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Three Ways to Get More Client Referrals

Most advisory firms will strive to be more successful, whether it is this year or by the year 2030. To do this, most will have to significantly grow the number of total assets managed. For others the total number of clients will need to increase, which is especially true for the minority of financial planners that only charge a financial planning fee.

The SEI and FPA research titled, “Advisory Firms in 2030: The Innovation Imperative,” showed that 77 percent of those surveyed believe client referrals are the most important growth driver. Yet, when we first start consulting our clients, few of them already have a well-thought-out plan to gain more client referrals year after year.

To help, here are three strategic actions each financial planner should do this year. These best practices can have a compounding benefit of increased number of clients and assets under management.

1.) Know Your Clients

At first each firm should have identified target markets that it wants to focus on for future growth. Hopefully the current client base is in line with the ideal client profile, as it is easier to replicate existing clients than to start from scratch.

By knowing the clients better than anyone, customized services can be offered, unique marketing messages can be created and targeted prospecting can take place.

How should planners get to know their clients? Of course, some of that work starts in one-on-one meetings. However, advanced client research requires an independent third-party facilitator to get deep into the clients’ feedback and opinions.

Every planner should use an independent third-party facilitator to conduct an annual survey that can be as short as 10 questions. More advanced research can take place in the form of focus groups and advisory boards to get to know the client base even better. Interestingly enough, when focus groups are conducted, clients involved typically give more referrals after the research than they did before. By asking them to share their thoughts and advice, they start to have an even greater vested interest in the success of the advisory practice.

2.) Have Conversations About Referrals

All the high-pressure tactics of asking for referrals have damaged the financial services industry in many ways. The effects are that often planners do not feel comfortable asking and—not by coincidence—clients do not want to be asked either.

Traditional approaches put the need on the client to help the planner. However, this is not the right approach. Instead the conversations should be around the planner wanting to help their client by helping their family member, friend, colleague, etc.

If the planner can, offer help, instead of asking for it. That approach will lead to many introductions. First of all, the planner will be comfortable having the conversations. Plus, the clients will feel like the planner is doing them a value-added service my helping others they know. This simple change can make a huge difference. Byrnes Consulting has seen that the more “helpful” conversations that occur, the more likely referrals will start coming from the existing client base.

3.) Facilitate Real Introductions

In every survey Byrnes Consulting conducted for our clients that included referrals as part of the learning agenda, we found that clients said they gave significantly more referrals than planners were actually seeing. We find that often planners only have 5 to 20 percent of their clients give referrals. However, approximately three out of four clients say they give referrals.

That is a big difference with huge potential. There might be many reasons the referrals are not reaching out, ranging from them experiencing terrible online first impressions to them just not being ready to take the first step all on their own.

Planners really have to step up their digital presence. Referrals will be the main way planners continue to grow, but any more websites and social networks now get an assist on making the referral a real lead. Today, the majority of prospects will have done some online research before taking the first step to call, email or visit a planner. Expect this preliminary step to be close to 100 percent in the coming years.

For those prospects not quite ready to take the first step on their own, planners need to create opportunities for them to get introduced. Ideally the existing client can bring them to an event or something more intimate. Every year, each firm should have a very diverse event strategy to get most of the client base to participate in at least one activity.

The financial planners that want to grow at a faster pace over the next decade need to continue to have a well-thought-out plan. Hopefully these strategic actions can help them take the initial steps needed to bring in more clients in the coming years.

Mike Byrnes Headshot

Mike Byrnes is a national speaker and owner of Byrnes Consulting, LLC. His firm provides consulting services to help advisers become even more successful. He helps financial professionals with business planning, marketing strategy, business development, client service and management effectiveness. He is a coach in the FPA Coaches Corner. 

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Editor’s note: This piece originally appeared in the FPA Coaches Corner whitepaper, “Action 2020: Create Business Success for Today and Tomorrow.” Download your copy of the whitepaper here.  


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4 Steps to Achieve Your Desired Business Outcomes

At some point in their career path, advisers might look at the success of their peers and wonder, “Why aren’t great things happening for me, too?”

Some examples might be a colleague taking over a multimillion-dollar 401(k) plan or landing a large roll-over or insurance account. While you may believe that luck has something to do with it, the truth is that your actions create your own outcomes.

Chris Grosser, a successful entrepreneur and photographer, said it best when he said, “Opportunities don’t happen. You create them.”

