Tell me if this ‘mutually beneficial relationship’ sounds familiar:
You have a new relationship with an accounting firm with great prospects. With five partners, a good name, and a similar culture to yours, there’s no reason why you shouldn’t provide wealth advice to this obviously high quality firm.
The only slight snag is the 10% revenue share they want on all introduced work, which was negotiated down from 15% from a previous ‘failed relationship’.
Nine months later, it’s all looking a bit saggy.
The five partners (well…two really) have referred 22 clients in total.
Of these 22 clients, only nine have actually turned up to appointments. Most of the no-shows have promised to ‘catch up very soon over coffee!’
Of the nine, five thought you were an insurance salesperson and were confused when you asked them to bring in their spouse “for any questions”. Of the dwindling four, only two turned out to be ideal prospects.
What’s wrong? That’s only two referrals in nine months.
The very first clue was the split revenue share.
It was never about their actual client. First, it was about the 10% split of the client’s upfront and ongoing payments. And secondly, it was about the client.
Agreement first, client second.
Back in the 2000s, financial product groups like Count, (the old) Professional Investments Services, and Securitor, led the ‘holistic’ push into joint accounting and retirement, investment, or insurance services. Let’s face it. This idea is now as outdated as buying a new fax machine.
A client rang recently to seek my advice about one of these ‘relationships’ she was in.
I advised her to get out quickly.
It is much better to be in the right place with smaller revenue and the culture intact, than in the wrong place with larger revenues and culture dictated (i.e. the referring base). In the latter, the firm sees her value-add as adding to their revenues – rather than acting in the best interests of their clients.
So…how can I foster better relationships in the future?
Simple. How professionals have always worked. Be direct.
Whoever takes the role of the client’s principle adviser must act in the best interests of the client – and without favour. They refer their best professional provider, who then charges for their work.
Medicine has been doing this for years, as has Law. Why not us? Build great, professional advice groups and you’ll be rewarded with genuine relationships and ongoing referrals.
Great times to build great advice firms.
What do you reckon?
About Jim Stackpool
For nearly 30 years Jim has influenced, coached, and consulted to advisory firms across Australia. As founder of Certainty Advice Group, he leads a like-minded team of professional advisory firms seeking to create greater certainty for their clients. As an author, blogger, columnist, and keynote speaker, Jim is regularly called upon for his professional insights into the advice industry. His latest book Seeking Certainty is available now.