Financial Advisor Blog on Marketing, Lead Generation, Prospecting and Sales

There’s a ridiculous notion in the advisor community that keeping your clients happy is the way to get referrals. While happy clients are a necessary condition to get referrals, it is not a sufficient condition. Sure, your clients must be satisfied with your advice and service, but that’s not enough to have them send you the quantity of referrals you would like.

It’s an absurd assumption to believe your clients walk through life thinking as follows: “I love my financial advisor. My day won’t be complete until I do something nice for my financial advisor. What could that be? I know! I’ll get him a referral!” Your clients have more pressing things to think about like their own welfare. And most of them are not clear how they can help you because you have not made it clear.

Of course, you will get an occasional referral from a happy client. But any advisor that is in a growth mode should be growing their assets by at least a million dollars a month. If your referrals generate that amount of new assets, then you must be a super individual. But I’ll bet you get maybe three or four unsolicited referrals a year and the new assets are insignificant. Being a nice guy or gal and waiting for your phone to ring is not a formula for success.

Most financial advisors realize that this passive referral method does not work and many attempt another method to get referrals. They don’t sit back and wait, they ask. But the way they ask is unproductive. They use the “ambush method.” Here’s what that looks like. In the middle of a conversation with a client, you verbally ambush them, “Say Bob, who do you know, someone like yourself that also wants tax free income from conservative investing?” Taken off guard, your client begins to stammer, “uh, uh, geez, I’m not sure. I can’t think of anyone. Give me a couple of your cards and if I think of anyone, I will pass them out.”

This unstructured way of getting referrals lacks any system or structure. It's ad hoc—you forget to ask half of the time and the other half of the time you get the stammering response from your client. If you want great results—in referrals, in portfolio performance, in your business—you must have a structured process.

Here is the process.

Step 1: At the beginning of the relationship, you ask your new client, “What do I need to do during the next ninety days so that you would feel comfortable introducing me to your friends and associates?” If you have reasonable clients, they will say things like

• Call me back the same day I call you
• Let me hear from you every two months so that I know you are looking out for my interest
• Explain my statements and insurance policies to me so that I understand them

Step 2: You write down what your clients tells you and over the next ninety days you do what your client has requested.

Step 3: You contact your client after ninety days, review what they asked of you and have them confirm that you have done it. Now that they are clear about the quality of you and your service, you then ask them for a favor. You ask them to join you for lunch and for their help with your business development program (ask them to bring their address book).

Step 4: At lunch, you have them sign letters introducing you to their friends and associates (which you take back to your office and mail). The read sound something like this:

“Over the last few months, Stu Jones has been my financial advisor and he’s been the best advisor I have had. As busy as he is, he calls me back the same day I call him. He stays in touch with me regularly so I know he is looking out for my best interest. He is also the only professional that has taken the time to explain my insurance and investments to me so that I really understand what’s going on. I highly recommend Stu. Feel free to call me at xxx-xxxx or call Stu directly and meet with him at xxx-xxxx.

There you have it. It’s what most advisors lack: a structured process that prepares your client from day one to assist you. They tell you the conditions of satisfaction to meet in exchange for their help. You simply fulfill their conditions. So far, the record is 150 referrals from one client using this approach. Many advisors receive from 5 to 20 signed letters from one client. Overall, 40% of these clients who receive a letter of introduction become clients of the advisor within a year.

So if you want to sit back and wait, you may get what you deserve. The meek may inherent the earth but those with a structured active process will get referrals.

Post provided by Javelin Marketing