There are a few elements to consider if you want your desired outcomes to occur: you need to consistently (on a daily basis, preferably) implement action steps, this includes getting to tasks that you least like first so that you ensure that they get done. Also learning from both your successes and failures from the past and mapping out ways to maintain what worked and replace what didn’t.

The following are some suggestions that I utilize in my professional development and coaching programs. See if you can relate to what the adviser in my example is going through when applying the process yourself.

Step 1: Consistently Implement Action

Most advisers who want better results miss consistently implementing action steps. Take Steve F., a 15-year veteran client of mine, for example. During our initial session he admitted that although he wanted to have a record year, he rarely prospected because of the anxiety he felt just thinking about getting rejected. It had overwhelmed and swamped his level of success.

I explained that being consistent in tackling items that are most challenging to you will end up reducing anxiety. Avoiding things that make us uncomfortable will keep blocking your way every time. I recommended that he trust me and for 20 business days he had to prospect and record his level of anxiety on a scale of 1-10 (1 being lowest and 10 being highest) to determine my theory. He reluctantly agreed but also knew he needed to move out of his comfort zone to forge ahead.

Step 2: Do the First Thing First

At this point, most advisers need to prioritize their tasks and, unfortunately, it’s the least desirable task that must be accomplished first.

To ensure that Steve prospected each day as his No. 1 task, he needed to begin each morning with a list of people to call, knowing exactly what he was going to say and how to handle the inevitable objections. That way he was prepared as best he could be. He then needed to make a game out of making the calls by trying to contact 10 people before 10 a.m. If he did that, he got to reward himself in some small way to motivate him to continue conquering that first of the day task.

Step 3: Look for the Lesson

One of the best ways to change a perspective about any undesirable task is to view doing the task as a learning opportunity. After Steve finished prospecting each day, he would record one lesson that he learned. The next day and so forth, he would review the list of lessons he had documented so that it would reinforce positive activity. It didn’t take him long before he started to look forward to adding to his list.

Step 4: Create Accountability

Consistency is important when creating productive new habits and in order to create consistency advisers need accountability. Without accountability, it’s too easy to slip back into unproductive behaviors. I had Steve begin emailing me his level of anxiety before and after prospecting for each of those 20 days. I also had him send me his “lessons learned list” each day. In addition, he had to track his appointments set, attended, individuals in his pipeline and any new business that he landed.

Why Crafting Desired Outcomes Works

After those 20 days, Steve had changed his perspective on prospecting. He realized that doing the aforementioned steps helped him redirect his focus from one of fear to one of faith that he could actually obtain his goals. The reason this process worked was simple—he had a stepwise approach and wasn’t winging things or procrastinating anymore.

If you are ready to take your business to the next level, schedule a complimentary 30-minute coaching session with me by emailing Melissa Denham, director of client servicing.

Dan Finley

Daniel C. Finley is the president and co-founder of Advisor Solutions, a business consulting and coaching service dedicated to helping advisers build a better business.

 


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Be Wary of Lead-Generation Adviser-Matching Services

Advisers looking to grow their business are always interested in finding new clients, but almost universally, advisers hate prospecting. Most of them don’t have the time, skill or interest to do the marketing on their own, which is why lead-generation services have become more popular. In fact, these services are banking on demand and specifically targeting advisers. You can find firms that will sell you prospect information in specific high-net-worth zip codes or Google and Facebook ads that will pop up on specific sites investors might be searching.

Some services take it further by promising advisers you’ll never have to prospect again. While adviser/client matching services have some differences in their business models, their core offering tends to be the same: they promise to match advisers with great quality prospects in their area who are pre-qualified and need their services. The adviser pays a fee to participate (usually a setup or onboarding fee, plus a fee for every referral the adviser receives) while the end client pays nothing.

Wow! That sounds great, doesn’t it?

You know what’s coming, don’t you?

There’s a big BUT. Like most things that seem too good to be true, there’s a catch. Let’s look at a few issues that should be considered before you sink money and time into an adviser-matching service.

Quality of Leads Generated

Where do the matching services find all these apparently great, high-quality leads? The leads come predominantly from advertising. The companies tout their multichannel approach for putting information in front of prospects, and they leverage Facebook, LinkedIn, Google organic searches and pay-per-click services, strategic partners and alliances, social media, email, custom landing pages and videos to make it all happen.

With these tools, they can target investors who are looking for information on a specific topic, such as how to leave money to children. Or they could compel a group of investors to reply to a general pitch for retirement planning or request an e-book on a topic after completing a form. While many prospects do complete such forms, they may or may not be told that a financial adviser will be contacting them afterward. Some prospects have expressed surprise when advisers reach out and say they don’t know how their name and number were obtained.

