How To Focus On Referrals

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.