A 9-Point Checklist for Finding Great Referral Partners

When it comes to finding referral partners, referral expert Matt Anderson stresses the need for quality over quantity. "For example," says Anderson, "Alan New and his business partner share a financial planning practice in Fort Wayne, Ind. Last year they worked hard to build great relationships with a property and casualty insurance company, two CPAs, and two estate-planning attorneys, people who are arguably among the 15% in these professions who understand the benefits of cross-referring. They have gotten 65% of their business from the insurance agency and another 25% from the other four referral partners!"

So how can you find referral partners who will bring you that kind of business? And just as important, how can you avoid those who might waste your efforts? Anderson suggests asking yourself these nine questions before starting a partnership:

1. Does this person know others who would make great clients for me? Does she get out and network much?
2. Is this person competent in understanding and serving my client base and/or target market? Is he in a good position to talk about what I do for a living?
3. Is this person as hungry as I am?
4. Does this person ever refer others? Does she talk to her clients and people she knows about other needs they may have aside from her own core product and service?
5. How much do I like this person and does he really like me?
6. Would I recommend this person to my clients?
7. What will it take for me to become the go-to financial advisor that this person recommends?
8. Is this person truly committed to connecting with her clients and showing a genuine interest in their lives and hobbies or is she mostly "business as usual"?
9. Possible red flag: Is this person too easy to get a hold of?

By taking the time to qualify potential partners, you can ensure yourself successful referral relationships that will be far more beneficial for all those involved. Make sure to read Matt's full article for even more partnership advice.

Add a Context of Value to Referral Event Follow-Up

Hosting an event for clients and their friends, no matter how small the affair, can be an arduous task. There are reservations to make, invitations to send, and not to mention the time and effort taken up by the event itself! But along with throwing an event that is fun for all those involved, it’s important not to neglect an often marginalized part of the process that is absolutely crucial for turning attendees into new clients: the follow-up. It’s during the follow-up that you begin to bring up business, but this can be awkward if you don’t know how to handle it.

During a recent teleseminar for Horsesmouth members called, “Client Events That Work,” Horsesmouth Senior Editor Nicole Coulter fielded questions. One, from an advisor named Shawn in Bethlehem, PA, was focused on the challenge of follow-up: “We have a client event scheduled for two weeks from now. It’s a baseball game. Clients are bringing friends. How do we follow-up with these friends in a way that is professional but not pushy?”

Nicole answered with a creative idea that adds value to the follow-up process and creates context:

“Baseball is an awesome idea, Shawn. I’m a San Diego Padres fan, myself. First off, I would recommend that you have someone there that could take digital photos. Maybe that’s you. But have a checklist of attendees to make sure they get nice portraits of each guest. And if they came together, make sure they get their picture taken together. And you can ask them for their email to send them their picture after the game. Or if you really want to impress them, put it in a frame that has the logo of their team.

We’ve seen this done. Other advisors will put pictures of their client events up on their websites and invite guests to check out the pictures. Or you can upload the pictures to Flickr.com and do the same thing. Send an email out with a link. This is an easy way to initiate follow-up.” 

Using a system like the photo-idea above, you can reach out to event attendees without the awkwardness or pretentiousness of coming from nowhere. Give it a try the next time you get clients and their friends together.

If the topic of referral/client events interests you and you'd like to know more, make sure to check out these articles on the topic (free registration required):

How to Turn a Client Event Into a Referral Event
In a recent Horsesmouth discussion forum, Michael Brizz dished up tips on how to throw a client event that will also attract high-quality referrals.

10 Tips for a Grand-Slam Client Event--Take Them Out to the Ballgame
Buy me some peanuts and Cracker Jacks--it's opening weekend in Major League baseball. Here's how financial advisors make their best pitches with the national pastime.

9 Steps to a Blockbuster Client Appreciation Event
Hosting a client appreciation event is an effective way to boost client morale and prospect, but an ill-conceived or poorly executed event can do more harm than good. Learn how to throw a bash that will have clients raving about it—and you.

3 Steps to Being More Persuasive

Whether in person or on the phone, you play a major role in how clients and prospects perceive you. The more persuasive you are, the more success you experience. Follow these steps provided by Art Sobczak, author of How to Sell More, In Less Time, With No Rejection,  for a persuasion tune-up:

Step 1: Get rid of the non-words

I find some people have this nasty habit to a very severe degree. When a listener is counting "uh"s and "um"s instead of focusing on the message, you know there's a problem. The persuasive speakers, on the other hand, don't use these filler sounds, or at least their use is minimal. How many times do you unconsciously depend on these words to fill a void?

