You’re getting referrals, you just don’t know it

While as much as 25 percent of clients say they have referred to their advisor more than once over the last 12 months, most of those referrals never walk through your door. You don’t even get the chance to win the business. This is because your clients generally don’t know how to refer well.

Who is referring?

“Have you provided a referral in the last 12 months?” It’s a powerful question to include on your next client survey.

You’ll end up with a list of clients that said they have referred prospects to you. Ask those clients about the circumstances of the referral and you have a strong chance of turning a ‘random referral’ into a more formal introduction.

Why clients refer

Many advisors hope that clients will refer because the advisor has provided good service or made a positive impact. They rely on the power of reciprocity.

As the chart below suggests, the reason clients refer may have very little to do with helping the advisor and much more to do with helping a friend, family member or colleague.

Q: Which of the following best describes the motivation behind providing a referral to your advisor?



Source: Advisor Impact, Economics of Loyalty US: 2012-2013

Clients are more likely to provide a referral to help a friend than to help an advisor. However, referral generation tactics are often in direct contrast to this finding. If clients are motivated to refer in order to help a friend, then asking them to do a favor that will help the advisor grow will not be effective. Instead, positioning for referrals in a way that clearly demonstrates how the advisor can help a client’s friend will be more effective.

When clients refer

It is not only critical to know why a client refers, but also what triggers the act of making a referral. What turns motivation into an actual referral? The chart below examines the circumstances of the referral.

Q: What were the circumstances of providing the last referral? (Multi-select response so does not total to 100%)


when-clients-referSource: Advisor Impact, Economics of Loyalty US: 2012-2013

In only 11% of cases did a client refer because his or her advisor asked for a name, despite the fact that we are routinely taught that ‘asking’ will drive growth. By contrast, in just under half the cases, a client was asked to recommend an advisor. And while advisors may appreciate that fact, this is not something they can control.

More interesting is that half of clients took action because a friend or family member was describing a financial challenge. In that moment, and motivated by a desire to help, they offered up the name of the advisor. They were motivated by the needs of others and they took action when that need was clearly articulated.


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