The New Age of Client Referrals

As a financial advisor, you’re in the business of relationships. You build relationships with clients so you can manage their wealth for them, and doing that well requires familiarity. It would make sense, then, that the way you grow your firm would be relational.

And that’s probably why the tactic that generally remains the most effective for many advisors to grow their firm is word of mouth. Referrals account for seventy-five percent of new business among all RIA firms. High-performing firms are four times as likely to leverage referrals.

Statistics show that this growth has largely been in the form of passive referrals. These clients are the ones who show up without you really doing anything to reach out and draw them in. One of your clients may point them your way without you even asking for a referral. The client was pleased with the work you were doing on their behalf, and referred you to a friend who was going through a similar circumstance.

Obviously, it’s more important that you’re known for your extraordinary financial planning skills rather than for your excellent marketing skills. But you can use a combination of the advisor technology you use and your client service processes to construct a proactive method for referrals and help you grow your business.

Here are five strategies you can try:

Be up front and ask. Think back to when you first met your spouse or significant other. Your relationship started when one of you asked the other on a date. Chances are the invitation was pretty direct, given that most people aren’t attracted to people who dance around the subject.

It works the same way with your clients. Just be up front and ask for a referral in an appropriate moment. Don’t try to bury it under meaningless babble.

Cultivate strong client relationships. Here’s an obvious statement: Your clients will be more likely refer their friends and family to you if they feel like you care. The only way to do that is by cultivating strong relationships.

This cultivation can start with the quarterly reports you send them. You should use your portfolio management system to create reports that are personalized, and as simple or detailed as your clients want them.

But beyond that, you should contact them regularly, and not just for their portfolio. One example: Use your CRM or portfolio management system to keep track of their birthday and then send them a hand-written birthday card as a physical act of care. Ideally, you’ll have your portfolio accounting platform and CRM syncing data with each other so personal client data is consistent among all your systems.

Don’t make it just birthdays, though. After all, I don’t necessarily feel like my insurance company cares about me when they send me a birthday card. Show your client that you’re vested in every area of their life. Perhaps their son has just graduated high school. You can send a card congratulating their son, and also proactively reach out to your clients about changes they can expect to their financial plan, including planning for college expenses.

Be specific. Think back to the last time someone asked you, “What’s the most exciting thing that’s happened to you this week?” You might have had a great week, but you suddenly blanked at that question.

The same can happen when your clients are put on the spot. They might know plenty of people who could use your services, but then you ask and they blank. As a result, when you ask for a referral, be specific. Keep the focus on how you are currently helping them.

For example, if you’ve just helped them with a 529 plan to send their son to college, you can ask, “Do you have any friends who could use planning for college expenses too?” The specificity makes it easier for your clients to think of the group of people within their circle of friends that fall into that category of need.

Provide great client service. Providing great service to your existing clients may seem like a no-brainer, but it demands to be front and center so it doesn’t get lost among everything else grabbing for your attention.

If you can “Wow” your clients, they’ll be more likely to refer you and your services to others. At Orion, we implement a number of services—a customized mobile app for every firm, quick-turnaround on report requests, support by online chat—to introduce a wow effect for our advisors.

And as advisors, you can use technology to provide your clients with a mobile app, video statements, or even extend text messaging capabilities for account updates. All of these services go above and beyond the expected and can help to create a buzz around your firm—and buzz leads to referrals.

There are three more key pieces of technology to use as the foundation to your referral strategy.

Use your web page, email marketing solution and CRM. When you ask for a referral, the best time to ask is in person. After all, a referral is a personal act on the part of your client; it should be a personal act on your end as well.

But being personal doesn’t mean you don’t use the technology at your disposal. In fact, there are three ways you can leverage technology to help with referrals: your web page, your email marketing solution and your CRM.

  • Your webpage. On your webpage, you could create a page clients can refer people to, set up specifically for them. On the page, you could make yourself available for any questions they might have. The benefit of having a specific page is this: You have simple tracking of which of your leads are being recommended and which are coming in cold.
  • Your email marketing solution. You could also create a special email campaign for referrals once you have their contact information. As you write your emails, you’d want to word it as if you were talking to a friend of a friend. Like the dedicated web page and form, an email drip campaign is useful because you can track who is reading your emails to better gauge their interest. If you’re at a loss where to start, the Orion platform includes a customizable email solution, Deliver, that lets you create one-off and automatic, recurring email campaigns for your firm.
  • Your CRM. As far as references go, you could manage them through your CRM. You’d want to keep track of touch points to figure out which clients are spreading the word about your firm. If your CRM is integrated with your portfolio accounting solution, you can even create a place in your client portal where clients can suggest referrals, and have that data sync automatically to your CRM. And remember: When your clients do refer new business to you, make sure to thank them effusively.

As an advisor, one of the best ways to grow your company is through referrals. Rather than waiting for your clients to speak up on your behalf, with the right tools you can turn this typically passive form of growth in a proactive arm of your sales strategy.

Eric Clarke
Eric Clarke
Eric Clarke is the chief executive officer and founder of Orion Advisor Services, which develops solutions that improve advisors’ business operations and interactions with clients. The company’s current vision is to integrate its portfolio accounting system with CRM platforms to increase efficiencies for advisors. Mr. Clarke and his colleagues founded Orion’s predecessor company after they developed an off-the-shelf portfolio accounting system for advisors. Prior to starting Orion, Mr. Clarke served as chief operations officer for CLS Investments, an SEC–registered investment advisor. As an industry-recognized expert in portfolio accounting, Mr. Clarke has written articles that have appeared in Investment News, The Journal of Financial Planning, and others. He earned a bachelor’s degree in accounting from Brigham Young University and a master of business administration degree from the University of Utah.

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