An inconsistent strategy and process for referrals is not going to deliver the best results.

At this year’s Cantella annual conference, Brian Nelson, a vice president and recruiting program manager at National Financial, gave a presentation called “Optimizing Referral Growth.”

“It is the No. 1 way we grow,” said Nelson about referrals. He encouraged the attendees to think about how much more a referral process could increase their overall growth.

To start off, he handed out a "Building a culture of referrals" worksheet that had advisors do a self assessment in four categories: planning, communications, business alignment and process discipline.

It Should Be A Focus
Nelson referenced a Horsesmouth study that found 80 percent of advisors surveyed had no referral strategy, or if they had one, it was unfocused and inconsistent.

If it is the main way advisors grow their businesses, why are they not focusing on it?  Fidelity’s own research found there is a big disconnect: Clients do not feel they are being asked for referrals, but the majority of advisors think they are asking them.

Best Practices For More Referrals
To help fix that gap, advisors need to work on their value proposition so clients can easily talk about the advisor, servicers and business. Nelson referred to this issue as an “ineffective practice story.”

Advisors also have to make it very clear who their ideal client is. Nelson pointed out that some advisors cannot even answer the "Who is the ideal client?" question for themselves.  If advisors do not know the answer, how can clients be expected to know?

Many advisors have no plan when it comes to referrals, Nelson said. They should start with a longer-term, five-year goal and then get more specific. Then advisors should define their desired increase in assets under management, the total number of new clients needed and a specific goal for each of their employees, Nelson said.

Advisors can make it part of their business culture by letting associates help in planning by contributing their own referral ideas.  Regular team meetings should be dedicated to this planning, Nelson said. 

Nelson also asked attendees to think about how they handle referrals and what clients are told during the referral conversion.

Nelson recommended integrating the referral process within CRM and using National Financial's Referral-EDGE tool, which is expected to be enhanced later this year.

Wrapping up, Nelson quoted Yogi Berra:  “If you don’t know where you are going, you might end up somewhere else.”

Jennie Devlin, president and chief operating officer at Cantella & Co. Inc., said in a follow-up conversation: “We see at Cantella, the advisors that do the best with referrals are the ones that have the closest relationships with their clients. They deliver high levels of service and communicate extremely well.”

Mike Byrnes is a national speaker and owner of Byrnes Consulting LLC. His firm provides consulting services to help advisors become even more successful. Need help with business planning, marketing strategy, business development, client service and management effectiveness? Read more at ByrnesConsulting.com and follow @ByrnesConsultin.