Should You Promise Referrals to Financial Planners and CPAs?

This is a question I received recently from a MC user named Bryan. He’s having some success getting referrals from CFPs, but some are asking for referrals back as an exchange, and he wasn’t sure how to handle the situation. Since other loan officers probably have the same question, I want to address it here.

First, you need to make a strategic decision on the type of mortgage practice you are going to build. If you are going to build a mortgage practice that develops relationships with dozens of financial planners and CPAs, I don’t recommend getting into a reciprocal arrangement. Here’s why:

1. First, the obvious reason is, you can’t promise trading referrals to more than a few financial professionals, so if you base the relationships on referrals, you will find yourself in the position of over-promising and under-delivering.
2. Your value proposition should be based on delivering ADVICE that is perceived as unique and valuable. Your clients will come to expect and anticipate a very high level of service and value from you — not just a referral exchange.
3. If the advisor perceives that you can deliver a valuable service to his or her clients that they can’t get anywhere else and that will, in turn, make their clients more valuable to them, then they will refer clients to you. So why limit yourself to working with a few financial advisors when you could be working with dozens or more?

Here’s the promise I always gave to financial planners and CPAs when I was a mortgage planner:

My services are unique and have obvious value to you and your clients. I promise to:

• Help your clients make informed decisions that integrate the mortgage decision into their overall financial plan;
• Make your clients better personal savers and investors with you; and
• Turn your clients into better referral sources for both of us.

I accomplish the above by delivering unique services that have obvious value to homeowners. My three core services are:

• First, I start every relationship by delivering a “Mortgage Plan”. I use the MC Total Cost Analysis report to help me compare the total cost of different programs over time and to evaluate the impact of different mortgage strategies on the “freedom point”. This service will help your clients make more informed decisions and help them understand the power of saving and investing.
• Second, on a monthly basis, I will send them a “Monthly Mortgage Review” (aka RateWatch report). This service helps homeowners make sure they always have the best interest rate and mortgage program. By delivering this monthly service, I will also generate lots of new referrals for both of us.
• Third, I will conduct an “Annual Equity Review” using MC’s Equity Repositioning Analysis to evaluate the repositioning of debt and equity. This annual service will generate at least one mutual referral for every four actual reviews.

Bottom-line, by referring your clients to me, I will make sure they make the right decisions. You will get more referrals because of the ongoing services I offer and, most importantly, your clients will save more money, and if you are good at managing it, they will invest more with you.

So who do you think advisors will refer business to? The loan officer who promises to refer all their business to them or the mortgage planner who bases the relationships on delivering valuable advice and ongoing services that makes relationships more valuable?

I used the above strategy to create relationships with over 100 financial planners and CPAs who were my primary referral sources and helped me generate $987,000 in annual commissions. So I know this strategy works. It just requires the following:

• Making a strategic decision that you are not going to play the “you give me a referral I give you a referral” game;
• Being able to back up your talk with a unique service that has obvious tangible value;
• Having a great presentation book and/or PowerPoint that helps you communicate your value proposition;
• Having lots of candid conversations with the right financial advisors in your marketplace;
• Creating and implementing systems to keep in touch with your new advisors. My two best systems were adding them to RateWatch and a weekly market update (I highly recommend using Mortgage Market Guide’s weekly market update).

For more information on how I built and managed my mortgage practice focused on advisors, read my e-book, “The Art of Referrals”.

Have you ever come up against this situation? If so, how do you handle it? Please share your strategy here for the benefit of all our readers.

Comments

[Matthew Bowe]

Dave... would you also say that planners who are in a more mature phase of their career limits this type of behavior (in general)?

[Tyler]

Dave, as a CPA I read your "Art of Referrals" guide. Several things are not practical and would not work with me and the colleagues I know.

The whole premise of calling, sending info and then "following-up" is dead. Give me what you got in the first call or you lost me for good. There are a lot of "mortgage planners" in my area and the more you try to sell you are "different" the more you sound the same.

Also, if someone starts peppering me with questions and we have no relationship -- end of call.

I will say this and it is what compelled me to write a comment. You are spot on with this blog post about referrrals. Referrals are not important. Treating my clients like gold is. I know that I am a topp notch professional so once a mortgage planner works with me -- they will be compelled to send me referrals as it will make them look great.

The quickest way to get blown off is by approaching a professional with the whole "I have clients that I need to refer to you" line.

Being straight up with me, super sesitive to my time (don't be a dummy and call Feb-April to see how I am doing), will likely get you in the door.

A quality CPA (with quality clients) is looking for the following:

- Professional behavior
- Appears trustworthy and committed to profession
- Very good knowledge of mortgage products
- Doesn't overstep bounds and provides "tax savings" figures toc clients and doesn't have a clue about taxes.
- Doesn't screw clients on fees
- follow-ups with clients
- gets a thumbs up from client after working through a loan