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.