CPAs: A Niche Worth Working

I started in the mortgage industry in 1992, when marketing to and working with CPAs wasn’t a mainstream concept. I fell into that niche because most of my business acquaintances were accountants from my past career as a CPA. Little did I know it would lead to a very successful mortgage practice that has been growing and thriving for so many years.

Today, my business is 100 percent referral based. The only marketing we do is to our database of clients and other referral sources. We have three main pillars of business. Our strongest pillars of referral sources are the financial services, accountants, and CPAs. This accounts for about 40 percent of our annual revenue. Our client database is the second most valuable pillar. We are fortunate to have kept a complete contact management system since 1995. Our past clients, who we like to consider our current clients, are very important to us. In fact, they represent about 35% of our annual revenues. Our last pillar consists of a small stable of great Realtor relationships. Our Realtor referrals represent about 15 percent of our annual revenue. The remaining 10 percent is generated from various sources such as associates, family and friends, and out of area referrals.

Why Work With CPAs?
There are many benefits from working with the financial community. I consider the financial community to include: accountants, CPAs, enrolled IRS agents, money managers, financial planners, life insurance specialists, and so on. These are all foremost businesspeople. They generally maintain normal business hours, with no Friday night or Sunday calls. Financial people enjoy working with other competent professionals. If an issue or problem comes up, and you’ve communicated the issue clearly, providing alternatives and other solutions, they will be loyal and continue to work with you. That’s not always the case generate from those who are not of the same professional caliber.

Working with accountants and other financial service providers has other great benefits. Even in a high interest rate environment, they have great potential to refer loans. This is attributed to the “type” of clients most accountants service. They work with many small business owners, self-employed individuals and entrepreneurs, who always have a need for money in any market. The interest rate is important, but not as important as service and providing solutions to problems. In addition, these professionals are loyal. Once they receive good service and become familiar with your character and competence, you become an integral part of the accountant’s financial team.

As loan originators, getting a referral from a trusted advisor gives us, the advantage to potentially refer them to some of our other business associates, such as Realtors. I have consistently been able to refer clients to my core Realtors for the past several years. Having and giving good referrals to professional Realtors is a great way to secure and build relationships regardless of an “in house lender” or other existing relationships.

What Volume of Loans Can You Expect?
In a normal interest rate market, the type of leads that are generated from the financial service community and generally purpose refinances or purchase money. I feel getting at least one loan a quarter from a business referral source is good. A few loans a month would be like hitting the jackpot. Remember these are quality leads. These referral sources are generally very low maintenance, once they know you and make you a part of their team. To maintain these relationships takes minimal effort, and in addition, they do not waste your time. I have relationships that can refer one or two closed loans a year, and some that refer three closed loans a month. The average loan amount for these types of clients is generally larger. I realized a long time ago, if I wanted a raise I needed to do more loans or increase my average loan dollar amount. This is a great way to get the larger loans. In a refinance market these relationships can refer you a large quantity of loans. My business has grown each year, largely to the fact I keep expanding my relationships in down years. When interest rates begin to go down, the lead volume I get from each of these relationships goes up four fold.

Getting Started
I believe the best way to start working with financial services providers is to look at your own sphere of influence. Who is your CPA? Who helps you with your investments and insurance needs? If you have been in business for a while, ask your best clients for their help in building your business. You might say “I am always looking to work with other top professionals. Is your CPA or financial planner someone you think I should meet?” Trust me, your best clients and friends would love to help.

The key to getting started is a face-to-face meeting. It is important to be prepared, as you need to convey both your competence and character in that meeting. In addition, you should have a list of questions to ask the CPA about their firm. Some questions might be: “What type of clients do you have? How many tax returns, both business and personal, do you prepare? How many employees do you have? Do you have an assistant? Do you have a marketing plan?” The more information you have, the more help you can offer. Remember, most accountants are not very good marketers. As part of my own initial research, I developed a two-hour workshop to help accountants and financial service providers market their own practice. Then I used feedback they provided and my previous CPA and marketing experience to give them some additional ideas for promoting their business.

Of course, one of the best ways to start or strengthen a financial relationship is to refer some clients back to them. I will always do anything and everything I can to help them and their business.
After the meetings I stay in touch with my referrals sources with a weekly e-mail that highlights market conditions and information, as well as a monthly mailer. This further helps to convey my competence and character, as well as solidifies our consistency. We are trying to be first in their mind when an opportunity to refer a loan comes along.

Commission Sharing
Today, CPAs and professionals in most states are able to earn commission and share in revenue of value-added service, such as, mortgages, life insurance, and asset management. This was not allowed when I first started and is a relatively new concept. But, today most of the states now allow accountants to share in the revenue, so this is a possibility for you to consider. However, each state has different laws, guidelines, and rules. It is important to be aware as the playing field and rules are always changing. If you are looking to go the commission-sharing route, I suggest contacting your state’s board of accountancy and the appropriate legal counsel who understand not only the accountants’ laws but also RESPA and federal laws. These types of programs must be set up in compliance with all the agencies.

CPAs and other financial service providers are a great niche to work with. Coupled with a solid database contact management system, you can build a strong, consistent practice that is loan recession proof and can be relied on for years to come.

By Mark Klein