Wednesday, September 27, 2017

Do You Ask for Referrals? You Should.

By Matt Kaas, Life Marketing Consultant

Most of the time when I ask financial professionals what is the most difficult part of their business, they respond that sourcing new clients represents the biggest challenge facing their businesses today. And while there may be any number of different ways to generate new clients, one of the most effective methods remains: being introduced.

A study conducted by Invesco Consulting that looked at the thought processes and actions of over 800 financial professionals found that referrals were the primary method for acquiring new clients, and that referrals typically come from three sources: satisfied existing clients, centers of influence (usually teamed arrangements between professionals with different but complementary specialties for the purpose of mutual benefit), and other people the financial advisor knows. Not surprisingly, 85% of financial professionals reported that they get most of their new clients from highly satisfied existing clients. But what may be more surprising is that the results shift dramatically when asked where these financial professionals received their wealthiest or most lucrative clients. Now centers of influence become the primary referral source, with about 75% of financial professionals reporting they received their “best” clients from centers of influence. If you have been in the industry for any length of time you have probably already exhausted your list of friends and family asking for referrals, so let’s focus on strategies to get more referrals from existing clients and centers of influence.[1]

When looking at existing clients, it is key to focus on the right relationships. It’s best to ask for referrals from your best clients, as these are going to be the closest in comparison to your ideal client, and will most likely offer referrals to prospects similar to them. Typically these are also your most affluent clients. Invesco Consulting Director Brett Van Bortel says, “Once in a while a client will provide a financial advisor with an unsolicited referral to aae new affluent investor. This is usually sporadic, but that need not be the case. Very often, when wealthy clients are asked and asked in the proper manner, they will come through with affluent investor referrals.”[2]

It’s important to make your clients comfortable giving you referrals. You need to make yourself “more referable”! And you do this by bringing value to your existing clients and establishing a system for asking for referrals. From the beginning, set expectations with your clients. Explain that you work with your clients actively, checking in to gauge their satisfaction with how their plan is working, and to uncover any potential problems before they appear. This builds rapport with your clients and strengthens relationships, but more importantly, client reviews are a great time to ask for referrals. When reviewing a client’s financial strategy, ask “Are you happy with how your financial strategy is working out? Do you know anybody that would find value in working with me to develop their own financial strategy?”

As important as asking for the referral is follow-up on the referral. Obviously reach out to the person you were referred to – that should be a no-brainer! But also check back with the individuals who gave you the referral, let them know you contacted the person whom they referred, and offer a thank-you and word of appreciation for the referral. When clients feel appreciated they are more likely to offer referrals now and in the future. Not only that, if your existing clients know that you took the initiative to reach out and that you hit it off successfully, they are more likely to offer more referrals.

While existing client referrals were the number one source for new clients, the Invesco Consulting study mentioned above found that the best client referrals came from centers of influence. Van Bortel explains, “The reason client referrals are cited as the most common source of new clients compared to centers of influence has a lot to do with the fact that a great many financial advisors are not very proficient at creating strategic relationships with centers of influence”. In fact, out of the 85% of financial professionals who reported that they are looking to build relationships with centers of influence, only one out of five said they are doing so effectively.[3]

No different than when asking for referrals from your existing clients, focus on your best centers of influence, those that possess the ability to refer you to the type of client you want to work with. Typically these are going to be lawyers, CPAs, accountants, or tax and other professionals like yourself. When working with centers of influence, remember they are not as much interested in whatever it is that you do, but what you can do for them. Remember that they are thinking, “What’s in it for me?”

Too many financial professionals, in attempting to win over a center of influence, focus exclusively on communicating their expertise and their ability to work with their clients. Centers of influence are constantly bombarded by other financial professionals, who are also claiming to have the same levels of expertise as you. In today’s day and age expertise is no longer a differentiator amongst financial professionals seeking out relationships with centers of influence, but rather it is now a basic requirement.

Instead, focus on uncovering specific problems the center of influence might have, and demonstrate how working with you can help create solutions to that problem. For example, the most common problem CPAs face is missing cost basis on older investments. It usually occurs during tax season when the CPA is working on a client’s tax return and sees a $0 cost basis. When they inquire, the client has no idea. By helping CPAs and clients identify cost basis on older investments beforehand, it saves valuable time for the CPA. If you can save time for a CPA during tax season, they are a lot more likely to sit down for lunch with you after April 15 and discuss how the two of you could work together.

I challenge you during your next client review to set the expectation, bring value to your client, and ask for the referral. For more tips, advice, or
information on creating referrals in your business, systems that you can use to generate more referrals from existing clients, and cultivating more fruitful relationships with centers of influence in your area, please give me a call at 800.321.3924.

Matt Kaas | Life Marketing Consultant
Ann Arbor Annuity Exchange
Ph: 800.321.3924 x133 | Dir: 734.786.6133

[1] Prince, Russ Alan. "How The Most Successful Financial Advisors Source New Wealthy Clients." Forbes. Forbes Magazine, 28 Mar 2016. Web. Accessed on 24 Jul 2017 at
[2] Prince, Russ Alan. "How Leading Financial Advisors Generate Affluent Client Referrals." Forbes. Forbes Magazine, 11 Jan 2017. Web. Accessed on 24 Jul 2017 at
[3] See note 1

Designed for Financial Professionals.