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Professional help

Helen Monks describes how IFAs can benefit from referring their clients to other fee earners such as solicitors and accountants

IFAs establishing links with other professionals, including solicitors, accountants and even photographers, can provide a solid way to market their services while saving their clients precious time.

Nick Ingram of Barton Hatcher Ingram Financial Management says: “By being able to refer clients to a will writing service, an accountant and a solicitor, you give them peace of mind and help them deal with all the things they’ve been putting off. Referral arrangements can save clients their most precious resource – time.”

Professional Solutions IFA regularly refers clients to other carefully selected professionals and director Mark Ryan agrees that providing these avenues is all part of delivering the best service: “I purposefully want to be able to provide a proposition to clients which covers the full spectrum of needs, not necessarily to get a kick-back from it but to provide clients with a seamless service which also prevents them from being poached by another firm of professionals.”

Aifa says it strongly encourages IFAs linking up with other professionals and there are, of course, good commercial reasons for IFAs to seek such link ups.

Origen business development manager Mark Pearson says: “The advantage to IFAs is to reduce the costs of acquiring business because you are presented with clients who either have immediate needs or a clear need for professional financial advice.”

Increasingly, arrangements are likely to be straight reciprocal schemes, where referrals travel in mutual directions, rather than operations where money changes hands.

Pearson says that anticipated changes under the retail distribution review are already putting pressure on fee-paying arrangements and that, by 2009, a lot more relationships between firms will be fee-free reciprocal arrangements. “The landscape is becoming increasingly complex which is prompting all to move towards reciprocal links,” says Pearson.

When it comes to establishing partnerships with other professionals, there are a range of options a firm can turn to.

Barton Hatcher Ingram Financial Management is a member of BNI (www.bni.com), which describes itself as the biggest business networking organisation in the world.

BNI works by operating cells of professional networking groups all over the world and each “chapter”, as they are termed, may only take one person per professional specialty.

Of his chapter, Ingram says: “There are 30 of us who get together every week for breakfast. There is one lawyer, one accountant, one IFA, one photographer and a whole range of other professionals all required to refer business to each other.”

But are there risks around whether a fellow BNI chapter member will deliver the expected level of service to your clients and expose your firm to complaints and reputational risk?

BNI says the application process for members asks for references and that because the nature of the networks is based on word of mouth, before a would-be member ever comes to a meeting, they would have already spoken to someone or been invited by someone in the group.

If a member gets a referral and does poor work, an ethics committee will take action, with BNI emphasising the importance of anyone who gives a lead and finds out it was not satisfactorily handled reporting the problem to a membership committee.

But Ingram says in his experience, it does not come to this: “It’s funny. I quite often do my very best work which has come from a referral and I think other members experience the same obligation.”

Origen operates a formalised due diligence process that must be gone through before teaming up with another business: “It’s not quite as arduous as when you plan to buy a firm but when commercial arrangements are involved, as opposed to reciprocal arrangements, the process of due diligence can be quite protracted,” says Pearson.

He adds that the Law Society can be quite prescriptive when it comes to teaming up with other firms, which can lengthen the process whereby an IFA and firm of lawyers begin a partnership.

Firms need not affiliate themselves with formal networking associations such as BNI to boost referrals, but can simply rely on their own local connections, which some advisers say clients appreciate.

Professional Solutions, for example, established its links with its preferred accountant by getting to know a client, who happened to be this professional. Ryan took them on as his own accountant and was happy enough with the service, so he established a referral alliance.

Ryan says: “I know both my solicitor and accountant, had a number of meetings with them and vetted them by speaking with people locally. It’s important both are nearby; that local connection gives people another reason to trust and feel comfortable with the referral.”

Arguably, IFAs who align themselves with lawyers and accountants might find they enhance their reputation as professionals by association. Does it follow, then, that they might also get greater access to higher net worth clients who are more willing to pay a fee?

This is not always the case, cautions Pearson: “Just because they’ve paid a fee to their accountant doesn’t mean to say these clients ’like’ paying fees and would be prepared to pay an IFA a fee.”

In any case, the traffic can and should travel both directions along the lines of a professional partnership, including from IFAs to accountants and solicitors.

The way Origen positions its links with lawyers and accountants using its Professional Connections service is an example.

Professional Connections starts from the point of recognising the increasing complexity of the financial services market, which can make it difficult for accountants and solicitors to keep fully up to date with the latest develop-ments and deliver independent financial advice to their clients.

Origen’s scheme provides members with financial update bulletins to help them build up a library of indexed and searchable information, as well as giving them access to relevant seminars.

Added to this, Professional Connections members can, of course, work with a senior Origen account manager to provide independent financial advice to their private and corporate clients.

For IFAs large and small, referral arrangements can be an invaluable tool in boosting both leads and the firm’s reputation. Ingram says: “There is nothing to distinguish IFAs from each other. The only USP is the man you are.”

By being suitably trusted by other well-respected professionals, referral arrangements can speak volumes about the man or woman their clients will meet when they chose your firm.

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