• Action item: Voice-over pro Susan Berkley, creator of Voice Shaping program, suggests that the first step to the cure is identifying the enemy. Record yourself and count how many fillers you use. Once you're aware of your most common non-words, consciously replace them with pauses.

Step 2: Enunciate!

A guest on a recent show mumbled so much that I had to turn up the volume and watch his lips so I could try to make out what he said. If I didn't care about what he was saying, I certainly wouldn't have worked so hard. And your listeners might not work that hard for you.

• Action item: Read this several times: "If, I, place, an, invisible, comma, after, each, word, and, an, invisible, semicolon; after, some, words, my, speech, has, presence." This forces you to enunciate.

Step 3: Get up to speed

During interviews, the more persuasive talking heads make their points quickly and don't mince words. We can all learn from that.After all, why use 100 words when 50 could make the same point? And don't speak at 33rpm when your listeners are at 45. (You won't get that reference if you don't know what record players are.) In the book Smart Speaking, Laurie Schloff and Marcia Yudkin say that when you speak too slowly, you could be perceived as boring, tired, or less intelligent than you actually are.

• Action item: Practice getting to your point more quickly. Pose yourself a question you frequently get during calls. Use a stopwatch and give yourself 45 seconds to answer it. Then cut it to 30, then 20. Tape your response and analyze it to refine your answer content and delivery.

Read Art's full article (free membership required) to fine even more tips for being persuasive with clients and prospects.

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Making the Switch to Target Marketing

Newly independent advisor Tom H. of San Luis Obispo, CA wanted to jumpstart his new business by concentrating on referrals and using target marketing to channel his message. "It has occurred to me that I don't have a defined target market," he wrote. "Yes, I have a book of business, and it includes many retired individuals as well as young business owners and random individuals."

But Tom had doubts about the approach, specifically a fear about alienating prospects with a specialized marketing message that didn't fit them: "At the risk of not maintaining a target market, I don't want to leave out possible clients.  Is this a sound approach?"

He addressed his concern to Bob David, Horsesmouth Director of Advisor programs and leader of the Automatic Referrals Jumpstart Program. Here was Bob's response:

"I understand how it can be a bit overwhelming to try to tackle too many things at once, especially after going independent. Having grown up in a small University town myself, I know there are some unique challenges. Here are a few thoughts:

• Keep in mind that having a target market does not mean abandoning the clients you have that have been loyal to you as you've changed firms. This would be a de-motivator for you for obvious reasons. It just means that when it comes to your pro-active efforts, you will begin focusing on the needs of your "ideal client" or "target market."
• It is very important to identify your "ideal client." It can be tough, but keep drilling down. Remember that success leaves clues, so start with a hard look at those retirees and inheritors. What do they have in common? What did they do before they retired? Are they affiliated with the University? Or the government? What is the demographic profile—are they men or women? What age? What are their affiliations, passions, hobbies, etc..?
• Consider going one step further and doing a "SWOT" analysis: S—What are your relative Strengths in your market? W—What are your relative Weaknesses? O—What are the Opportunities perhaps overlooked by your competition? T—What are the Threats to your practice? (Could be aging clients, lack of a consistent advisory process, service quality, etc...)
• Consider derivatives of the more obvious categories and maybe move beyond your borders. For example, "Family Owned Funeral Home Operators" throughout CA or retired college professors or retired football coaches, etc...

At first, target marketing can seem daunting, but if you do some digging like Bob suggests, in the end it's a rather natural extension.

For more on target marketing and SWOT analysis, see these Horsesmouth (free registration required) articles:

How to Pick a Lucrative Niche

Many advisors think that by keeping their options open to all potential business they won't miss an opportunity. But the opposite is true. A focused, rich niche can be far more effective. Here's how to develop a niche over the course of the year.

6 Rules to Guide Your SWOT Analysis

SWOT stands for strengths, weaknesses, opportunities, and threats. In order for your marketing plan to work, you must honestly assess your practice in these four areas. If not, you risk failing in your efforts to grow your business.

Only Fools Rush Into Referral Accounts

Having a referral throw a new account into your lap is hardly ever a bad thing, but jumping into a new relationship helter-skelter can lead to unnecessary problems. Plus, you could miss valuable opportunities for additional referrals.

Jim W., a Canadian advisor, wanted advice on how to handle such a spontaneous, new account. A woman who had been referred to him moved over $250,000 to him, citing the fact that he came “highly recommended” as her reason, and left without so much as bringing up the topic of investments. Additionally, she mentioned that her husband might want to bring his assets over, too, but that he would need convincing.

Wanting to leverage this new client and potential advocate, Jim asked Bob David, Horsesmouth Director of Advisor Programs, “How do I approach the husband and also ask for other referrals from her right away?”