Some marketing agencies go even further by making the most of today’s sophisticated data analytics. They can cross-reference reams of data and extract candidates who might seem to fit a specific lead profile, such as being older than age 60, living in a particular town or zip code, owning a second home, driving a Mercedes-Benz and so on. These prospect pools might not have clicked directly on an ad or requested information, they have simply qualified as lead because they visited a financial planning site or clicked to run a retirement income calculator.

A One-Size-Fits-All Approach

All these services create pay-to-play scenarios, meaning that only advisers who sign up and pay will receive referrals. So, even though the services promise to match clients with advisers who are a great fit, the premise is flawed. A questionnaire for an investor looking for an adviser is likely to ask only the most basic questions to assess needs (e.g., are taxes important?), rely on investors to self-report their income and assets and make no distinctions for adviser experience and education. So, an adviser with a CFP®, AIF®, CFA®, CPA and 25 years of experience will be presented on an equal footing with a rookie adviser holding only a FINRA Series 7 securities registration. Since the job of lead-generation services is to spread the leads around to all advisers, everyone is treated the same—even though that may not be best for the paying adviser or the prospective client. Advisers receive a brief form with the name, phone number, email and total assets for each prospect, and then it’s up to them to follow up.

Compliance Approval

This is tricky territory indeed, and every firm is different. Depending on how the particular lead-generation service is structured, the SEC will likely consider the service to constitute a solicitor arrangement under Advisers Act Rule 206(4)-3. That’s because the SEC defines a “solicitor” broadly as “any person who, directly or indirectly, solicits any client for, or refers any client to, an investment adviser.” In general, the payment of compensation by advisers to for-profit lead-generation or adviser-matching services may be done only in strict compliance with the solicitation rule. And since it is the adviser making the payment who falls squarely under the jurisdiction of the SEC, it is the adviser who will be held accountable for failure to comply with the rule. Given that, before you spend money or time with any of the services out there, be sure to check with your compliance department and see if it’s allowed.

Are the Services Effective?

According to the marketing and websites of the lead-generation services, absolutely! And there likely is a degree of success, or these companies would quickly close doors.

Caveat emptor applies, though. First, carefully consider what you are trying to do with your business and see if these services make sense. Second, make sure you understand the following:

  • Cost: The services can be expensive. For most advisers, the up-front costs and costs per lead could be better spent on other marketing initiatives that would give them more control and better results.
  • Limitations: Geographic location seems to be the biggest factor in assigning advisers to clients, not experience or designations. The heavy zip code weighting seems at odds with the ability of more targeted technological capabilities, as well as the increased mobility of clients.
  • Missing information: Many advisers invest heavily in their learning and have earned a number of credentials and licenses. The services don’t take any of that into account when matching advisers to clients, although prospects can be influenced by reading designations on adviser profiles.
  • Lack of customization: Even though the services tout their ability at matchmaking, there’s no way for the service to get to know either the adviser or the client. Most prospects who fill out the (very basic) questionnaires might not even know their financial issues or the kinds of solutions they need, so how can they choose the adviser best qualified to help?
  • Risk of wasted time: While advisers can pay more for a lead based on the prospect’s assets, they cannot identify or choose their ideal clients. At Commonwealth, we coach advisers to try and find the right people who meet their minimums and ideal client profile. The opposite is happening with these services when the adviser agrees to follow up with all leads, whether they fit the practice or not.

Evaluate Carefully

Where do you want to spend your money, time and energy? What is best for the long-term success of your practice? In my opinion, most advisers’ time would be better spent deepening relationships with current clients, learning the best ways to ask for referrals and introductions and being highly visible in the community.

If you do want to engage in a digital strategy to find leads and prospects for your business, I suggest you check out LinkedIn first. There are plenty of resources to help you leverage the social media platform that are free, easy and put you in control of the people you contact. And that sounds like a lead-generation strategy worth trying.

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Kristine McManus is chief business development officer, practice management, at Commonwealth Financial Network®, member FINRA/SIPC, the nation’s largest privately held Registered Investment Adviser—independent broker/dealer. Since joining the firm in April 2014, she has been working with affiliated advisers to grow their top line through the introduction of various programs, tools and coaching. Kristine holds the Chartered Retirement Planning CounselorSM designation, a master’s degree from Pennsylvania State University, and a BFA from Adelphi University.