Requests for References

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Jul 10, 2007 12:40 pm

I have only had a few prospective clients ask for references.  However, I am not sure how to respond.  I don't like giving out references for a couple reasons:


Confidentiality - Many clients don't want to discuss their financial lives with strangers.  I would always ask them in advance, but that might put them "on the spot."


Precedence - Not sure that I want to start doing this a lot.  If there are just a few clients willing to give their information, I don't want them constantly being called.


How have others addressed this situation in their businesses?

Jul 10, 2007 1:27 pm

The biz and experience speaks for itself. Key is to start working together on some investments, not every client wants to move every dollar on day one. That's okay, as long as I am fairly paid for mytime from day one.


If they can't make a judgement to start with part of the portfolio with you at the conclusion of the interview/planning process, or just pay for advice as it comes,  they shouldn't be a client.

Jul 10, 2007 2:11 pm

in my experience prospects that ask for references arent good prospects.

Jul 10, 2007 2:47 pm
Vin Diesel:

in my experience prospects that ask for references arent good prospects.



Yep. Ask them for a reference from a financial advisor, so you can see if they're worth having as a client.

Jul 10, 2007 2:48 pm
Bobby Hull:
Vin Diesel:

in my experience prospects that ask for references arent good prospects.



Yep. Ask them for a reference from a financial advisor, so you can see if they're worth having as a client.



Jul 11, 2007 12:09 am

Tell them that it's in their best interests to NOT get references from you.


Ask them this:  Do you think I would give you a reference of someone who DIDN'T like what I've done for them?  Do you really think you'd get an OBJECTIVE point of view from a name that I give you?  How would you feel if I gave your name to someone you didn't know who wanted a reference on me?


Focus on YOUR relationship and the advice that you're giving them.  That element needs to speak for itself, not an unpaid spokesperson that's already invested with you.

Jul 12, 2007 2:59 pm
Vin Diesel:

in my experience prospects that ask for references arent good prospects.



Amen to that.  Had it happen to me once, the client was a total PITA and I ended up firing him.......

Jul 12, 2007 11:17 pm

High income (more than $250k/year), high net worth (more than $1

million and less than 50, more than $5 million at 65) clients will generally

not do business with someone unless through some kind of personal

introduction and they will definitely not do business without someone

who cannot produce referrals. (I'm not talking about giving you $100k to

see what you can do - I'm talking about hiring you as their Financial

Advisor and ACATing the entire account.)



You should expect to be asked for references. Doctors, attorneys, CPAs -

all of the other professions develop lists of references to give to

prospective clients. The SEC's website suggests getting referrals, as does

the CFP BoS. It's a reasonable request, and any statements to the contrary

by an advisor will be met with suspicion by any person with the brains to

be a decent client.



For several years, my firm has maintained an idiotic policy of not allowing

any facility to provide a prospect with references. So, I've simply chosen

to ignore that policy and instead have gotten LOAs from the clients that

I've asked to be references and kept them on file.



As part of my packet that I give to prospects, I give any serious prospect a

list of three happy clients. I then contact the clients to let them know that

they may get a call. I suspect that this has helped a great deal in

competitive situations.



Unfortunately, this isn't of much value to a rookie that doesn't have any

experience. My recommendation is that you team up with a more

experienced producer when you're dealing with the kind of situations

where references are appropriate.



All this having been said, I agree with the view that a client who has

$100k to invest and insists on seeing references is too much of a pain in

the ass to be worth having. This person has no understanding of how

little money they have and will waste your time with all other kinds of

requests.