This Just In: New Research on Referability

The data is in.  And yes, you are very likely standing at the base of a mountain of referral opportunity.

Clients love you, they tell their friends and you don’t meet most of the people who hear about the great work you do. It’s time to stop the referral madness.

The Opportunity (Though the Eyes of Your Clients)

Each year we reach out to clients to understand what’s on their minds.  And referrals is one of the topics that tops our list.  If you’re familiar with our investor research, this year we did things a little differently, limiting the sample to high net worth clients.

We gathered input from 575 higher net worth clients in the United States, all of whom work with a financial advisor. Thirty-six percent have household assets between $500k – $999k, 47 percent between $1m – $4.9m and 17 percent have $5m plus.

Here are the referral opportunity highlights:

  • Almost all high net worth clients we surveyed (96%) are comfortable providing a referral.
  • Half of high net worth clients in the US say they referred someone to their advisor in the last 12 months. Yes, half.

The referral gap is as clear as it is enduring.  Referral opportunities are slipping through the cracks because you don’t meet the vast majority of people who hear about the great work you do.

As we’ve seen in other years, to varying degrees, the reason the other half of high net worth clients didn’t refer is because they haven’t met anyone who they think needed a financial advisor or they simply didn’t know who would be right. I don’t need to point out that this is the essence of missed opportunity.

Q: Which of the following best reflects why you have not referred? (n=those who have not referred)

  • 64% “I just haven’t met anyone who I think needed a financial advisor.”
  • 19% “I would be uncomfortable referring to a financial advisor.”
  • 18% “I’m not sure who to refer to my advisor, otherwise I would .”

There’s little doubt that the opportunity is significant.  The obvious question, of course, is what do we do about it?  Perhaps more specifically, where do we start?

The Research

To answer that question, I partnered with Stephen Wershing, the CEO of The Client Driven Practice and with the good folks at SEI who sponsored the final report called The Elements of Referability.

The study gathered input from 512 firms across the U.S., and the sample included firms of various sizes and across many platforms and compensation structures.

The Response

Now I understand that it would be ideal if I could tell you that the result of the research was a single, simple tactic that you can employ tomorrow and which will guarantee a flood of new referrals.  However, we know that’s not going to happen.

Steve and I concluded that one of the obstacles to tapping into the existing referral potential is that many approach the topic tactically rather than strategically. Most who write on the topic recommend specific action steps, but frequently without context. For example, they tell advisors to: organize client events, add a line to their email signature or ask people to pass their name along. Or, the recommendations are far too general.

“Provide outstanding service,” you’re told, or “Wow your clients.” Some of these tactics work some of the time, and others work well, but only for some advisors. So, which ones will work best for you? We believe the answer is the standby of most attorneys—it depends. We believe the question needs more context and a more strategic approach. We also believe that advisors need a clear framework. A framework suggests that the value of any given component increases, the more of the framework that is in place.

In the Elements of Referability, we outline that framework, which includes nine specific strategies:

  1. Know your ideal or target clients and their unique needs and wants
  2. Talk about those clients and their needs frequently
  3. Differentiate yourself by customizing your offering to your ideal client
  4. Emphasize your differentiators when describing your business
  5. Develop a marketing plan aimed at your target clients
  6. Involve your clients in the experience you provide
  7. Develop your staff
  8. Have a system for attracting and tracking referrals
  9. Strategically manage your digital footprint

The concept of a framework highlights the fact that no single tactic is the answer.  You may define your ideal client, but if you don’t communicate that regularly to clients and to your team, it doesn’t support referrals.  You may market to your target clients, but if your digital footprint doesn’t support a compelling and targeted message, leads may be lost.

Your Next Step

I’d invite you to download the full report and dig into the detail on the framework.  It’s a great first step to get you thinking about your overall approach to referrals.

Download the report here.

Thanks for stopping by,


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