The power of co-sourcing: How my first CPA relationship resulted in huge mutual benefits

By Rich Jarvis


Through co-sourcing and delivering the greatest value to the client, I made Bryan over $100,000 in commissions his first year while finding hundreds of new clients for my own business. In hindsight, I have to say that check I put on his desk to buy an hour of his time was some of the best money I've spent.

While creating a strategic plan for my practice, it became clear to me that one of my four key strategies was to develop professional alliances for the purpose of delivering the greatest value to the client and driving revenue. These alliances include CPAs and attorneys, property and casualty agents, college planning professionals, loan originators and banking relationships. This discussion will focus on building relationships with CPAs and tell the story of how I made my first CPA over $100,000 in commissions his first year.

Picking up the phone, I dialed to make an appointment with a CPA that I had known for several years. I was surprised to learn that he had recently sold his practice. The unfamiliar secretary immediately began scheduling an appointment for me to come in and meet with the new CPA named Bryan. It didn't take long to realize that the appointment she was setting was for me to come in as a potential client. I wanted the appointment for sure, but I definitely knew I couldn't go in disguise as a potential client and expect to establish a relationship of trust and respect. I also knew if I told the secretary that I wanted to meet with Bryan and discuss how we could work together, I may not get the appointment until after the next tax season. I simply confirmed the appointment and asked about his hourly rate.

The day of the appointment came and I brought along a mentor of mine who had worked with CPAs in the past. As we arrived, we were astonished to learn that Bryan's office was actually in a building owned by a wealth management company providing a wide variety of financial services. Taking a deep breath, I wondered how this meeting was going to go. As I entered Bryan's office, I placed a check on his desk and confidently stated that I had just bought an hour of his time. He looked surprised, but gladly invited us to have a seat. We respected his time, and he respected ours in return.

After brief introductions, we began to discuss his practice and learn about his clientele, the quality of service he wanted to provide and his philosophies regarding how to help his clients in all areas of their financial lives. We discussed his industry and the current trends of CPAs adding financial services not only to compete with other CPAs, but to fulfill their financial responsibility to their clients while providing greater levels of service. So, what were his options?
Option No. 1 — Referring out: The traditional approach

Bryan understood that he did in fact have a particular responsibility towards his clients as it related to their finances. We then introduced the traditional approach: outsourcing, or in his current case, referring out his clients to financial professionals to get the desired products or services. I asked how that was going for him, and he replied, "Not too well."

The benefit of this traditional approach is that he had the ability to choose which of his relationships would best serve his clients and essentially match them up with each referral.

The downside: loss of control and the fact that it's not always a two-way street. Once the client was referred out, Bryan no longer had much control over the quality of service provided and in most cases, was not involved with the recommendations given to them. In fact, he related that countless financial professionals had tried to establish a working relationship and even though he had referred out, not one had involved him in the decision-making process or referred new clients to him. He had even lost some clients due to bad experiences with a certain financial professional.

Option No. 2 — In-sourcing: Hiring a full-time financial professional

Another option was to hire a full-time financial professional to work with his clients. The upside: maintaining control of the client, being intimately involved with the recommendations and providing a much broader range of services.

The downside: It's expensive to pay a qualified financial professional full time.

Option No. 3 — Full time co-sourcing

We then introduced co-sourcing, where we would work together to service his clients. The upside: He would have access to all of our firm's resources and expertise, maintain full control over his clients (they would forever be his clients), play an integral role, sign off and actually make the recommendations to his clients whenever possible. In turn, we would meet initially with his clients at his office, prepare all recommendations and case design for his approval and complete all paperwork. We would approach each case as joint work — splitting it 50/50.

The downside: He would need to spend the time to become licensed in life, health and securities.

He first asked us if we had noticed that he was in a wealth management building with financial professionals eager to work with his clients. He said that they had been in a number of times, soliciting their products and services. In fact, he had sent several clients to them in the past, but they had never approached him with the opportunity to co-source. He complained that they never involved him with their recommendations, and never once referred potential clients back to him. We could tell this was a sore spot.
It came as no surprise that Bryan chose to co-source with us, and within a few short months (during his busy tax season) he passed his tests and acquired the necessary licenses. We were off and running! Not only did we dramatically enhance the quality of service he provided his clients, he exponentially increased his production, as well. The strategic alliances were taking shape and my practice was growing. If he had clients that would benefit from our services, where else would he send them now? He would send them to his team of professionals.

The power of the recommendation

Have you ever made a recommendation to a client only to have them come back and change their mind because their CPA or other trusted advisor was not involved in the process? There is a great power that comes when their CPA or other advisor's recommendation is the same as yours, or better yet, when they make your recommendations for you. This is the beauty of working in a co-sourcing relationship.

Recommendations that would have previously been met with potential objections are now actually made by the CPA or trusted advisor. After all, in a co-sourcing relationship, the clients are still their clients. They have been involved with the process of determining the clients' best course of action. The CPA or advisor understands the whys, and even has the opportunity to add their input to address specific concerns, tax consequences, or estate issues. At the end of the day, the client benefits from a united front and takes action readily.

Through co-sourcing and delivering the greatest value to the client, I made Bryan over $100,000 in commissions his first year while finding hundreds of new clients for my own business. In hindsight, I have to say that check I put on his desk to buy an hour of his time was some of the best money I've spent.

If any of you have had similar experiences, or would like to share additional tips, please feel free to add your comments below.