Singing the Praises of Tax Season

And those referrals are top-quality, either because the client has already bought into Cohen's plan recommendations or because he's identified the product need–thanks to an in-depth understanding of financial solutions. In addition to being a CPA, Cohen also boasts the CLU and ChFC designations, plus a master's degree in taxation.

"We encourage all of our CPAs to pursue other advanced designations and degrees," says Cohen, who adds the advanced training helps the firm compete against other practices that now offer more than tax preparation services. "Many CPA firms of our size, those with 40 more of professionals, have a practice unit that is doing investment advising and that sells insurance products," he says.

Getting the Strategy Right

Sources say that advisors need to be patient in cultivating relationships with potential partners. Jason Moehring, a senior financial consultant for Cornerstone Group, a practice affiliated with Thrivent Financial for Lutherans, Blaine, Minn., observes that a significant amount of retirement and investment planning has resulted from referrals from a partnering CPA–but only after a long period of professional courtship.

"I spent a lot of time getting to know [the CPA], how he works with clients, and what he is looking for when he needs someone to turn to," says Moehring.

"Once the ground work is laid, I have to stay in touch," he adds. "I make sure that I provide feedback to him on the clients and thank him for the referrals he gives. I also call to see what tax issues my clients should be aware of. And I keep him current on insurance and investment trends."

If the advisor-CPA partnership calls only for an exchange of referrals, then the relationship should be simple to enough to manage. But sources caution that producers need to be able to diplomatically navigate potential frictions with CPAs when, as is often true in complex business and estate planning cases, the engagement calls for jointly meeting with the client and the two advisors differ on strategy.

When these situations arise, says Morrisette, he'll suggest to the client that he meet privately with the CPA and (if needed) the attorney to explore the different proposals further and return with a consensus recommendation.

"You never want to get into an argument with the CPA in front of the client," he says. "That fortunately hasn't happened to me. Also, misunderstandings as to the client's situation can be a good thing if they lead to new planning options."

When, Morrisette adds, a client revealed that he owns a 401(k) with $1 million in assets, the disclosure surprised the client's CPA, who had not thought to ask about retirement assets that were not generating taxable income. Upshot: Morrisette recommended rolling the 401(k) into a guaranteed life income annuity.

Producers have their own blind spots, starting with a basic one: knowing with whom to partner when conducting a search. If the CPA's business model and clientele don't mesh with the advisor's, then the CPA's referrals will be of little value.

Moehring says the producer can ease outreach efforts by asking clients for referrals to their CPAs. If the clients are affluent, chances are their tax preparers also cater to the high net worth.

Should the insurance professional and CPA agree their practices are a match, then the next step is to develop a business plan. Among other things, says Partners Financial's Chung, the document should outline revenue targets; the scope of each advisor's services; how and when to refer clients to one another; revenue-sharing arrangements; co-marketing and presentation strategies; and, not least, techniques for identifying client prospects.

"Too often, financial advisors simply assume that a CPA can effectively describe the value they bring to table," says Chung. "It's fine to formalize the terms of an alliance, but without a business plan, the chances of success actually drop."

Failure is also likely, adds Buck, if the advisor structures alliances to disproportionately benefit his or her practice; approaches the CPA with sales (rather than planning) ideas; and fails to understand how the CPA's breadth of services, market focus and strategic vision will complement (or not) those of the producer.

But when the two practices are aligned, then sales and referrals can be expected to follow–and increase over time.

"My [CPA] partnership has growing more sophisticated," says Ohio National's Mercer. "The referrals I get now are of a higher quality than in years past. The cases are bigger; the dollars invested are larger."