At the Schwab Impact conference in Washington, I was on a panel discussing client experience. One part of the discussion caused quite a stir in the media, both traditional and social.
While sharing our thoughts about wealth management, I made a pejorative comment about how our industry asks for referrals and the absurd "how to get referrals" education many of us grew up with.
I sincerely believe that the way most of us have been taught to ask clients for referrals is demeaning and insults our profession. Imagine if, after curing you of cancer, your doctor asked you for a referral by saying, "Now that I've cured you, can you introduce me to your friends or coworkers that might need my service?" or, "We grow our business by receiving referrals from our valued clients. Do you know anyone else we should work with?" Asking for referrals in this way is embarrassing for you and for your clients.
Referrals are the No. 1 source of growth for most advisers, and our national firm is no exception. Heck, just this year we've obtained over $1 billion in assets under management in referrals already. Am I being hypocritical by talking down about something that gives us so much benefit? I hope not. Referrals are the lifeblood of our profession. However, I think there is a far better way to get referrals that isn't quite so "icky."
1. Understand your value. In the past, most advisers made their living selling investment products, like salesmen in a transactional relationship. That's when the original referral language was developed. Today, most advisers in wealth management have insights that go way beyond investing. They have a professional, long-term relationship with clients. Their knowledge and time are valuable.
Whether it's figuring out the most efficient wealth transfer strategy or helping somebody manage their financial life through a divorce, most advisers have important skills that can help people avoid costly mistakes. That's something to be treasured by your clients and their friends.
2. Check your intentions. Is your primary goal to make more money or to help more people? Your intentions matter. You can grow your firm the "old school" way of asking for referrals to find more clients and make more money, or you can help your dearest clients take care of their closest friends. As nuanced as the difference might appear, it changes everything.
Your intentions determine how you frame and approach the topic of referrals. If you offer your expertise to help your clients' friends, they will view your service as something to appreciate, not something to dread. If your primary goal is to help people, that intention permeates the organization and drives a mindset of service that makes you more referable whether you ask or not.
3. Offer your help in the right way. Offer your help, don't ask for a referral. Here's a simple example: "Jen and Steve, if you're ever in a situation where someone you care about needs my help, I want you to know that we're here for you to have a call and help them in any way I can. I might not be able to take them on as a client, but we can at least give them some guidance and help them to avoid making big mistakes." By doing this with a genuine intention to help, you offer an act of service instead of asking your clients for a favor. Imagine if your doctor or lawyer offered this service. You would be grateful, not painfully uncomfortable, right?
4. Offer your help to the right people. If your clients aren't comfortable telling their friends about you, it could be that you have not yet done enough to help them. Be selective. Make it a privilege. Offer your time to people with whom you have an authentic connection, folks who really love working with you and on whose lives you've made a big impact.
While your time might occasionally be spent on a call with a person who will never be qualified to be your client, such as an irresponsible brother-in-law, your clients will not abuse this service and will genuinely appreciate you. They will return your favor with their loyalty. It goes without saying that some of their friends will be people who end up becoming clients.
Do great work! The advisers who do the best work also get the most referrals. People aren't going to talk about their financial plan with their friends, but they might talk about a unique problem you helped them solve. They might say, "She got my husband to agree to go on a three-week European vacation!" or "He got my wife to get comfortable with retiring early!" or "I don't know how we would have dealt with my dad's death without their help!"
When you help people in a way that is specific and makes them feel special, they are going to share it with their friends in the way we all do: by telling stories about someone who really helped them.
This article originally appeared on Investment News “Duran Duran” blog.