Half of business consultant Angie Herbers' financial advisory clients give her a hard time for suggesting that they offer perks to their own customers. The other half are taking her advice to the bank.

Herbers, a Manhattan, Kansas, management consultant with a high percentage of financial planning clients, says she believes perks that resonate with clients are "the secret to life, the universe, and advisory firm growth."

Incorporating unexpected but helpful extras beyond your financial services — such as subscriptions to Kiplinger's Personal Finance magazine, identity theft protection or rewards programs — can get clients talking to family, friends and colleagues.

"They're not going to talk about their quarterly review at dinner," says Herbers. "They're going to be sitting across from someone who's complaining their debit card got stolen, and they're going to say ‘We don't have that problem because our advisor has I.D. theft protection for us.'"

The concept has its detractors. Kent Grealish, a San Bruno, California, hourly rate investment advisor, feels it is better to charge a fair price than buy clients gifts with their own money. Yet Grealish has not forgotten being asked by a good client why he does not give out signature golf balls as his buddy's broker does.

Others say it solves a common advisor challenge: How to ramp up referrals.

The 'Perks-Up-Front' Model

Herbers divided her client base down the middle to compare informally the referral business won by advisors who use perks with those who don't. Typically, an advisor may get one new referral a month for every $1 million in revenue.

"We found that those who offer perks significantly exceed the benchmark," she says. What's more, firms that offer perks often don't have marketing expenses or marketing departments because they don't really need them. Their clients do the marketing for them.

Perks can be broken down into two categories: Those the advisor pays for, and those that are free, though they may require an advisor's time.

Deborah Fox, CEO and founder of San Diego-based Fox Financial Planning Network, which provides consulting services to more than 300 advisors, says her client firms have hosted wine tastings, dinners and golf events for clients at their own expense.

Another popular perk is providing clients with free online portals for account aggregation so they can see all of their accounts in one view. That can offer advisors the additional benefit of getting to see all of their clients' assets, even those they do not manage.

Dave Caruso, founding chairman and managing director of Boston-based Coastal Capital Group, which manages about $1.1 billion in assets, keeps a circle of consultants on retainer so clients can obtain free help with issues such as getting medigap health insurance or managing cash flow.

"I know they don't say, ‘Boy, he got me 10 percent last year.' They say, ‘I was going crazy with my health insurance and he put me in touch with someone who deciphered it for me,'" says Caruso.

He also keeps a shelf full of his favorite books. If a client is getting divorced or starting a new business, Caruso hands him or her some helpful reading. He has picked up referrals after books were passed around among a client's family and friends.

Herbers found one perk that worked well across all firms was helping clients sign up for American Express rewards programs. It costs the planner some time helping clients apply, and helping them understand how it works and how to redeem rewards. Clients are thrilled with the amount of free stuff they can rack up, even if they pay the membership fee themselves.

The 'Wow" Factor

Clients are most likely to refer their friends and relatives when they feel personally attached to a product or service. That is why some advisors tailor their "perks" to fit their individual clients.

"I put in my own time on a Saturday to sit with a client while he shared business issues he couldn't share with anyone else," says Fox, who in addition to consulting has her own advisory practice. "I took another client to lunch for her 80th birthday." She has also helped clients plan vacations and shop for airfare and cars.

The more clients feel the "wow" factor, the more likely they are to refer, says Deborah Fox. "There's a big difference between loyal clients, which lots of firms have, and clients who are advocates. Much fewer have the latter."

Photo: Reuters/Eddie Keogh