The first thing Jim should be doing, Bob suggests, is to do some digging into what exactly brought the referral into his office. “It’s vital here to get a much better understanding as to why you came so highly recommended in the first place and by whom,” says Bob. “This gives the context which in turn allows you to get client-centric, do some detective work, and create a network map that will lead to the right introductions.”

This understanding of the new client’s motivations is vital, as knowing the problems they came to you to solve will let you offer to help any of their friends in similar situations. In Jim’s case, that includes the husband as well as other potential referrals.

Bob additionally cautioned Jim to slow things down with his new client. When things get rushed, the chance of miscommunication increases and mistakes can be made to tarnish the new relationship. Bob recommends saying something akin to the following:

"I can appreciate the value of your time and that you are in a hurry—my time is valuable also. But you've worked hard to accumulate this money, and I want to do make certain we do what's best. I find it’s mutually beneficial when we take the time in the beginning to be thorough in our planning, so what I suggest is setting a time to come in and do this right....does that sound like a reasonable approach?"

Part of the beauty of referrals is that prospects come to you already confident of your abilities and in most cases pre-qualified. But just because a referred prospect is an easier client to take on, doesn’t mean you should race into the relationship. Doing so could damage the relationship and cut-off the possibility of gaining even more referrals.

Asking for Referrals: Overcoming 3 Fears

It’s an oft-repeated axiom that that the hardest part about completing a task is starting it. This is certainly true about asking for referrals, and often what gets in the way is plain old fear. Horsesmouth contributor and president of Referral Coach International, Bill Cates, has identified three common fears that keep advisors from asking for referrals and given solutions:

1. Fear of appearing pushy. Almost all advisors out there will tell you they don't want to appear pushy or hurt their relationships by asking for referrals (there are some "old-school" agents who haven't learned better yet). I certainly understand this concern. But here's the good news: To move through this fear, all you have to do is find a way to engage your clients in a referral conversation that is not pushy—and will not hurt a relationship.

Don't assume they are willing to talk referrals; your first move is to get their buy-in to the referral conversation. Confidently ask for permission to talk about introductions. Give clients the opportunity to say no. Don't back people into a corner. At all times, let them feel in control of the conversation.

2. Fear of begging. Many advisors don't want to look unsuccessful or needy with their clients, but all you have to do is find a way to engage your clients in a referral conversation that doesn't come from a needy place. Instead, come from a place of confidence, success, and value.

Stay away from the old style of making referrals be all about you: "I get paid in referrals." "I'm trying to build my business and I really need your help. Please! Please!" Make your referral conversation about the value clients have recognized in their work with you—and sharing it with others. Get in the habit of always checking in with your clients to make sure they see the value in your processes and in your relationship. (This is usually best done in person, but it can be done over the phone if part of a scheduled phone appointment.) Focus on the importance of the work that you do and bringing that important work to others.

3. Fear of hearing "No." Successful, confident, and even cocky advisors can turn into a bowl of Jell-O when they face the prospect of a client turning them down in their request for introductions to others. Many advisors can dial for dollars until the cows come home, yet they are afraid a client may not want to give them referrals.

How do you deal with this fear? Just get over it! First, you are only going to ask clients who have seen value in your work and like you. Second, assuming they find the previous point is true, if a client doesn't want to give you referrals, it has nothing to do with you. It's their fear. It's their baggage from past experience. Just practice the "Zen of referrals." Ask for referrals without being attached to whether your clients say yes. Focus on your actions, not the results of your actions. Control what you can control. You can't control whether a client wants to play the referral game with you, but you can control moving through your fear and asking.

If these fears hit close to home, make sure to read the full article, "Asking for Referrals: Overcoming 3 Fears," (free registration required) to gain additional insight into defeating them.

Rid Your Clients of Common Referral Objections

Advisor Amy Berk from Denver, CO, was running into a wall with her referral efforts—actually, she was running into three: three objections she was getting from her clients when she asked them about referring.

They were:

1. "I don't talk to people about their money."
2. "I don't know anyone."
3. "I already gave you referrals."

"How do you handle those nasty objections?" Amy asked.

These objections and others like them can bring a referral conversation to a screeching halt. How do you not only address these objections, but do so in a way that makes the client genuinely want to give referrals? 

Bob David, Horsesmouth Director of Advisor Programs and leader of the Automatic Referrals Jumpstart Program, had this to say about overcoming the first of Amy's objections: "When someone says they don't talk to people about their money, it's most often because we haven't positioned the request in a client centered way, and it needs to be more focused on exactly what you can do to help the person you're asking to be introduced to." If a client sees that you can help a peer with a problem they've been struggling with, they won't have reservations about bringing your name up.

