Recently, there seems to be a debate in the financial services industry on whether or not referrals are still a key to advisor success. The studies are conflicting—some say referrals are still a major source for obtaining new clients, other studies say there is a major drop off of new AUM from client referrals. Some say the rate of referrals, once an integral part of business growth, is decreasing and others remain chanting the motto of, "focus on referrals."

It doesn't matter which theory you subscribe to or what new business generation tools you incorporate (social media, direct mail, email campaigns, etc.) into your marketing campaign, one thing remains constant—advisors need to grow! Building a referral-worthy practice by offering both a strong package of comprehensive services and a higher level of expertise is still how best practices thrive.

As someone who coaches several hundred high-level practices and with over 30 years of training many of the industry's finest, it's sad to say that most advisors do not deserve referrals and consequently do not get very many.

When you break down the study of referrals, there are two main components.

Step one is where many advisors often fall short. Earning referrals—that is, conducting a practice that is truly referral worthy. Many producers think that just asking is going to work. Using some slick sales line is not the answer. This crucial misstep could be a key reason for the source of declining referrals that certain studies have found. Have the advisors surveyed created a business that is actually worthy of generating referrals? This first step requires advisors to take an honest look into their practices and ask themselves, "Do I offer a practice that deserves the business of my best client's friends, colleagues and family?" "Do I do, 'just enough' or do I go above and beyond?" "Do I really offer value that is referral worthy?"

Here's a simple equation: highly satisfied clients equal referrals. Financial advisors who offer a strong menu of superior client services and prove they are experts in their field are the ones who can consistently earn referrals. Creating trusting, long-term relationships with your current clients will not only increase your retention, but also garner referrals. If you are providing exemplary service to your current clients, they will be more willing to reciprocate by referring new business to you.

A good general rule: Before you ask for referrals, make sure you deserve them. If you provide referral-worthy services, your chances of growing your practice through referrals will improve exponentially.

So, how can you rate your practice to see if it is truly referral worthy?

Two of the first areas you need to revisit in order to evaluate the referral worthiness of your practice are your services menu and your communication with existing clients.

Revisit your services menu and ask yourself the following questions:

"Am I providing a service that people will want to refer?"

"What can I do to improve the services I offer to stand out from the rest?"

Then, take a look at your communications and ask yourself these questions:

"Have I been visible?"

"Do I provide non-threatening (non-sales oriented) forums for prospects and referrals? "

"Does my office have a proactive and referral-friendly environment? "

Step two is asking for referrals. This isn't simply asking a question. "Asking" for a referral many times includes creating an environment that is comfortable and encouraging for clients to introduce you to their friends, family or colleagues. This can happen through activities like client educational events, client appreciation events and client referral programs.

Whether or not you plan on relying on referrals for growth, it is good practice to have the mindset of creating a company that you are fully confident your best clients would refer to their closest family members or friends. It's safe to say that you may see a revitalization of referrals coming your way. Remember the golden rule—the best advisors EARN referrals.

Ken Unger is the founder of The Academy of Preferred Financial Advisors Inc., a coaching and training company for mid- to high-level financial advisors. Unger has over 30 years of industry experience, with over 16 years developing the industry's top financial advisors.