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How to Get More, and Better, Referrals

Use these strategies to find new prospective clients.

The Death of Referrals.That’s how industry research completed 2 years ago explained the decline in referrals as the top driver of growth for advisors. Regardless of these research findings, entrepreneurial advisors will always need referrals to remain profitable and achieve long-term growth.

The best way for advisors to elicit referrals is to consistently go above and beyond when servicing their clients. If an advisor enables a client to understand their overall financial picture, helps them craft comprehensive strategies for reaching their financial goals, and helps them build strategies designed to help protect their wealth during market downturns, then the client is more likely to recommend the advisor to a friend or relative.

However, generating and engaging referrals can be hampered by inefficiency. Some advisors may not ask for referrals as often as they could because they’re afraid of how clients might perceive their actions. Other advisors may not be able to devote as much time as they would like to reaching out and soliciting referrals.

Whatever the concern may be, here are some referral strategies many advisors have successfully utilized to help obtain more referrals.

Hold Client Appreciation or Informational Events: Clients like to know they are appreciated. One great way to show them how much you appreciate them is by sponsoring appreciation or informational events, in your community where your clients can bring guests and enjoy food and drinks while learning how to better manage their wealth. By inviting your highest-net-worth and most satisfied clients to these events and encouraging them to bring friends or relatives, you show your clients and their guests that you’re open to referrals and willing to help their friends and family just like you’ve helped them.

Provide Event Attendees with a Call-to-Action: While making a connection with referrals and prospects is key, advisors need to proactively take the next step to ensuring that a follow-up conversation can take place. A great way of doing this is to have response forms asking for contact details at the entrance to any event. This allows you to follow up with market commentary and other communications for prospects. Advisors should also provide evaluation forms for all attendees, giving the clients and prospects in attendance the opportunity to offer input and make their voices heard. Evaluation forms can also allow prospects to ask questions—giving advisors the chance to contact them and demonstrate their experience and value.

Find Common Ground Clients Can Discuss with Others in Their Situation: When clients experience both joy and hardship, they talk to their friends and family about what they’re going through, especially if those friends and family have gone through the same thing. Advisors can use this to their advantage. When a client welcomes a new baby, an advisor can reach out to say, “Congratulations! With this happy event some financial changes will likely be necessary, and I can help you with that. And if you know other people who have young kids, I’m happy to talk with them about this too—or we can all talk about it as a group.”

Similarly, if a client experiences the loss of a spouse through death or divorce, their advisor can step in to say, “I’m sorry about what you’re going through. Here’s how I might be able to help. And by the way, I’m sure you’ve talked with others about this as well, or maybe you know others going through something similar. I’m happy to talk with all of you about what I can do to help in each situation.”

This is a subtle way to demonstrate value for clients and strengthen existing relationships while also soliciting referrals and forging new relationships. This is especially meaningful in retaining your female clients, as we know that women whose husbands pass before them often switch financial advisors. We also know that women are more likely to discuss a successful advisor relationship with people they know. 

Part Ways with Bad Clients to Make Room for More Good Clients:
Being an entrepreneurial, independent advisor leaves limited time and resources. We all know you can’t be everything to everyone, and clients who require a lot of time, without adding much to your practice’s assets under management, take resources away from serving those higher-net-worth, and less demanding, clients. To better serve the clients that bring the most value to your practice, you need to part ways with the ones who don’t. These high-maintenance clients will often find they work better with a different advisor, and this works to everyone’s benefit. Ultimately, parting ways with any client isn’t something that is fun, but will help your practice run more smoothly by freeing up your time and resources to serve more ideal clients and prospects.

Generating client referrals can be considered an art form. Practice makes perfect, and the above tips may help advisors obtain more referrals who are likely to become their ideal clients.

Chris Radford is President of AE Wealth Management.

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