Tips for Building a Referral Strategy

1 Comment

It’s no secret—more client referrals mean better business. In fact, a 2010 report by The Oechsli Institute found that 54 percent of affluent clients surveyed had made their selection of financial adviser as the result of a personal introduction. However, many clients find being asked outright for referrals to be off-putting or overly aggressive. With an increasing emphasis being placed on garnering client referrals and gaining client trust, how do you generate one without jeopardizing the other?

Beyond Advising—Breaking the Social Barrier

Sure, you know your clients well on paper. But what about on the golf course? Hosting client events are important because in order to trust you, your clients need to feel that they know you on a personal level. Consider hosting a small, strictly social event that allows clients to mingle with advisers in an informal setting. Clients surveyed by The Oechsli Institute stated that they would be most likely to attend this type of event and that they felt the most comfortable bringing guests to this type of an event—and guests mean more opportunities for face-to-face referrals.

Establishing a social repertoire with clients can also allow you to feel more comfortable asking for direct referrals without coming off as pushy. More than 40 percent of elite advisers (defined by The Oechsli Institute as those making $1 million or more per year) held four or more of these small social events over the past 12 months. Coincidence? Definitely not.

Expand Your Strategic Approach

In addition to hosting social events, elite advisers employ other client-generating strategies that are also worth imitating:

Referral alliances: Develop working relationships with others in the financial field to open up your referral flow. Look for professionals who don’t compete with you, who appreciate your expertise and who are open to a two-way referral alliance relationship. You may be surprised at how many referrals a solid professional presence can provide you.

Niche marketing: Focusing on just one or a few types of clients can seem limiting, but often the most successful advisers actually have fewer clients. How? These advisers have learned to focus on client specialization. Narrower markets offer more opportunity for recognition and referrals, so client acquisition through word-of-mouth becomes exponentially easier. With fewer clients, you can spend more time building client relationships, which eventually leads to greater client loyalty and a greater chance that clients will introduce you to other prospects.

Strategic networking: Get involved in organizations within the community that attract high net worth clients, such as country clubs or fundraising events, and commit to spending some out-of-office time in these places. By prospecting clients in these types of environments, you are more likely to attract the type of clients you want and gain both respect and trust within these communities.

Above All, Don’t Be Passive

Many financial advisers assume that if they remain in business for long enough, doing what they have always done, they will become successful over time. Although it’s nice to believe that doing well and meeting client expectations is enough to succeed, this approach is simply not effective. Many advisers with the highest earnings actually have less experience than other, lower-earning advisers. But how could they have built a stronger reputation in a shorter amount of time? After looking at the strategies these advisers use, it’s clear that they have learned where to focus their energy to be successful rather than taking a passive approach. Start socializing, find your focus, work at networking within your community and see improvement in your client relationships and client referrals.

Brian WalshBrian Walsh, CFP®, CLU®, CASL®
Manager, Partner Relations

Advicent Solutions
Milwaukee, Wis.

One thought on “Tips for Building a Referral Strategy

  1. Brian, you are spot on. From our experiences, most advisers shy away from a real niche market for fear of losing business. In addition, many don’t get the referrals they want simply because they are not willing to develop their relationships to that high of a level. Contrary to what some have been told, business is personal. Those who get personal, get more business.

Leave a Reply