Are you open to referrals?

Advisors need to reframe how they ask and receive referrals, says portfolio manager

Are you open to referrals?
Grant White

When I ask other advisors about where they are seeing most of their growth coming from, almost always the answer is from referrals.

So many successful advisors have developed great connections within their networks and are building their businesses through those connections. Yet, when asked about whether they have a process around receiving referrals, most do not the slightest clue about why it is working and certainly don’t have a planned process for it.

How can you replicate something if you do not understand it? How can you mentor another advisor in your team to be successful if you cannot figure it out for yourself? How can you refine your referral process so that it is replicating the clients you want to replicate?

The first step in increasing referrals and having a set process for it is identifying within your practice the clients you want to replicate. I am big proponent for segmentation of clients. The simple reality is that not every client demands or wants the same level of attention. Through your client segmentation you can identify which of your clients you want to replicated based on a number of factors, including who you enjoy working with, who can you add value for and who is most profitable per hour for your business.

You may also be able to identify other common characteristics among your favourite clients, which can be helpful as you began to target new clients. For example, you may find that all your favourite clients also enjoy fishing, or wine tasting or travel. This will come in handy when you begin asking for introductions.  But we are getting a bit ahead of ourselves.

Once you have identified the clients who you would like to replicate, the next step is making sure they know that you are open to referrals. This goes beyond just putting a tag on your email signature which mentions referrals.

This is often one of the most difficult steps for most advisors, as many feel guilty or unqualified in receiving a referral. Advisors feel awkward asking their clients because they feel like they are asking them for a favour. You need to reframe referrals in your own mind because you’re not asking for a favour, you’re providing a service to some of your best clients and it’s not a service you offer to everyone.

If you are providing value to your clients, then is it  not reasonable to expect that they want their friends to receive that value as well? Of course it is. Everyone wants their friends or family members to be successful as well. This is not a favour; this is letting your best clients know that you are open to helping the most important people in their lives. I would also point out to them that you are not offering this opportunity to everyone because you simply don’t have the capacity to take on that many new people in a year and you don’t want your service offering to suffer.

Another common struggle I encounter in conversations is, when is the best time to ask for a referral? Personally, I prefer bringing up the conversation with clients right after we have delivered on a value promise. There is no better time in a relationship with a client than when you have delivered on something that makes them happy and helps them to feel relieved and excited about their financial future. My personal favourite is a simple ask, which goes something like this:

“I’m so glad to see how happy you are knowing that your plans and goals are on track. We love working with people like with you and if there is anyone else you know that you feel could benefit from this advice please let us know. We would love to have a chat with them.”

If you’re not having these conversations with your clients, you might be surprised to find out just how many of them weren’t sure if you were taking on new clients and so they don’t bring it up. They may just feel that you are too busy and so by asking them or making a comment about referrals you are in fact giving them permission to introduce you to the people they care about. I would also reframe in your mind that a referral is more of an introduction rather than a promise of new business. That is all you are looking for, an introduction.

Finally, once an introduction is set to be made, you need to determine the best way of engaging that introduction. My personal favourite is through passion prospecting events. As mentioned earlier, this is where it is important to know if there are any common interests among your favourite clients and yourself. If you are an avid wine drinker then perhaps this would be a great opportunity to line up a wine tasting event at a nice vineyard or wine store in town. It is a great opportunity to invite your clients with a similar interest and ask them to invite their friends, who they want to introduce you to. 

Alternatively, you could invite your clients out for dinner and ask them to invite their friends as well. Make sure they know it is a casual event and they are not there to be pitched. There will be plenty of time for business in a meeting, for now you are just looking to make the connection. You can always reach out to the contact after the occasion and see if they are open to meeting. Of course, if your client knows someone who would like to meet with a new advisor right away, then ask if you can reach out to them and arrange for a meeting. No sense beating around the bush if they are ready to make a move.

Is it ok to ask for referrals during the pandemic? Absolutely! Now more than ever people are looking to help each other out and unfortunately, there have been many advisors who have not been as attentive to their clients as they should be. Building your business through referrals can be one of the best opportunities any of us have. It will enhance our existing relationships, develop new long-term clients and help us to enjoy the work we are doing more. If all that sounds appealing to you, then perhaps it’s time to make a plan for it.

Grant White is a Portfolio Manager/Investment Advisor at Endeavour Wealth Management with Industrial Alliance Securities Inc, an award-winning office as recognized by the Carson Group. Together with his partners he provides comprehensive wealth management planning for business owners, professionals and individual families.

This information has been prepared by Grant White who is a Portfolio Manager/Investment Advisor for Industrial Alliance Securities Inc. Opinions expressed in this article are those of the Portfolio Manager/Investment Advisor only and do not necessarily reflect those of Industrial Alliance Securities Inc. Industrial Alliance Securities Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.