If advisors want more referrals from centers of influence, they had better get strategic.

Referrals are the most effective way to grow an advisory practice, said Nikolee Turner, managing director of business consulting for Charles Schwab.

Seventy-five percent of all new business comes from referrals and 60 percent of those referrals come from centers of influence, but those results largely occur absent of a strategy to cultivate referrals, said Turner, who spoke at the Schwab IMPACT 2016 conference on Tuesday. “Advisors lack formal structures in their approach," she noted. "We see a lot of activity in generating referrals, but it’s a lot of unproductive activity.”

In fact, while 94 percent of advisors told Schwab in its 2016 Advisor Benchmarking Study that they were working with centers of influence, only 1 percent said they were effective at working with them.

Schwab’s top quintile of high-performing and fastest growing firms in its benchmarking study tended to be those who had a clear strategy for generation referrals, said Turner.

Those high performers also tended to provide a high level of client service and were able to describe their client experience through storytelling, she said.

“They’re deliberate about it and intentional in the way they share their stories,” Turner said. “They use their stories not just to connect with centers of influence, but to share with their clients.”

Turner said that an advisor’s storytelling shouldn’t be simply about who they are as a firm and what they do, but also demonstrate specific examples of how they have helped clients deal with common problems in a relatable way.

A great strategy for generating referrals from centers of influence involves three essential elements: organization, process and sustainability.

Organization involves setting clear objectives, finding the right stakeholders to lead the process, and establishing an implementation plan. It also means fostering a practice-wide culture of service around centers of influence within the firm.

After the organizational groundwork is laid, advisors can begin the process of selecting and cultivating centers of influence.

“The first thing you have to do is figure out who you want to be going after,” Turner said. “You have to work it down to six or seven coveted partnerships that you want.”

Potential partnerships can be identified by similarities in firm culture, clientele and objectives, said Turner.

These potential partners should also be diversified, and advisors may want to look beyond more typical centers of influence like attorneys and accountants.

“You don’t want six CPAs or six attorneys,” Turner said. “Think about where else you can look for referral sources. It depends on where you live and what types of clients that you have. I have heard of firms using art dealers. There’s a firm in Colorado that uses life coaches to generate referrals.”

Junior advisors and younger staff members can help firms cultivate centers of influence across generations, too, said Turner.

Advisors should start with a broad list of possible referral sources, and then begin meeting with the centers of influence.

The first meeting should be short – Turner recommends around 20 minutes – and take place in the center of influence’s office.

“It’s important for you to see how they treat their staff and what their office environment looks like,” Turner said. “They do all the talking, because you are sort of interviewing them. You’re going to talk to them to find out what’s important to them. Resist the urge to pitch.”

If a firm is a good fit with the advisor and if they seem open to making referrals, an advisor can move on to a second, longer meeting. This way, centers of influence that are unlikely to refer clients or are culturally incompatible with the advisor can be culled from the list.

The second meeting should last for 40 minutes, and advisors should drill deeper and conduct some due diligence by creating a profile of the center of influence.

If the advisor still senses an opportunity for quality referrals, they can then arrange a third meeting with the center of influence.

“This is now your time to shine,” said Turner. “Tell them about how you work with clients and how you collaborate with other professionals. What is your experience and credibility. Give them a snapshot of your firm, a picture that can plan in their mind what it is you do so they will remember you.”

Turner said that many advisors fall short in making explicit what is normally implied – that they want the center of influence to generate new client contacts.

“What happens is we just assume that the center of influence knows what we’re doing,” Turner said. “We don’t talk about it, we sort of talk around it and we don’t cement what the partnership would look like. In a partnership, there has to be a win-win. This step is about communicating what that looks like, what am I going to do for you, what are you going to do for me.”

Professionals should create a process around referrals – does it involve an e-mail thread, a conference call, or scheduling a face-to-face meeting between the client and the professional? Is simply telling the client about the advisor sufficient?

Too often, advisors and centers of influence refer clients to one another by handing over a business card, said Turner, adding that advisors and centers of influence also don’t do enough to cement their relationship – and their referred client relationships – over time.

“It’s a partnership, you need to ask how you’re going to go forward,” Turner said. “Can I add you to my mailing list for my newsletter? Can I touch base with you every four months? Can we have annual meetings where we talk about how our referred clients are doing? Change the way you talk about that experience.”

Centers of influence who give advisors referrals should be treated at the same level as an advisor’s best clients, said Turner.

“The whole process is about deepening trust,” she said. “It’s part of our relationship with the client, it should also be the foundation of our relationships with other professionals.”