Life would be so much easier if our clients did our prospecting for us. Years ago, I was introduced by a current client to a business owner who handed me her statements and said: “I have been told you are very good. You are my new broker.” Not much work was required on my part.
But in the real world, referrals do not come in a steady even flow. Unlike other prospecting methods, you cannot double your efforts without offending people. I once overheard an advisor on the phone say: “You haven’t sent me any referrals lately.” That might work in a networking group, but not in an advisor/client setting.
Why are your current clients who are happy with their relationship not be sending their friends in your direction? Here are a few reasons:
1. They may not know you accept referrals. The simple reason is your client does not know where your clients come from. They might assume they are assigned to you by your manager. Think about it: Their dentist and family doctor do not prospect. People sign up for a plan and go to the nearest doctor in their plan.
Strategy: Let them know your practice grows through referrals. You like them. You wish you had more clients just like them.
2. They may assume you are full up. This might happen if you are experienced and always busy. They want you to play gold on the weekend. You are working. They want you to join them on vacation. You can’t get away from the office. They may assume you have all the accounts you can handle and are struggling to keep up.
Strategy: Let them know when a client has relocated or passed away. Mention you always try to help people who are friends of current clients.
3. They do not know how you help people. This might happen in transactional relationships when financial planning isn’t at the center of the relationship. They consider you an "order taker." Even worse, when they are losing money, it’s somehow your fault yet when they are making money, you are just doing your job.
Strategy: You should have a conversation that introduces financial planning, creating a need for the core elements like retirement planning and college saving. This should get them thinking about who has these needs.
4. They cannot think of anyone to refer. This happens if you ask: “Is there anyone else I can help?” What does help mean? It would be very rare for a friend of theirs to say: “My life is really messed up. I need a financial advisor.”
Strategy: Try asking: “Who in your office is retiring in the next year?” You could also try: “Who do you know that just had their first child?”
5. Risks outweigh the rewards. This client fits into a different category. They know people with money who have an existing financial advisory relationship. They have not complained. Maybe they just got a financial windfall. If they sent their friend in your direction and something went wrong, they might lose a friend. If that friend sued you, the advisor, they might be named in the lawsuit because they made the introduction.
Strategy: Get them looking for people with problems. They know some people who say their advisor never calls or their performance stinks. It’s easy for them to say: “You should really talk with my advisor. They may be able to help.” It’s human nature to want to help when someone has a problem.
6. They don’t know what you do for them. There is the story of the teenager who went off to college. When she finished wearing clothing, she dropped it on the dorm room floor. Her roommate got upset. It transpired she grew up doing this at home. The clothing on the floor magically reappeared cleaned and folded in her dresser drawer. She had no idea how this happened! You might anticipate needs to such a great extent your client might assume this also happens magically.
Strategy: When you conduct portfolio reviews, remind them how you have helped them over the years. Who else do they know that would benefit from a similar relationship?
7. You have not asked. There is an urban legend concerning John D. Rockefeller. He had a need for insurance, bought from someone and mentioned it to his friends. One of his friends in the group said: “You know I sell insurance. Why didn’t you buy from me?” Rockefeller replied: “He asked.”
Strategy: You cannot assume everyone has perfect recall. It’s been said you need to remind a person at least six times before something sinks in. Let your clients know from time to time you accept referrals.