Registered investment advisors continue to grow their business during turbulent times, but have room for improvement when it comes to recruiting new clients, according to speakers at the TD Ameritrade Institutional "Momentum Optimized" conference in Washington D.C. last week.

"People seem to be a little calmer. We are more prepared, because of this volatility. This seems to be helping advisors' businesses," Tom Bradley, president of TD Ameritrade Institutional, told an audience of about 400 people. Bradley noted that the S&P has moved more than 2% on 63% of the days since July. Wirehouses have only grown at a rate of 11%, while RIAs have grown at 46%, he said.

During a panel on panel growth later in the day, nobody raised their hand when speaker Julie Littlechild, president and founder of Advisor Impact, asked who felt they were doing an "excellent" job of getting client referrals.

"Advisors are too simplistic or just not effective," she said. "Referrals go to the heart of what advisors do for their clients. They are a transfer of trust."

Advisors face some obstacles when it comes to seeking referrals, Littlechild said. For example, she said, it is easier for people to refer a friend to a restaurant than an advisor because advisors are considered high-risk referrals, she said. A night out on the town versus the security of an entire retirement savings are two completely different things, she noted.

Unsolicited advice can be viewed as an insult, she noted. For example, if one person says to a friend, 'You should go to my barber," the friend might think, "Why do I need to go to your barber--do I have a bad haircut?" Likewise, an unsolicited endorsement of an advisor might be viewed by someone as a comment on their financial situation.

Advisors may also be bashful about asking clients for referrals, thinking, "'My clients are going to think I am looking past them [for the next client.]"

She trashed traditional referral techniques, such as asking clients to write down the name of prospects when they visit the office. "I'm not saying advisors have to be passive," said Littlechild. They just need to do a better job of positioning referrals and making their clients feel comfortable, she continued.

On average, she said, about 29% of clients say they give referrals, while only 4% give successful referrals. Advisors should focus on improving this success rate if they want to quickly tap into potential growth, she said. Advisors could start by approaching their clients who have already provided a referral and ask if they could two more, she said. "It may be the path of least resistance, as they have already given a referral," said Littlechild.

She also recommended doing qualitative research, such client advisory boards and focus groups. "Find out what is important to them," she said.

Richard Whitworth, senior manager in the practice management group at TD Ameritrade, said, "A successful referral strategy begins with being able to correctly and consistently articulate your value proposition as a trusted financial advisor. When advisors and their staff embody that value proposition, they will inevitably attract the right type of clients."

Whitworth believes an effective referral strategy creates a multiplier effect for a business, building an extremely cost-effective marketing engine. "Raving fans" can carry a message to a broader audience than traditional marketing tactics, he noted.

Mike Byrnes founded Byrnes Consulting to provide consulting services to help advisors become even more successful. His expertise is in business planning, marketing strategy, business development, client service and management effectiveness, along with several other areas. Read more at