You’ve improved your overall practice management, your client service is top-notch, and you’re seeing unsolicited referrals become new clients. Maybe you understand why the financial services industry has long recognized the power of referrals in attracting new business. The numbers are clear on how referrals can help boost your bottom line:
Still, many financial advisors struggle with “the ask.”
Around 70% of loyal millionaires are likely to refer people to their primary advisor, yet only 10.7% of advisors actually ask for referrals. It takes time to build your business with referrals, and it takes practice to get your “ask” right. But a solid referral strategy can build brand authority, expand your client base, maintain a sustainable network, and increase your AUM.
Financial advisors should make referral requests a fundamental part of their business development strategy because referrals offer objective value and profitability. In particular, advisors should identify key centers of influence for potential referral sources to support a sustainable growth strategy.
Keep reading to find out which clients offer the best referrals and how to build a referral strategy that strengthens your bottom line.
A center of influence (COI) is a highly regarded professional in your community who regularly interacts with your ideal client type or target audience. A COI could potentially connect you to new prospects or introduce your brand within their circles. A COI is someone that people trust and respect, so their endorsement can mean new prospects for you.
Word-of-mouth recommendations are one of the most powerful marketing tactics because people believe other people’s experiences over ads. If your neighbor or friend tells you about a great experience they had with a product, you’d likely check it out. However, not all recommendations are equal—you’re far more likely to believe the word of someone you admire or trust.
Word-of-mouth referrals are powerful, but they aren’t something you can just buy. Since they aren’t purchased or directly self-serving, people tend to give more weight to the recommendations given by friends or trusted professionals. Building a solid reputation for your practice can have long-lasting effects with ongoing growth opportunities.
For many financial professionals, the traditional definition of COI primarily includes CPAs and attorneys. However, you can cast a wider net to engage more people influencing the types of clients you are looking for. Your definition of a COI should include other high-end service professionals with solid reputations as leaders in their respective circles.
Good COIs offer relevant referral relationships and have a healthy appreciation for your services. These valuable contacts can include any kind of trusted professional who has your ideal client’s ear, such as:
The list above isn’t exhaustive. This list is just a starting point to help you consider the COIs within your own circle and client list.
Remember, not all COIs hold equal weight with your audience. And not all COIs are within your current circle. You can’t just ask anyone to give you a referral, and you shouldn’t classify just anyone as a COI.
Analyze your current clients to pull out your ideal accounts, high net worth clients, and most influential people. Of those top accounts, whom are they interacting with that would make good prospects for your business? Note the COIs within your existing client list and consider how you can invest in their account to make your relationship mutually beneficial.
Who holds the ear of your target audience? From certain celebrities to local news anchors, you should identify some of the leading voices holding sway over your ideal client list. These influential people could make ideal COIs if they believe in your products and services.
Look around your community to gauge which professions are connected to your target prospect group. You may simply Google “_(professional)_ near me,” search on LinkedIn, or see who’s advertising in relevant interest magazines and websites. You want to find professionals with high brand recognition and stellar reviews. Determine industry leaders you can target as prospects to become future COI contacts.
Once you’ve looked at it from all three angles, start creating a list of individuals you want to approach as potential COIs for your referral strategy.
It’s not a good idea to cold-call or rush a COI relationship. These valuable partnerships should be built on foundations of trust and mutual respect. How you reach out depends a lot on your connections to each individual on your list. Here are four ways you can initiate and cultivate your COI relationships.
You don’t have to ask for a referral right away—in fact, it’s probably better not to ask for an endorsement until you’ve really been able to prove your value. But that doesn’t mean you can’t plant the seed early!
Before ever asking for a referral outright, you can say things like, “Don’t keep me a secret!” or “Tell your friends all about me!” These statements aren’t directly asking for referrals, but they do certainly remind your client how much you value their business and support. Plus, this kind of gentle nudge makes it easier to ask for names outright down the road.
You may find that many of your clients are using the same attorneys or CPAs, and you may already be in contact with them as part of your overall account management process. When you have clients in common, there is an existing connection that makes it easier to set up an initial meeting. Simply calling or reaching out via social media to say, “We have a number of clients in common, let’s meet…” is a natural step in sharing your common focus of supporting your clients.
Alternatively, you may ask your other clients to mention you to whomever they work with for their legal, accounting, or other professional needs. Many COI are interested in gaining referrals, so be clear that you’d like to form a mutually beneficial relationship.
When talking to a possible COI, make sure you aren’t vague about your ask. A vague question would be something like, “Do you know anyone who might be interested in my services?” Instead, ask in a way that helps provoke your client to think of specific contacts that fit the bill.
For this question, always keep your value proposition front and center. Who do you want to work with, and what do your top clients like most about your services?
