Referrals: It's not them, it's you

Before they can expect to get a reasonable number of referrals, advisers need to ask some tough questions about themselves

Feb 13, 2013 @ 12:01 am

By John Anderson

Practice management, advisers
+ Zoom

A financial adviser has just finished a great meeting with a client.

The adviser has covered the markets, portfolios, retirement income and estate-planning updates. Everyone is happy.

Then the adviser mumbles something like, “Do you know anyone that you could refer to me?” or “Is there anyone that you know that could benefit from my services?”

The client starts to squirm and then most likely starts doing some mental gymnastics to try to remember the names of friends or at least the friends who won't get too mad if given the adviser's name.

Ultimately, the client mumbles back, “Not right now. I'll get back to you.”

And now both the client and adviser are uncomfortable, and the lasting impression isn't of a great meeting but of an awkward exchange. We all know that referrals are important. In fact, according to the InvestmentNews/Moss Adams Financial Performance Study of Advisory Firms, 66% of new clients come from referrals.

But advisers stink at asking for them, probably because they have been on the wrong side of that conversation. Advisers ask and ask, and yet the client doesn't immediately offer up a bunch of names and phone numbers.

Advisers get discouraged and maybe a bit desperate.

It is high time that advisers stopped asking the client and started asking themselves, “Is it me?”

Before advisers can expect to start getting a reasonable number of referrals, it makes sense to ask themselves the following questions:

1. Is the adviser referable?

Sounds like an easy question, but is he or she? Does the adviser meet or exceed the expectations of clients? Does the adviser return calls quickly? Have a process for quality client service meetings? Is he or she proactive in communicating? Has the adviser surveyed clients to find how satisfied and engaged they are in the process? When is the last time the adviser took a critical look at the office environment? Is he or she projecting a professional image that would be inviting for prospects?

2. Does the adviser have a niche, and do clients know that they are within it? Can clients clearly articulate how the adviser's specialty services meet their needs?

Most advisers do some form of client segmentation. There are A, B or C, or Gold, Silver and Bronze, clients. Most segmentation, however, is usually based on what is important to the adviser, and not the client. In other words, advisers segment based on assets under management of the client or revenue to the firm, not on the service level required or communication preferences of the client. By segmenting at the client level, advisers may find that they have a niche that they didn't realize. Look for employer, specializations, social or professional organizations, religious affiliations, hobbies and demographics. The more targeted the adviser's offering to a niche, the more he or she becomes “known” within the niche as the go-to person. Rather than asking for referrals, they come to the adviser.

3. Does the adviser have the desired types of clients, and do the clients know what the adviser does?

Very few advisers can clearly articulate their value proposition. As professionals, advisers no doubt are meeting other business professionals and influential people in the community. An adviser may even belong to social and business organizations whose members are potential clients who fit the firm's niche or target demographic.

When advisers meet these people, how they introduce themselves is key to how they will be perceived in the future and any potential referrals they may get from centers of influence. An adviser who says, “I am Joe and I am a financial adviser,” makes the other person have to decide what that adviser actually does. Does the adviser sell insurance? Is the adviser a stockbroker or mortgage broker, or does he or she work with clients at a payday loan store? Advisers who articulate who they are, what they do, who they do it for and the outcome of their relationships set the tone for the conversation.

Don't make it cute, too long or sound like a brochure. It should sound natural and authentic as if the adviser just thought about it and responded.

The only way to make it sound unrehearsed is to practice, practice, practice.

Ask without asking, then follow up

Most advisers usually spend the first 10 to 20 minutes of a client meeting making small talk. It is those first few minutes that can provide the opportunity learn more about a client's circle of friends and influencers than any questionnaire or referral sheet.

1. Was the client on vacation? Ask with whom.

2. Does the client volunteer? Where and with whom?

3. Does the client belong to a club or association? Who are some of the other members?

Be a “collector” of names. Advisers should look for names of people they want to get to know or people who are influential in clients' lives.

Later, an adviser can look for these people on social media and do homework. If these people are a fit, and when the time is right, the adviser can ask the client to make an introduction to the prospect over coffee, dinner, golf or a mutual passion.

The next time an adviser looks at the business or marketing plan and are reviewing progress toward goals, take a look at the projected number of referrals. Advisers who are behind in the number of new-referral clients for the year should ask themselves, “Is it me?”

John Anderson is the head of practice management for SEI Advisor Network.


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