Learn enough beforehand to make every question meaningful.

    It would not be an overstatement to say that most referral systems don't work. The primary reason is that most advisors don't ask for referrals or use any kind of a system. However, if you're using a system and obtaining referrals, and you're not satisfied with your success rate, it may be due to two simple reasons.
    First, advisors rarely gather enough information about the people to whom they have been referred. To improve your success rate, you must create a compelling reason for people to want to take or return your calls. How do you create that compelling reason? You find out in advance what's important to people and you let them know how you can help.

The second reason for a sluggish success rate may be that you're not prepared to respond to legitimate questions and concerns. If you view these as objections, and the person you're calling says something like, "Well, I already have a financial advisor," you're likely to adopt a defensive posture that can lead to an adversarial relationship. The conversation becomes a debate, with you trying to persuade people instead of addressing their legitimate concerns.

On the other hand, you may be achieving some success with your referrals because the people you call have such strong relationships with the people who referred them to you. These folks would talk to you no matter who you were or what you said. Referrals like these are wonderful, but they're few and far between. More often, you'll be calling people who aren't automatically warm and friendly. How can you break the ice? If you want to build a high-trust relationship, shallow chitchat or talking about your credentials won't do it. Before you even call the referral, you have to ask the referring person the kinds of questions that gets him or her thinking about what's meaningful, important, significant or compelling to the person they're referring. Remember the acronym MISC. It stands for meaningful, important, significant and compelling-not miscellaneous information.

Here's an example of how a MISC conversation might work. Let's say I ask my client Dan for referrals, and he recommends his friends John and Sally. To obtain MISC information, I might have the following conversation with Dan. Notice the types of questions I ask. They're designed to stimulate Dan to think about what's meaningful, important, significant and compelling to John and Sally.
Bill: Based on how you know John and Sally, what makes you think they'd value the same experience that you've had in working with me?
Dan: They have some goals and are interested in achieving them, but I think they could use some help.
Bill: What are some of the goals that you know are significant for John and Sally?
Dan: They'd like to own their own home and have the financial freedom to travel more often.
Bill: Have they ever mentioned particular places they really want to visit?
Dan: Oh, yes. They'd love to go to Europe and they'd like to visit their families more often.
Bill: Which family members would they like to visit and where do they live?
Dan: Their parents. They live in California, and John and Sally live in Maine.
Bill: If they had more time, what would you guess John and Sally would want to spend their time doing?
Dan: John would like to spend more time with his horse.
Bill: What's his horse's name?

Did you notice how specific those questions were? Now, when I call John and Sally, I can say, "I understand that some of the things that really matter to you are taking a trip to Europe, seeing your parents more often, and spending time with your horse, Mr. Ed." Knowing that their parents are important to them, and even knowing the horse's name, makes what I have to say much more compelling than if I talked about family, travel and hobbies in general.
It's also crucial to ask specific questions about the person's spouse. Then you can have the same kind of conversation no matter who answers the phone.     Before you start dialing, prioritize the five most compelling reasons why what you do will have a positive impact on the referred person's life. Lead with the best one. The response you get will determine whether you need to use the remaining ideas. Also, be prepared to respond to the three or four most common questions and concerns that could come up initially.

When consulting with advisors, I encourage them to send me audiotapes of their referral conversations, and I provide feedback and coaching about their performance. Last year, I listened to a call made by David, a financial advisor from Pittsburgh. When a woman answered the phone, David immediately asked to speak to her husband. David not only discounted the wife, which was a bad way to begin, but then he ignored the obvious party going on in the background. Clearly, this was a bad time to call. Both husband and wife were very nice to David, which showed that their relationship with his client must have been fairly strong. As the conversation unfolded, David was extremely professional. He was articulate, confident and a good communicator. In other words, he sounded great. However, David provided no real meat for the couple to sink their teeth into and the outcome was fairly inevitable.

After listening to the rest of the calls on his tape, David and I agreed that he didn't have enough MISC information. He called the referrers back and said, "I've been thinking about this and I realize that I really don't have enough information to make this call relevant for your friends." He obtained more specific information, called each of the referrals again, and this time got eight out of nine to agree to meet with him.

If there's a moral to this story, it's that you should never call anyone unless you first know what's meaningful, important, significant and compelling to them, and unless you have a plan for connecting that information to what you do and how you do it.
If you want to improve your referral success, try using questions like the following to elicit MISC information. Remember, you'll be asking your existing clients about people who might benefit from working with you:

What do they do for fun?

When they talk to you about their future, what kind of future plans do they talk about that are meaningful to them?

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