A specific referral question asks something more along the lines of, “Do you know anyone who _(specific client type, like just got married or has kids in high school)_ that would appreciate_(value proposition offering)_?” Your goal here is to help your client honestly tell you whether or not they know someone who matches your ideal client type.
Don’t hound your referrals—treat them with value. You want to reassure your COI that you will treat any referrals as VIP prospects and respect their space. The last thing you want is for your COI to feel pressured into giving you a name or feel nervous you’ll embarrass them.
Make it easy for COIs to send people your way by treating their circle well.
Of course, providing top-notch services according to your fiduciary duty is one of the most important things for getting referrals of any kind. But what other things can you do to establish a true referral strategy?
Be prepared to explain the services you offer, why you are different from the competition, the types of clients you typically work with, the situations where you can add value, and offer concrete examples of how you can work together.
Demonstrate how the COI relationship will be mutually beneficial. Share your unique value proposition with COIs, so they know how to talk to clients about you, your firm, and your services.
Be sure to learn about your centers of influence and their businesses. Ask about their hobbies and their family. You may very well discover shared interests. Understand their pain points and the things they value. Find out how you can support them.
This handy communications packet contains tools to assist you in your efforts, including sample introductory talking points and communication and meeting templates.
Don’t reach out just because you need something. Establish a relationship built on value before you hope to get something in return.
Use an engagement calendar to schedule and keep track of phone calls, appointments, emails, and in-person meetings with your COIs. Try to establish a regular rhythm that works best for your point of contact. Stay in front of your COIs with intentional outreach, including:
Use this COI communication plan template to help keep track of your engagement outreach.
The value of your contacts will change, and you need to adjust accordingly. Over time, assess the value of each COI relationship. Relationships take time to build, and referrals won’t happen immediately, but some connections are a dead-end or one-way street.
Increase engagement for high-referral COIs and decrease your efforts for non-productive relationships. People may move to and from your COI list at any given time, so stay agile in your approach.
Here are a few key mistakes you should avoid when cultivating COIs and your referral strategy.
COIs don’t refer their clients to balance the scales. So, don’t assume a COI will start referring clients to you because you’ve sent some of your contacts their way. Most referrals occur because the COI is offering a possible solution for a particular problem.
You must demonstrate real expertise, care, and a documented process. COIs need to know what their client can expect from you and your business and feel confident that you will deliver. A real strategy isn’t built on unspoken assumptions and hopes of reciprocation.
Always follow through on what you promise or schedule. You can use alerts or calendar reminders to help you stay on track. Be consistent. When you are in a meeting, be present and focused.
Show your COI that you are reliable and can be trusted to handle your business.
Keep your engagements reasonable. Don’t commit to too many relationships, or you won’t have time to nurture them properly. Overextending yourself can lead to flaking or inconsistent service.
Putting a face to the voice solidifies the new relationship. So, after initial contact, try to set up an in-person meeting as soon as possible if your COI isn’t already in your circle.
Getting a referral from a new client is exciting, but it’s not the norm. Most COIs are guarded with their recommendations because they have a reputation to uphold. Demonstrate how you can add value, perhaps by solving one of the COI’s own financial issues, before asking for referrals. Build a relationship to show you have your clients’ best interests at heart.
It’s important for the experience to be relatively seamless and beneficial. If possible, make the first move and refer one of your clients to the COI. Your client will appreciate the introduction, and the COI will be reminded of the benefits of your relationship.
Giving an out might seem counterproductive, but you should never force anyone to give you a referral. Think about the last time you gave a referral. Did you do it because you felt pressured or because you really appreciated the service you received? When you made the recommendation, did the business make you feel good about that decision?
If your COI can’t think of a qualified referral, trust them. Making it easy for them to say no now increases the likelihood that they’ll come back if they do think of someone down the road.
At AssetMark, we know the value of a quality connection. We help financial advisors like you build their businesses by preparing for the future and taking a proactive approach toward growth. Our turnkey solutions and resources can help you establish meaningful relationships and cultivate your network.
Would you like tailored support for your firm? To get a comprehensive marketing strategy for your business and learn about the latest innovative technologies, reach out to one of our consultants today.
AssetMark, Inc. ("AssetMark") is a leading provider of extensive wealth management and technology solutions that help financial advisors meet the ever-changing needs of their clients and businesses. The information on this website is for informational purposes only and is intended as an overview of the services offered to financial advisors, not a solicitation for investment. Information has been drawn from sources believed to be reliable, but its accuracy is not guaranteed and is subject to change.
Advisors seeking more information about AssetMark’s services should contact us; individual investors should consult with their financial advisor.
AssetMark is an investment adviser registered with the U.S. Securities and Exchange Commission. Visit our ownership page for more information.
© 2024 Copyright AssetMark, Inc. All rights reserved. 6916884.1 | 08/2024