As far as addressing the "I don't know anyone" objection, Bob stresses the importance of specificity. "Clients need to understand who we can best help, why or what problems we can solve before they can go through their mental rolodex and get a picture of someone in their heads," he says. Your client probably knows plenty of people who would make for an ideal client, but they have no idea what criteria define one. It's your charge to make sure they know exactly what services you can provide so that they have a clearer picture of who could benefit from them.

When a client says, "I already gave you referrals," it's a definite sign, Bob points out, that the requests are coming at the wrong time. You need to make sure that you haven’t been over-zealous in your referral requests.

The one mistake you can make with these objections, or any objection for that matter, is to let them stop you. Any concern a client may have can be addressed and overcome.

Bridging the All-Important Referral / Client Gap

Getting referred to is a big step toward gaining a client, but the business relationship is far from cemented at this point. You've been introduced to the referral, but things can still be awkward between you. After all, you haven't worked together and probably don't know much about one another. Sometimes it can be tough to bridge the gap and make the transition between the referral and the first appointment.

Brian V., an advisor in Arcadia, CA, asked Bob David, Horsesmouth Director of Advisor Programs and creator of the Automatic Referrals Jumpstart Program, how to turn that new referral into a new client. "A lot of times I am introduced to referrals and these referrals understand what business I am in," Brian wrote. "However, the topic of their investment needs never seems to come up in our conversations no matter how many hints I drop. Once you get introduced to a referral, what is the best way to approach the referral and ask for an appointment or to take your relationship to the next level?"

To transition the nascent relationship into a business one, you need to focus on the referral's perspective, or what Bob David calls the "client centered mindset." "Focus all your attention on learning about them and being interested in their situation, their business, their hobbies, etc. Then look for an opening," says Bob.

Once you discover more about them, you can explain how you've helped those in similar situations. You may think the natural thing to talk about is investments, but as Bob points out, that's not really the case. "We tend to think the opening is always about investments," he says, "But from the client's perspective, it's more important to identify a problem that needs to be solved. For example, if you're talking to someone who owns a business, you might ask how they got started, the nature of the business, how they would describe their best customers, etc...then mention you've been able to help other business owners and ask how they feel about their current retirement plan, cash management, succession plans, etc."

It really comes down to getting into the referral's head and learning their unique perspective. Once you do that, you're in a position to address their true needs and the business side of the relationship will naturally develop.

Client Referrals: Megaphone or Muffler?

Just read a referral post on the blog of Kirsty Dunphey, an Australian entrepreneur and self-made millionaire, that really resonated.

Kirsty was referred to a particular store by two different friends. When she mentioned to the proprietors that she had been referred, they showed no interest in learning who these loyal customers were who had recommended the store to their friend. 

As Kirsty points out, had they asked and gotten this information, the owners could have sent a thank-you note to these raving fans, or called and thanked them, or even sent them a discount voucher for their next visit to the store.

"When someone refers a friend to your business," Kirsty explains, "you’ve just got yourself a walking, talking billboard going around advertising your business! What you do to thank them for doing your marketing for you can act as a megaphone or a muffler. Which would you prefer?"

Do you religiously follow up with every referral source and say thanks?  Do you send thank-you notes? Gifts?  If not, don't wait! Start now. Reward those raving fans for trumpeting you to everyone they know, and they'll trumpet even louder.

The 7 Deadly Sins That Destroy Referral Business

Are you sabotaging your own success? Horsesmouth contributor Matt Anderson, president of the Referral Authority, recently shared his list of the top seven worst mistakes advisors make around referrals.  See if any of these sound familiar.

1. Don't know who is giving them referrals. Many advisors don't know where their referral business comes from or why their top referral sources like them so much.

2. Don't know when to ask for referrals. Many FAs ask at the wrong time.

3. Have an unhealthy mindset about asking for referrals. Many avisors develop a negative attitude about referrals, or even outright fear [free registration required].

4. Don't know what drives referral conversations. There are six steps to an effective referral conversation, but many advisors do not know them or consistently follow them.

5. No niche. For FAs, there are enormous advantages to concentrating on a focused demographic. Do you know the five qualities of a good target market?  (By the way, more referrals are just one reason for having a niche!)

6. No strategic referral relationships with other professionals. Advisors must deliberately build reciprocal referral partnerships with other professionals.

7. No system in place for keeping in touch with clients year-round. People think about themselves 95% of the time; they don't sit around brainstorming ways to refer more clients to their advisor.  If you want to get referrals, you've got to stay top of mind.

Are you making any of these mistakes?  Read the entire article, "The 7 Deadly Sins That Destroy Referral Business," (free registration required) and stop missing out on all of those referrals you could be getting!