Retirement Watch

The gift of more retiree referrals

Are your clients willing to risk their reputation to recommend you?

Dec 7, 2008 @ 12:01 am

By Martin R. Baird

As we roll into the holiday season, I want to give you a gift for 2009 and beyond: more referrals from your retired and soon-to-be-retired clients.

Receiving this gift requires that you change your mind about how referrals come about, especially from your older clients.

To be blunt, many financial advisers are not aware that their long-held assumptions about garnering referrals from seniors and clients who are well along the path to retirement are wrong. This is confirmed by credible research.

Most advisers erroneously assume that satisfied clients are the key to referrals. They aren't. For as long as I can remember, I have heard the claim that by increasing the satisfaction of clients or the number of satisfied clients advisers automatically will be rewarded with more business and more referrals. Advisers have stated this as an irrefutable fact, assuming that if a client is satisfied, they will tell their friends about their wonderful adviser.

Unfortunately, advisers' assumptions about how satisfaction affects referral behavior simply aren't true. Satisfaction is fickle, according to an article by Frederick F. Reichheld, "The One Number You Need to Grow," in the December 2003 issue of Harvard Business Review. Customers will tell a business they are satisfied with its product or service yet not necessarily continue to do business with that company. What's more, he found, they are highly unlikely to make referrals.

The article references research done by one of the big-three U.S. auto manufacturers that enjoyed a very high buyer satisfaction rating. Nevertheless, only a small percentage of customers purchased their next vehicle from that company, a finding that goes against the grain of every assumption about satisfied customers.

For advisers, this translates into there being no correlation between the number of satisfied clients or their level of satisfaction and the growth of their practice.

Deconstruction of the satisfaction assumption is critical when it comes to retirees. If you're working to improve retiree satisfaction or are measuring their satisfaction through surveys, you are wasting your time and hard-earned money. Retirees will not give you a referral simply because they say they are satisfied.

Why not?

To find out, you must drill down to discover what really matters to seniors: their reputation. Seniors put a lifetime into building the person they are, and their reputation is dear to them. They will not risk it for just anything or anyone, and satisfaction alone while perhaps sufficient to retain a client is not enough to make a client put his reputation on the line.

According to the Harvard Business Review article, only if clients are intensely loyal are they willing to take a risk and refer you to someone. If they have reached that point, they have skin in the game and are willing to go the extra mile.

So how do you get your best clients to put their reputation at risk by recommending and referring you? To find the answer, you must assess the elements of service you provide to clients and find out which ones resonate most. You're looking for service elements that engender rabid loyalty and are so memorable or unusual that they stand out.

The specifics of what clients want and what you deliver varies from adviser to adviser. Only you can figure out what works for you and your clients.

Once you go through this process, referrals will open up.

This new way of surveying your clients moves them toward wanting to share their friends with you. That is what friends do; they tell each other what they have found that is good in their lives.

But don't stop there. I recommend re-evaluating the effectiveness of client appreciation lunches and dinners. By now, you should question the usefulness of clients' saying they're very happy with you over a steak you've bought. What would make them tell their friends that you're the greatest adviser they've ever known?

If your goal is more senior referrals in 2009, start right now to discover which service elements are touching your most loyal clients. Once you find out, you can harness the enthusiasm of your best clients and put it to use so more senior clients can receive the help they need from you.

Martin R. Baird, who operates advisormarketing.com, is chief executive of Robinson & Associates Inc., a Phoenix-based consulting company that helps advisers measure and manage the quality of client service. He may be reached at mbaird@raresults.com.

For archived columns, go to investmentnews.com/retirementwatch.

0
Comments

What do you think?

View comments

Upcoming event

Nov 13

Conference

Top Advisory Firm Summit

Formerly known as the Best Practices Workshop, this new one-day conference will also include content from the Best Places to Work event!The Top Advisory Firm Summit will provide CEOs, COOs, CTOs, CMOs, and Managing Partners from the... Learn more

Most watched

INTV

Young professionals see lots of opportunity to reinvent the advice experience

Members of the 2019 InvestmentNews class of 40 Under 40 have strategies to overcome the challenges of being young in a mature industry.

INTV

Young advisers envision a radically different business in five years

Fintech and sustainable investing are two factors being watched closely by some of the 2019 class of InvestmentNews' 40 Under 40.

Latest news & opinion

SEC clears up confusion over whether advisers can continue to call themselves fiduciaries

Despite an agency directive to eliminate the word 'fiduciary' in Form CRS, SEC officials say it's OK to use it.

InvestmentNews' 2019 class of 40 Under 40

Our 40 Under 40 project, now in its sixth year, highlights young talent in the financial advice industry. These individuals illustrate the tremendous potential of those coming up in the profession.

How to suspend Social Security benefits

Mary Beth Franklin says the move can boost future benefits but advisers and their clients should beware of unintended consequences.

Vermont establishes restitution fund for victims of investment fraud

Portion of settlements with financial perpetrators would supply the pool.

10 IBDs with the most variable annuity revenue

Although the popularity of VAs has declined in recent years, some independent broker-dealers still do a good business in them.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print