Have you ever lost a sale because the CPA said "no"? If your answer is "yes," rest assured, you are not alone. I have talked to many agents who have lost sales because of CPAs. One that stands out to me was an agent who had a 61-year-old female client. She was single and very worried about the financial markets. She was in good health and had a strong family pedigree; her parents had lived to be 94 and 97. One of the agent's recommendations was to purchase an equity index annuity, with the enhanced guaranteed lifetime withdrawal benefit. He told me that since the client still needed growth and longevity, this was the safest recommendation. I agreed that the annuity could be appropriate for a portion of the client's portfolio, but not for all of it.
The client also agreed with the agent's recommendation; however, when the client asked to go over the recommendation with the CPA, the sale was lost. Why? Unfortunately, many CPAs have a preconceived notion about annuities and advisors.
The first reason you lose the sale is that most clients do not explain the details about your recommendations. I have heard, "I have read bad things about annuities. You should buy bonds" from CPAs. I've also heard, "Be careful of those sales people" when CPAs talk about agents. Therefore, you already have some strikes against you.
The second reason you lose the sale to the CPA is that your potential clients are explaining your recommendations, instead of you. Do you think the client in the above example understands the enhanced benefit riders, the rollups, or the chronic illness rider? Do you think the CPA understands the riders attached to the policy? Do you think the client has taken the time to explain the riders to the CPA? Most CPAs are familiar with fixed and variable annuities, but not the riders attached.
Which of the following recommendations would have a better chance of closing the case?
Client's approach: Mary calls her CPA, we'll call him "Bob Boring." Mary explains that an insurance agent came over to her house, and the agent recommended that she buy an annuity. Mary asks Bob what he thinks about the recommendation. This is how most clients explain recommendations to CPAs. The CPA does not have the whole picture, therefore, the CPA is thinking of a plain vanilla fixed or variable annuity.
Advisor's approach: "Bob, my name is Brian Gilder; I have been working with your client Mary. Knowing her goals, objectives and risk tolerance, I have recommended an equity index annuity for a portion of her long-term money. This annuity is designed for an eight-year time horizon. As I was looking over her tax return, on schedule D, Mary had some big losses last year. In our meeting, she expressed her desire to keep her risk tolerance low. However, she is only 61 and needs to grow a portion of her money. In addition, since she has longevity in her family, this annuity has riders so that Mary can receive a monthly lifetime income regardless of how long she lives. Also, the monthly lifetime income rider could be increased every month if she qualifies for the chronic illness rider. This could help her pay for a portion of her long term care expenses. Therefore, the equity index annuity will meet her risk tolerance, grow her money, provide for a lifetime income, and protect her principal. Can we meet at your office or for coffee to discuss this? I want to make sure we are as tax-efficient with her investments. In addition, I would like to learn a little more about your tax practice."
Now, if you knew how to read and interpret a tax return, you could sit down with the CPA and have a professional conversation with him or her. In addition, you could see if this CPA could be a fit for some of your clients.
The third reason you lose sales to CPAs is that most advisors do not have any tax background and cannot stand toe to toe with a CPA. I am not telling you to become an expert in taxes. When you meet with a business owner who runs a technology company, do you research the company? You should. How about talking to the business owner about a current technology article you recently read? That shows you have done some homework and know something about the client's industry. When you talk to a CPA, you need to do the same. For example, "I have read many articles about estate taxes; what do you think will happen with the future of estate taxes? How about capital gains issues?" There are many articles on taxes that you could look up on the Internet. This takes you from a financial sales person to a professional advisor.
In short, you should know your products in detail, talk to the client's CPA when they want to explain your recommendation, and learn about a couple of current tax issues.
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