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CPA Alliances -- 3 Ways to Build Mid-Year Ties
CPA Alliances—3 Ways to Build Ties Mid-Year
By Nicole O. Coulter
Horsesmouth Senior Editor
June 26, 2003
In the wake of spring's tsunami of tax returns, CPAs tend to take a little breather—and that means now's the perfect time to work on starting or strengthening your referral relationships. Here's how.
With tax season finally behind us, you can bet that CPAs all over the country are kicking back and breathing a collective sigh of relief. And if you're interested in forging or fortifying referral relationships with CPAs, that's good news for you. Here are three ways to take advantage of CPAs' post-season down time to work on your strategic alliances this summer.
Invite a CPA to your mid-year reviews
Within the next two weeks, you'll be sending out second-quarter statements—and if you're proactive, you've already begun scheduling semi-annual reviews with your best clients. Why not invite a CPA to join in on these meetings?
"More than 89% of CPAs complain that they don't receive correspondence from clients or their financial advisors until the end of year," says marketing consultant and Horsesmouth contributor Daryl Logullo, of Strategic Impact. "Not communicating about transactions until the end of the year can create big tax messes."
To include a CPA up front in the strategic decision-making process, following these simple steps:
Contact clients to schedule reviews. When talking with clients, ask whether they already have a CPA and whether they'd like to have dinner with you and one of your CPA alliance partners. "You're in a position to refer them to a CPA," Logullo says. "Suggest that you'd be happy to make an introduction and that the three of you could sit down to review their statement."
Contact CPA alliances. If you haven't already forged solid alliances, start auditioning CPAs within a 10- to 15-mile radius of your office. "Let them know that statements are coming out and that you'd like to involve them," Logullo suggests. "Tell them you've got 30 clients who could use a CPA. Guaranteed, you'll have a new best friend."
Sit down with clients and CPAs for the review. Be sure to raise and discuss a range of relevant topics, such as:
Embedded capital gains or capital losses
Taxable and tax-free interest and dividend income
Mutual fund capital gains distributions, if applicable
Potential Roth IRA conversion strategies
Opportunities to convert to 529 plans from UGMAs
Strategies relating to the new tax law
"These are the topics you as an advisor should look at," Logullo urges. "Talking about them will build your credibility and show clients you're at the helm."
Host a financial summit
Been a while since your last event? Consider planning a mid-year symposium that features one of your CPA partners as a guest panelist. Successful summits serve as a great business-building tool—you may well attract 100 to 200 people—while at the same time helping you strengthen your relationships with clients and CPA allies.
Here's how to pull off a successful summer summit:
Coordinate the location. Reserve a local hotel ballroom that is convenient to a major interstate. Set up a dais or platform for the panelists, as well as a screen for PowerPoint presentations. Also, consider serving refreshments; while a full-course meal isn't necessary for a 90-minute symposium, a light buffet or refreshments can be a nice touch.
Plan the agenda. You'll want to invite several panelists to speak for around 20 minutes each. Consider potential topics carefully. You might ask your CPA ally to discuss the ramifications of the new tax law for mutual fund investing, for example, and then ask a portfolio manager to address growth investment opportunities in the next six months, an estate planning attorney to describe the do's and don'ts of using annuities in an estate plan, or a local representative from the Social Security Administration to talk about retirement distributions. You might even consider inviting a property appraiser to discuss trends in commercial and residential loans.
"The point is to find out what's timely and newsworthy and cover all avenues in finance," Logullo explains. "Also, July is a good time to look back on what's transpired in the first six months of the year and give a forecast for the rest of the year." Once you've nailed down the specifics, be sure to choose a summit title that's descriptive but also enticing, such as "2003 Mid-Year Financial Review and Forecast."
Invite guests. Invite your best clients, and provide them with VIP seating. Also, remember to ask them to bring a friend. While you'll probably want to avoid charging for attendance, you might consider tying your event to a charitable cause. "Suggest a $10 to $20 donation to your favorite charity," Logullo advises. Then, at the outset of the event, take a brief moment to talk about, say, the Special Olympics, collect the cash, and present the money to the Special Olympics representative you've invited for this purpose. "You do good and look like a hero," Logullo says.
Request tax returns
If you haven't already asked clients for copies of their tax returns, now's a great time to do so. If they don't have their returns, put together a request and offer to mail it to their CPA. Your assistant can help you with this. "You want the tax return sent to your office for safe keeping with clients' other records," Logullo advises. "Having the return reveals who your clients' CPAs are and also gives you an opportunity to look within the tax return for hidden areas of wealth."
Once you have the returns, investigate the following two areas of the 1040 form:
Schedule A. Schedule A lists deductions, including professional fees. "If you look at Schedule A, you can see whether a client is having money managed elsewhere," Logullo observes.
Schedule A can also reveal relevant information such as whether a client has large medical expenses, which might prompt you to propose a Section 125 cafeteria plan so that such expenses would be paid pre-tax.
Schedule B. Looking at Schedule B might reveal, for example, that a client has $3,000 worth of interest income. Doing a reverse analysis—applying, say, a 2% rate of return—you might determine that your client has $700,000 at Fidelity.
Bear in mind that a client's tax return can reveal a lot of private information—and you'll need to treat that information with confidentiality and the utmost respect. "Clients are parting with one of most personal items in their possession," Logullo notes.
Before entrusting you with such information, clients will need to feel confident in your professionalism. Remind clients that the NASD has a "Know Your Customer" rule, and that the more information you have about them, the better able you are to manage their investments. "You can't render a proper investment or strategy until you know how it fits in with a client's entire portfolio," Logullo cautions. "Why would you want to sell a stock in portfolio that's going to create a $100,000 capital gain if you don't know all the money a client has?"
While plenty of FAs have clients fill out financial disclosure forms when they first open an account, many are lax about updating their files. "People's financial situation changes," Logullo warns. "A lot of arbitrations are caused by unsuitability."
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