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Why Loan Officers Should Partner with Financial Advisors

We talk a lot about realtor referral partners for loan officers. But real estate agents aren’t the only people that make great partners for us in this industry. Have you considered partnering with financial advisors?

I’ll be honest. I hadn’t. Not until my friend Todd Ballenger gave me the inside scoop on how to work with, market with, and get referrals from them.

Todd started a small independent business as a financial advisor right out of college. When he began meeting with customers to talk about their finances, one of the first things he noticed was that most of them had really high mortgage interest rates, so he started referring them all to a local mortgage lender he knew. Three years later, when the lender retired, he took Todd out for lunch, and told him how much money he’d made from his referrals alone. 

It was a lot of money.

Financial Advisors Are an Untapped Market

This lender convinced Todd to get out of the finance industry and into the mortgage industry. So Todd crossed the balance sheet, so to speak, and became a lender. But, because of his past as a financial advisor, he calls himself a liability advisor, rather than a lender. He actually tried to be a hybrid—both a financial advisor and a liability advisor—for two years. But he soon realized that his real strength was on the liability side. 

People have more money flowing through their house than in the form of their savings. Advisors are only dealing with money people have left over. 

During his three years as a financial advisor, he only referred people to that one lender. He never once got a call from another loan officer who wanted to partner with him. So he’s pretty confident that financial advisors are an untapped referral source for loan officers. I told him we’re averaging 700 units a month in my branch, and I’ve never gone after a financial planner. So this is definitely an untapped market. 

Todd even makes the bold claim that, over time, lenders can have more referrals coming in from advisors than from realtors. Financial advisors work in a life event-driven world, he says. And realtors live in a rate-driven world. So, getting referrals from financial advisors smooths out his referrals from realtors that are more like a roller coaster. 

How Loan Officers Can Develop Relationships with Financial Advisors

It can be tricky for lenders/liability advisors to develop relationships with financial advisors. He says that, unequivocally, financial advisors see lenders as people that sell debt. And therefore lenders are in opposition to their primary goal, which is creating wealth and financial freedom. Because of this, they often don’t see eye to eye, but he teaches people how to overcome that and build relationships. 

Todd says you have to understand the mindset of an advisor. They live in a world of suitability. They’re always coming from the perspective of what’s going to keep me out of trouble? You have to make suitable recommendations. 

The lender comes from a world of eligibility. Is this person eligible to borrow or not—and how much are they qualified to borrow? 

You need to communicate to the advisor that you understand their world. It’s not a world of “everyone needs a mortgage” or “no one needs a mortgage.” It’s a world of “it depends.” Is it a need or a want? Do you have cash or not? The suitability kicks in for you to figure out what’s the highest and best use of your money. It’s a function of what’s the lowest cost of ownership over time. And that may be having a mortgage. It may not be. It depends. 

So you want to be able to have that conversation with an advisor in a way that they start to realize that you aren’t trying to sell everybody debt. They start to realize that you could partner to accomplish the same objectives for your client.

When you have your first coffee appointment with a financial planner, once you’ve talked through family/life stuff, and you start talking business, you can say, “You know, Carol, one thing I know about financial planners is that you look more at suitability, and most loan officers strictly look at the eligibility, but I want you to know that I’m also looking at suitability. I care about my clients, and I’m not just trying to loan them money no matter what.”

Todd also bridges the gap between financial advisors and liability advisors by teaching his clients some of the financial planning concepts he learned as a financial advisor. Things like the three-legged stool of safety, liquidity, and return—and opportunity cost, taxes, and diversification. He says that you learn these things when you’re building wealth, but no one was teaching people how to borrow wisely for their largest asset, their largest liability—a home.

When a loan officer collaborates with a financial advisor, you’re working both sides of the balance sheet together to maximize wealth for your mutual clients.

Three Types of Financial Advisors

Todd says there are three types of what we classically call financial advisors—agents, accountants, and advisors. An agent is someone like a life insurance agent. An accountant would be a bookkeeper or someone in the tax profession. And then we have the classic advisors. Each of these three types has its own role if you’re building out a book of business.

The agent is the place to start building your confidence and get your story down. They’re transaction-oriented. You just have to get them to give you a shot and build a relationship. You’re teaching them how to spot an opportunity for you to help them save their client money—and make that referral. An insurance agent might have 1000 to 3000 clients that they actively service as a book of business, so there’s a huge opportunity there. But they’re not as tight with their clients, so they’re not as high up on the referral food chain. 

When you move up to the accountants, it’s a little more complex because they get paid on an hourly basis. Todd uses slow summer months to build relationships with accountants, because tax season is over, and they’re bored. Talk to them in the summer, and they’ll send you a huge burst of activity in November, December, January, and February, he says.

Advisors are at the top of the food chain, because they’re required to meet with their clients on an annual review basis. In some cases they even meet quarterly. So they’re in contact with their client regularly and witnessing all the changing life events. They can become an incredible stream of referrals because those life events trigger opportunities for lending.

How Do You Make That Initial Contact with a Financial Advisor?

If I’m doing a loan for borrower Bob, and I want to connect with Bob’s financial advisor, what does that phone call sound like? First of all, Todd says never make a cold call, and you don’t ever have to. For every client he does a loan for, he has them fill out a survey. It asks for the names of their financial advisor, insurance agent, CPA, etc. And it asks them to rank them from 1 to 10 with how happy they are with them. 

He makes a list of all agents, accountants, and advisors that rank from 8-10 on surveys. Then, when someone ranks their agent as a 5 or 6, he tells them, “Hey, we’ve got financial advisors who are 10s. Would you mind if we introduced you to one of those advisors?”

Todd makes an outbound call to that “10” advisor. “Hey, I would love to introduce you to one of our clients. We have a lot of the same customers and they’ve been consistently ranking you very high on our internal surveys. I wanted to meet you to know if the type of people that I would typically refer to you are the type of people you’d like to work with. And I’ve got someone right now that I’d like to refer to you, but I want to make sure you’ll take good care of them.” Isn’t that brilliant?

Shift Your Mindset

I seriously learned so much from Todd. I’m a very successful loan officer, and I’d never thought about partnering with financial advisors. I’d never thought about the three different types and how they make up the “food chain.” I’d never thought about the suitability/eligibility difference and how I could bridge it. I’d never thought about a survey where you have them rank their agents, accountants, and advisors. The 8-10s are the people you’re going to refer people to and do business with, and the blanks and the 1-6s are the ones you can help find new advisors.

Todd also created a certification for his loan officers because he wanted to differentiate them in their market. Taking the class made them a certified liability advisor. Now the class is a 25-hour online course you can take. Whatever your book of business is, he says, you can increase it by 10-30%.

Todd would love for every loan officer in the country to shift their mindset from loan officer to liability advisor because it changes the way they think about what they do. They’re not just someone selling money, but creating real wealth and helping to be part of the wealth management team for that client over time.

Thank you, Todd, for giving me so much great new stuff to think about.

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