Sorry, there is no magic. This article will address some of the key issues to unlocking your referral potential. If you are looking for clever sales tactics to get referrals, this article is not for you. If you are looking for deeper insights to become a better and more referable financial advisor who earns the right to ask for and receive referrals, read on.

Most of your clients carry smartphones. Your clients, even your most elderly clients, have some names with contact information programmed into the memory of their smartphones. How many? A few dozen? A few hundred? A few thousand? Who are the people programmed into their smartphone memory? The people they care about most, with whom they have the best relationships, of course. That means that most of your clients come to your office with a device in their possession containing the names, addresses and phone numbers of many people they could introduce you to … if they wanted to. Yet, when asked, most of them say something like, “I really can’t think of anyone right now, but if I do I’ll let you know.” Don’t hold your breath, right? What’s really happening here is that they are unwilling to risk their relationships with their friends, family and colleagues by referring you. Ouch! Sorry, but that’s the truth.
What are the possible reasons for this, and what can you do about it?

1. Not enough trust. How can that be, you say!? “They trust me with hundreds of thousands or millions of dollars, they follow my advice about their money, and we’ve worked together for years!” It’s two different measures of trust. Everyone has an imaginary trust dial embedded in their subconscious. Everything you say and do moves the needle on that trust dial one direction or the other. On a scale of 1-10, perhaps your clients need to have an 8 level of trust to do business with you. Where does the needle on their trust dial have to be in order to risk their most important relationships by referring them to you? Probably higher than the level required to do business with you. Almost certainly close to 10. Do not assume that trusting you with their money or for financial advice, even for a long period of time, means they trust you enough to introduce you to their friends, family and colleagues. You might find it valuable to reread the articles I’ve written on building high-trust client relationships for this magazine.

2. Most financial advisors don’t ask for referrals. Given the overwhelming evidence that financially successful people will meet their next advisor by referral and how much less time-consuming and expensive it is to grow your business by referral, this fact is remarkable. How many financial advisors do you know who have a scripted process for asking for referrals and following up that they consistently implement? What might be the reason for this? Do you remember that classic scene between Jack Nicholson’s and Tom Cruise’s characters in the movie A Few Good Men? “The truth!? You can’t handle the truth!” If referrals are a measure of how much my clients trust me and how much they value my services, then if I ask for referrals and they say ‘no,’ I’m hearing something I don’t want to hear. But it’s the truth. Can you handle the truth? It’s important that you can. Sadly, rather than dealing with the truth, building more trust and adding more value, many financial advisors choose to buy more advertising, run more seminars, do more direct mail or e-mail blasts, do radio shows, have dinner meetings, etc. Check out Bill Cates’ book Get More Referrals Now for great ideas on how to build and implement a referral process.

3. No real distinction between advisors. Some clients are thinking it and some say it out loud, “Yes, I choose to do business with you, but you pretty much do what most financial advisors do, right? So why should I refer you to my friends who already have a financial advisor when they are probably being taken care of by someone who is doing just as good of a job for them as you are for me?” Is that true? Do you pretty much do the same things as every other wealth manager, financial planner or broker? If so, how did you let that happen? If not, how is it that some of your clients think that? Check out Scott McKain’s book The Collapse of Distinction for great insights on how to distinguish yourself, in a good way, from the homogenous bucket of financial advisor mediocrity.

4. Not referable. Mediocre client experience, few deliverables, infrequent or inconsistent client meetings, a value proposition based on investment performance versus goal achievement and being an asset gatherer versus a true advisor are some of the many reasons that make a financial advisor not referable. You have to actually be better in order to be referable. Remember, your clients are risking their most important relationships by referring their friends, family and colleagues to you. Would you refer your friends to a mediocre restaurant or recommend an average movie? Check out for great ideas on how to operate at the high level that will make you referable.

5. Perception that asking for referrals is too much self-promotion. This is evidence of thinking from the wrong perspective about who benefits from the referral process. Building your business by referral isn’t just good for you; it’s good for your clients’ friends, family and colleagues. And it’s beneficial to your clients because it’s less expensive and less time-consuming than other forms of client acquisition. How does meeting you benefit your clients’ friends, family and colleagues? How will their relationships with their friends, family and colleagues be enhanced because they make the introduction? You must be able to answer these questions or you’re right to be concerned about self-promotion.