MASELLI: Every advisor wants to get referrals. Very few advisors have a process for getting referrals. I recommend creating a referral intelligence file. Come up with 20 clients-just 20-that you would like referrals from over the next 12 months. Then, research each of those clients' worlds and develop a one-page dossier on each, identifying specifically who that client can refer to you. I never would go to a high-net-worth client and ask, "Who else do you know that might be interested in my services?" Do that homework before asking for a referral.
GLUCK: What are the kinds of things you're trying to uncover about referral sources?
MASELLI: You're looking for information about the client's personal world, family and interests-restaurants she goes to, country clubs, hobbies, kids' names, where her kids go to school, charitable activities. You're also looking for professional ties, such as suppliers, major clients, her stature in the industry and board memberships. The ultimate goal of the referral intelligence file is to identify specific relationships in that client's world.
GLUCK: So you want to do research on your client to find out if he's a corporate bigwig, sits on any boards and determine if he has a friend that you might want to make a client.
MASELLI: If your client sits on the board of a charity or publicly held company, you want to know all the other board members. Then you can say to the client, "I know you serve on the board over at XYZ. There's a guy on the board, his name is Bob Smith. Is there any chance you could engineer an introduction between the two of us?" You do all the homework in advance. High-net-worth people are busy. They don't have time to brainstorm when you ask for a referral and search their contacts to see who might be a good fit for your services. Your top clients are busy running their lives, running their businesses. So do the homework for the client.
GLUCK: But aren't you back to begging for a referral? And by naming someone the client knows, isn't it kind of stalker-like?
MASELLI: When you're face-to-face interacting on a client-to-advisor level, it's friendly and relaxed.
GLUCK: One insightful observation in your book is that clients face what you call "referral risk" whenever they recommend their advisor to a friend. What is referral risk?
MASELLI: Giving you a referral can be terrifying to high-net-worth clients or centers of influence, like accountants and attorneys. There's no upside for them. If you screw up something, your client may get a call asking why he gave his name out to you. If you lose money or give poor service to the person who was referred, your client could lose that friend. That's why when you ask for a referral from clients, many will give you answers like, "I don't really get involved with my friends' finances." Or, "I can't think of anyone right now." Basically, they're scared. To them, it's like writing a naked call option. High-net-worth clients and centers of influence have three levels of trust. The first level is when they give you a portion of their money to care for. The second level is when they give you all of their wealth to manage. And the third level is when they trust you with their friends, colleagues and critical relationships. To get referrals, you must get to the third level of trust.
GLUCK: You suggest ways to manage referral risk. What are those ways?