Three-Quarters of Clients who Referred their Advisor Were Asked for This

Growing up I was taught that if I wanted something I had to ask for it. When it comes to sales or marriage, that’s sound advice. But not so when it comes to client referrals and not according to the more than 1,200 clients responded to an in-depth study focused on client engagement. You can download the full report here.

The Rules of Engagement, a new report from Advisor Impact and sponsored by AssetMark makes it clear that having been asked for a referral is a relatively light indicator of actual referral activity. However, it highlights a striking connection between having been asked for feedback and generating referrals.


The obvious question is why. Why don’t clients refer when asked and why is feedback connected to referral activity. We’ll tackle each separately.

1. Why don’t otherwise satisfied clients refer when they are asked?

A relatively small number of clients refer, even though 85% of clients say they are comfortable and 51% go a step further and say they are likely to refer in the next 12 months. It’s not that they are being willfully difficult but simply acting rationally based on two key facts.

  1. Clients are more motivated to help their friends than to help you grow your business. If your ‘ask’ is focused on bringing more clients into your business you are unlikely to offend your best clients but you are missing their fundamental motivation by a wide margin. Fifty-eight percent of clients say they were motivated to refer in order to help a friend while 38 percent said they want to help an advisor build his/her business.
  2. Clients simply don’t know who to refer. Sixty-three percent of clients, who didn’t refer, said the primary reason was that they didn’t know of anyone who needed a financial advisor. Simply stated, clients think they are looking for people with a defined need for an ‘advisor’ when, in fact, they should be on the lookout for people in need of ‘advice’. For example, if I am selling a business, having a child or dealing with the challenges of aging parents, I probably need some advice; it’s unlikely I would articulate that as a need for a new financial advisor.

2. Why is client feedback so strongly correlated with referrals?

Client feedback takes many forms, from formal written/online surveys that result in robust benchmarks to informal conversations between advisor and client. The common denominator across all forms of feedback is that they create a sense of partnership and ownership while demonstrating commitment to the relationship. When clients are asked for feedback they are reminded that you care – as long as you actually follow-up on the results.

There is another more nuanced reason that client feedback is tied to both client engagement (the study shows that the most Engaged clients are nearly twice as likely to have been asked for feedback as other clients) and to referral activity. When you ask for feedback, you remind clients of everything that you do for them.

Think about a typical survey. You might ask clients to rate their satisfaction on a range of issues from their confidence in the plan, to your expertise, to their belief that you put the interests of their families first. As clients are rating you on each individual metric, you are reinforcing how much you do for them. You are lifting the value you provide to a top of mind position.

When clients are reminded of the value you provide and when you give them the words to articulate that value (through a survey) they are more likely to share that with others. When you demonstrate that you care enough to ask for their input, they have a greater stake in the business. And, if you use your survey to ask if they have provided a referral, you are given the perfect launching pad for a targeted discussion. While 29% of clients say they have provided a referral, you have probably met very few of those individuals; by asking the question you can follow up and translate what the client perceives as a ‘referral’ into an actual ‘introduction’.

The data provides us with a lesson in focusing on the right metrics. When it comes to referrals, the fact that clients are comfortable referring is nice, but not enough to drive action. Focus instead on how many have actually provided a referral. It also makes a case for client feedback as one of the ways we encourage clients to spread the word about the great work you do because it looks at your relationship through their eyes.

If you are considering gathering feedback or thinking about how to increase referrals generally, here are a few resources that might be helpful.

1. Using Feedback to Drive Referrals

Advisor Impact’s Client Audit program is designed to identify targeted referral opportunities. Request a demo.

2. Advisory Boards

Steve Wershing is the President of the Client Driven Practice and an expert on how to use client advisory boards.

3. Turning referrals into introductions

Bill Cates has new online courses on referral generation through The Referral Coach. Or, follow Bill on Twitter.

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  1. Advisors’ Morning Cup of Links: Blogging, De-stressing, and Getting Feedback - SEI's Practically Speaking SEI's Practically Speaking - January 29, 2015

    […] referrals, you are probably not getting a great response. This post by Julie Littlechild  – Three-Quarters of Clients who Referred their Advisor Were Asked for This – goes into a survey of over 1,200 clients who describe that client engagement drives […]

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