Yield of Dreams

Q&A: The ABCs of Teaming with CPAs

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Advisor Kevin Graham, pictured here, teamed up with a CPA about a year ago.

About a year ago, Kevin Graham, an advisor with Princeton, N.J.-based Princeton Retirement Planning, teamed up with Jose Selaya, a CPA in Elizabeth, N.J. Selaya had been Graham’s personal accountant for over 20 years, and one day Graham approached Selaya with the idea. Graham would provide financial planning services to Selaya’s accounting clients who needed it, while Selaya would provide a source of referrals to Graham’s practice. In November 2010, Selaya became licensed with Cambridge Investment Research, Graham’s broker/dealer. Since then, he's added about a dozen new clients as a direct result. In honor of our teams package hot off the press in April, I spoke with Graham about the ins and outs of his partnership with a CPA. If you’re thinking about teaming up, especially with a CPA, there are some important lessons here.

Registered Rep.: Besides a revenue-sharing agreement, what do both of you get out of the partnership?

Kevin Graham: From my side of it, it was certainly another source of referrals. From his side, it was something where I could bring a lot more experience. Prior to teaming up, he was licensed to sell securities with another broker/dealer. Primarily what they were doing was old-school retail mutual fund stuff, not getting into, especially with higher end clients, managed money and so on. So I was able to bring something different to the table. From his point of view, because he’s got maybe over 1,000 clients, it was a way to bring in an additional source of revenue for himself without having to put in 100 percent of the work for it.

RR: Did it take a lot of convincing on your part?

KG: Not really. He understood what my approach was. The big fear with a lot of accountants is, ‘I have this client base that is gold to me. I’m not going to turn over a relationship to an unknown.’ To me, that could possibly tarnish that relationship. They’re very fearful of, ‘You’re going to come in and bang away at my clients and earn a commission. And if you don’t service them, it’s going to look bad on me and eventually they leave me.’ So a lot of my pitch to him was about the servicing because as far as my own model is concern, it’s very client-centric, very service-oriented. If you can get that across to the accountant and have them involved in every step of the process, he doesn’t feel like he’s just turning it over into this abyss.

RR: Since he was licensed before teaming up with you, what were you able to offer the relationship that he couldn’t get on his own?

KG: With any accountant, we only think they work from January through April 15. That’s not the case. It’s really from January through April 15 where they’re crazy busy, and then from April 15 through usually October, they’re still busy. There’s a large chunk of time, and on the investment side of things, it’s extremely time-sensitive. If a client needs servicing, if a client needs a review, if there are changes going on in the market that needs to be addressed with certain clients, it’s very time-sensitive. You can’t get back to them ‘after tax season,’ if the market has taken a 10 percent hit. If the CPA does any type of investment business, they’re not concentrating on that 100 percent of the time, so it’s difficult for them to really stay focused on that.

RR: What impact did the teaming have on your existing clients?

KG: There were a couple of clients, maybe a half a dozen, that did say they were looking for a new accountant, so I made the introduction. I don’t get paid for that, but I have brought him some new accounting clients.

The response was primarily positive; there were a couple of clients that were concerned, ‘Oh, is he going to be handling my account now?’ And I said, ‘No, that doesn’t change. I’ll continue to service you. This is just someone who’s joining with his own list of clients that I’ll be helping him on. But it’s not going to go the other way.’ It gave them a little comfort that we were growing, and it was growth that they could see.

RR: What steps did you have to take in the transition to make the integration process smoother?

KG: Even though we knew each other for 20 years and I kind of knew how he did business, I needed to manage his expectations in the sense of, ‘This is how I approach a client.’ We’ve got a very distinct process that we’ll go through with each client to make sure what I put together is a good match for them.

Many times I’ll do fee-based work for them, where we’ll do some managed money. So that tends to put him at ease, because the CPA business is not commission-driven. They are use to working off of fees.

RR: CPAs are known to have a very high level of trust with their clients. How did that play out in the teaming process? Did it take longer for you to build trust with his clients?

KG: I have come to personally experience that level of trust, so I imagine the rest of his clients have the same level of trust. I’ve had one or two of his clients say to me, ‘The only reason we’re sitting here is because of Jose.’ And they became clients. You have to be cognizant of that level of trust. You really have to value that trust, and treat it with a lot of respect. A number of my clients have been with me for quite a long time, and I’ve got a very low attrition rate. And a lot of that is due to the fact that I take care of my clients. If you can express that to the accountant in small ways, especially in the beginning, they’ll get more and more comfortable and bring you more and more opportunities.

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