountants, this point of view is accurate. but it is not the case for capable accountants using the everyone wins process. while you should certainly be appreciative of professionals sharing their wealthy clients with you, remember:
you select the professional, and you are going to help achieve their self-interests. they do not choose you.
we find this perspective is a very different and distinctive way of thinking about wealthy client referrals from professionals than many accountants are accustomed to. we have found that this viewpoint actually scares some accountants. just keep in mind n.e.x.t. and the law of small numbers.
to make this work for all involved, you need to understand the self-interests of these professionals.
their self-interests
you need to extensively learn about the perspectives and practices of professionals you are considering. you need to have an excellent and extensive understanding of their business models, their goals, the obstacles they are facing and so forth. you want to know their critical concerns and what they are doing to remedy the problems and overcome the obstacles they face.
like the open-ended questions you use at the start of the discovery process with your wealthy clients, you can use the same type of questions with professionals …
- how are things going with you and your family?
- how are things going with your practice?
- with all that’s going on, what’s happening with your practice?
the professional will usually now explain what is going on in his world. some questions that might help you include …
- how are you dealing with this crisis?
- what services would you say you specialize in?
- what is the biggest challenge to make your practice much more successful?
- how do you generally meet wealthy prospects?
- how many referrals have you made in the last year?
- what are the biggest obstacles to your success today?
- how are you compensated at your firm?
- where do you see your practice in a few years?
- do you want to make a lot more money?
very importantly, you want to know about their clientele. as you intend to work with the wealthy, you might ask, “how many clients are you currently working with who have businesses valued at $20 to $30 million or more, and what are you doing for them?”
you can, of course, pick any criteria you want, but this helps to zero in on what they are doing today as well as help you start to see if there are possibilities for you and your firm’s capabilities.
based on your understanding of each professional as a prospective source of referrals, you decide if you want to work with him or her. very importantly, you are making this decision. not to belabor the point, but you are deciding if you are going to help them achieve their self-interests. it is entirely in your hands. to get more confirmation that a professional is the right choice, you can ask, “is there anything that will stop us or slow us down from working together?”
depending on where your relationship is at the moment, you will likely get different responses. still, asking the question – in one form or another – can help you uncover concerns that might throw a monkey wrench into your efforts.
it takes time: gathering these insights takes time. to discover someone’s self-interests often takes a few good conversations. while most professionals will share some information fairly readily, going deep is a longer-term process because a high degree of trust is required.
fortunately, you do not need to know everything to start getting a constant flow of new wealthy clients. very likely, you will start to get a steady flow of new wealthy clients with a comparatively minimal understanding of their self-interests. but you will need to really understand them to get referred to their best clients and keep the pipeline of new wealthy clients full.
appeal to their self-interests
when you help the wealthy achieve their self-interests, you commonly produce more revenues. you need to do the same with the professionals you choose so they will more often refer you their best clients. the way you help them achieve their self-interests is predicated on what you learn about them, the way their practices operate, and their self-interests.
a very pervasive self-interest among professionals is to grow their practices and personally make more money. to be clear, this is rarely the only important thing. also, it is not necessarily the case with all the professionals you might meet. but it tends to be fairly ubiquitous, and it is undoubtedly important for almost all of them.
based on the discovery process you conduct with these professionals, if they …
- have wealthy clients or other high-potential clients you want to work with
- want to grow their practices meaningfully
- are very receptive to referring their wealthy clients to you
… then you need to be able to help them achieve their self-interests for you to be more successful. this is accomplished either through direct alignment or by adding value. direct alignment is usually a less conventional way to get the results you seek. with direct alignment, you have to find overlap between you and your firm’s services and what the other professional offers the wealthy.
direct alignment: if you are dealing with an investment banker, for example, there could be a direct overlap between your firm’s valuation capabilities as well as the client’s need for current financial statements. when a wealthy entrepreneur is selling her company, there are certainly opportunities for accountants and investment bankers. the same is the case with m&a lawyers and business brokers.
if your firm is a third-party administrator and can administer sophisticated, qualified defined benefit plans and non-qualified deferred compensation plans, there is direct alignment with those professionals doing compensation work and providing life insurance to wealthy business owners.
examples of additional opportunities include …
- doing the tax work for charitable trusts and private foundations
- complex tax planning resulting in multiple entities needing tax returns
- many forms of international tax planning
- overseeing the use of sophisticated premium financed life insurance or private placement life insurance
- litigation support services
for many accountants, it can be helpful to construct a resource matrix. the aim is to think through and identify areas of direct alignment. resource matrices are easy to construct:
- step #1: you and your firm’s expertise: take all the areas of expertise you and your firm can deliver and fill in the cells of the matrix down the left side. what you are doing is using your resource grid to fill in these cells.
- step #2: their expertise: do the same with the areas of expertise of the professional you are working with. you place their services and products in cells across the top of the matrix.
- step #3: fill in each cell of the matrix: in each cell in the body of the matrix, fill in the opportunities. not all the cells will lend themselves to you and the professional getting business, but a substantial percentage usually will. it can also be useful to specify how you and your firm make money and how the other professional makes money where there is overlap.
we have found that this exercise generally leads to ways you can quickly generate new business – a goal of yours and these professionals.