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Welcome to MythBusters Registered Investment Advisor Edition. Here we tackle the tall tales of
industry folklore MythBusters, registered Investment Advisor edition. Remember to share and subscribe for more financial services marketing insights, and drop your questions in the comments below.
Welcome back. Hopefully you've had a chance to see video one where we debunked the myth that you as a financial advisor or registered investment advisory firm run a pure referral based practice. So today we're going to talk about myth number two.
Myth number two, I hear this all the time from financial advisors and RIAs is CPAs and attorneys don't refer. Now, you've probably been taught this during your career, and you may have even experienced this yourself.
When I first got into the business 25 years ago, my branch manager said, here's some orphan accounts. Their advisor left a long time ago. Nobody's really been in touch with them. Go introduce themselves as your new advisor. Go do a review, and then when you do a review, ask who their accountant and attorney are. Call 'em up, introduce yourself. Take that account attorney out to lunch and build a relationship and get some referrals.
I was young and dumb and didn't know any better, so I listened. I wasted thousands of dollars buying lunches, breakfast dinners, cocktails, and probably way too many calories, and I never got a single referral back.
Now I know what you're thinking. You're not 22 years old, right? Because the objection I got at the time was, the first objection I got was, you're brand new. You look like you're a kid. How do I know you're going to last?

5-10 years later I got different objections.
It wasn't you're brand new, it wasn't, I don't trust you with my client's money because you're new. It wasn't. You're going to quit. Now, you've probably heard these objections.
It was, I don't refer or I can't play favorites. I know lots of financial advisors and they all send me referrals. I can't play favorites.

Instead of just saying no, they make up excuses. Now it turns out it's not true.

Here's what happened, and I interviewed over 147 accountants and attorneys to find this out. Drove me crazy. I had to find the secret.

The secret is they have referred, and here's what happened. They referred a long time ago to some other advisor, and that other advisor dropped the ball, screwed it up in some way, made it so that the client that got referred was mad at the accountant or the attorney for the introduction.
That day that accountant said, I'm never referring again. I can't risk my reputation. I don't want my clients to be mad at me. I just won't risk it.

Now, here's the problem. When you ask for referrals, you've got your handout, you want their client, it's all about you. It doesn't add any value for the accountant or attorney in their eyes for them to refer to you. Why would that accountant or attorney stick their neck out and risk that relationship and their reputation to refer to you when they don't really get anything out of it?

Now, I know what you're going to say. There are programs in our industry, and I won't name names. The premise of their programs is we're going to help convince the accountant or attorney to get securities or insurance license so that you can share fees with them. The reason why they're going to refer now is because they can make money. Except if you've tried that, you know how hard it is to actually get an accountant to say, or an attorney to say, sure, I'll take an insurance exam. I'll take the series seven. Most accountants and attorneys I've talked to say, I swore after I passed the CPA exam or the bar exam, I would never take another test other than continuing education ever again.

You are telling them, let's build a relationship of trust and confidence and get licensed so we can share revenue. Is it possible? Does it work? Of course, it works to a certain extent. Otherwise, those companies that teach you how to do that wouldn't be in business. However, does it work often? No. It's a tiny, tiny fraction of the CPA or attorney population that you could actually get to do it. That's a big ask.

How can I say that it’s a myth if accountants and attorneys don't refer?
I'm saying that's a myth, that it is not true because you haven't built a relationship in a way that adds value to the cpa, an attorney. It can't be, “I'll connect you to my multifamily office of experts,” and it can't be, “I'll send clients your way.”
It's got to be, the script has to be flipped upside down to the point where you're the golden goose laying the eggs and the CPA or the attorney can't afford to make you mad, can't afford to piss you off because the golden eggs that you are laying for them will dry right up.
Stay tuned and we'll show you what that is all about and how you can actually get CPAs and attorneys to promote your practice to their clients every single week and another video.