I had an interesting email exchange about referral aversion with Connie Kadansky, a call reluctance expert who writes for Horsesmouth.
Connie took exception to the following passage from the article 10 Referrals You Can Get This Month (free registration required):
When it comes to new clients, you might be even more reluctant to ask for referrals. Give them a couple of months to develop a trusting relationship with you before approaching the question. But if you feel comfortable doing it right up front, go for it.
In Connie's view, that passage "reeks" of Referral Aversion call reluctance. She writes: "I believe that anytime we come from 'don’t want,' we are coming from fear. 'I don’t want to prematurely ask for referrals'... 'I don’t want to jeopardize this relationship.' We may be making up a story that 'it is too soon' to ask, when our new client may be the type of person that will give a great referral that afternoon. Why not gently put it out there in the initial appointment and ask the prospect and/or new client what their style is as far as introducing people?"
Connie raises an interesting point. In my view, there is a difference between being reluctant to ask and having a sense of timing. Some advisors (you may be one of them) are taught to start asking for referrals before they even sign a prospect as a client. I do not personally adhere to that approach. Looking at it from the client's perspective, I would be very reluctant to refer people to a financial advisor before I'd had a chance to really evaluate his service and performance—but I am thrilled to provide referrals once I really know and trust someone.
High-quality referrals and introductions come when clients recognize an advisor's value. That may happen immediately with some clients, and take longer to develop with others. I do believe it's best to ask when you can be confident the relationship has reached the right stage of development. It may be appropriate to ask new client A for an introduction or referral a few days after opening his account, while client B needs to be cultivated for a month or two.
I'd point to Scott Carr, a very successful advisor (well over $100 million under management) who has built his practice almost exclusively through referrals. But he will sometimes wait for as long as a year to ask for certain introductions. He believes, and I agree, that it's better to be patient and get the introduction than to rush things and force an unnatural situation. Patience is key, he says: "It might be a year before I feel comfortable asking to talk to someone." (A case study detailing how Carr used referrals to build his business is included in the Automatic Referrals action reseach report).
However, I also agree 100% with Connie that advisors DO tend to make up stories in their own minds about whether it's appropriate to ask a client for referrals—and, due to irrational fears, usually come to the conclusion that it's NOT appropriate. Some advisors won't ask for referrals even when a client relationship is years, even DECADES old. It's like the difference between the guy who knows it's not a good idea to kiss the girl ten minutes into a first date (good sense of timing) vs. the guy who's still shaking the girl's hand at the door after 10 dates (fear).
As I see it, the critical question to ask yourself is, am I really waiting because that's what the situation demands, or am I just making excuses because I'm scared to ask? Learn to take each situation individually and honor your own judgment—but if your “judgment” is constantly telling you it's dangerous to ask, you've probably got a case of referral fear—and you owe it to yourself to work on that.
Want to weigh in on this issue? Click "comments" and tell us what you think.
Thanks, Connie, for a great discussion! Connie's article on referral aversion will appear on Horsesmouth in the near future (we'll let you know when it's ready for prime time). In the meantime, you can read her other articles on call reluctance here (free registration required):
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