I'll Be Your Wingman
How COIs Can Help You Find Clients
- Building relationships with ERISA attorneys, CPAs, insurers, business owners, and other key professionals can be an important way for advisors to grow their practices.
- Advisors need to focus on building a strong network of professionals who are willing to provide referrals in return.
In the early days of his business, John Spach, Founder of 401(k) and 403(b) Advisors, focused on traditional marketing techniques, such as cold calling and prospecting to drive introductions to qualified plan opportunities to his business. After failing to attract consistent business from those activities, he tried purchasing leads from other vendors.
Then one day, Spach followed up on a meeting arranged by one of his wholesalers to a nearby property and casualty benefits agency that wanted to do more business in the qualified plan arena. The agency wasn't looking for help on their own plan. Rather, they had clients in the core business that needed the help of a retirement plan specialist. In other words, they were a Center of Influence (COI), rather than a direct client. Spach visited, the partnership was established, and the rest was history.
He began to heavily promote the fact that he was actively seeking these partnerships to wholesalers and third-party administrators (TPAs). Now, TPAs regularly send him business from insurance agencies with which they have conducted business in the past.
Charles Mulfinger of Graystone Consulting had a similar experience in building partnerships with CPAs and/or attorneys. Referrals from these professionals have been very important to growing his business. "Non-profits and retirement plans require specialized expertise," he says. "References really play a key role in the institutional consultant selection process."
In a business where a DC advisor can't be all things to all clients, building relationships with ERISA attorneys, CPAs, insurers, business owners, and other key professionals can be critical to building your business. But in order for advisors to be truly successful at it, they must focus on building a strong network of professionals who are willing to provide referrals in return.
DC Edge spoke with Spach and Mulfinger about their strategy in building partnerships with COIs and the impact it has had on their businesses.
Build inroads to networks
DC advisors usually rely on their local network of professionals to find CPAs, attorneys, insurers, and other professionals.
Most of Spach's business, which consists of 50% tax-exempt and 50% for-profit organizations, comes from his consultant relationships on 403(b) plans.
DC advisors usually rely on their local network of professionals to find attorneys, CPAs, and insurers.
"A lot of these organizations want to talk about 457 plans, non-qualified deferred comp plans, and so we've been successful at being the consulting firm that has those initial conversations with plan sponsors," he says. "That specialty comes from understanding the needs of tax-exempt organizations and the fact that there are at least two layers of authority that have to be educated and informed on best practices–the plan sponsors, and the Board of Directors or finance committees. It's a lot different than the 401(k) world. We've had a lot of success educating boards on fiduciary liability and best practices for tax-exempt organizations."
To promote his partnership, he has developed a program, Strategic Partners, designed to educate independent insurance agencies about the potential opportunity and benefits of engaging in partnerships.
"Many of the benefit agencies in Southern California are feeling the pressure from firms that provide one-stop bundling of benefits and services, and that's starting to make the independent insurance agents feel exposed," he explains. "The goal of Strategic Partners is to partner with them, ask for a sample client list and then provide them with an idea of the opportunity that exists within their existing book of business from the qualified plan side.
"This is usually an extremely eye-opening experience for them," he continues. "It marks the beginning of a relationship that could create additional revenue sharing, as well as client retention. They know they are perceived as more of a resource than just an insurance agency. It helps them feel like they are closing some of the back doors that had been open for years that the competition would walk into," he says.
Be your own self promoter
Mulfinger, who has been in business for 28 years, relies on his experience and key affiliations to promote COI partnerships. For example, he recently gave an address to the Florida Public Pension Trustee Conference on the investment consulting process. "The opportunity for the trustees to hear our message directly really made an impression on them," he says.
To manage partnerships including licensed professionals, John Spach, Founder, 401(k) and 403(b) Advisors, develops a formal agreement spelling out official revenue sharing agreements and disclosures.
In terms of promotion, Mulfinger relies mostly on self-promotion, such as serving on boards and being affiliated with the associations. His background as an accountant for Arthur Andersen, as well as his law school education, helps him tap into a strong network of lawyers and CPAs. In addition, he relies on warm calling to financial advisors at Morgan Stanley.
As part of his partnerships with insurance agencies, Spach produces a co-branded monthly newsletter. He also conducts a monthly educational webinar with a RSVP process to it so that we can track the insurance agency leads.
Shall we seal the deal?
To manage partnerships including licensed professionals, Spach develops a formal agreement spelling out official revenue sharing agreements and disclosures. "Sometimes, there are revenue opportunities that arise where we can compensate them and put their name on the back of a contract. They are happy to do it, but they are more interested in having the expertise as part of what they offer to their existing clients," he says.
That kind of agreement can serve his clients well in their prospecting efforts, he explains. "Sometimes they prospect and present without us. Other times, we co-present and they don't get the business and we do. Other times, they may get the business and we don't."
Mulfinger and his team find that clients "prefer to work with a provider that will be paid either an asset base or a hard dollar fee for providing services and not from the revenue sharing associated with the funds that are being offered," he says.
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