Asking Centers of Influence for Referrals Without Appearing "Aggressive"

Welcome to Day 6 of our Referral Clinic and Blog-a-thon.  We asked advisors to send us their toughest referral challenges. Now we're featuring the best, along with solutions from top referral experts and veteran financial advisors. 

Today's winning question was submitted by Gregory F., an advisor with a regional firm in Virginia Beach, Virginia. Congratulations!

Gregory's question will be answered by Bryce Sanders, a 20-year industry veteran, author of Captivating the Wealthy Investor, and president of Perceptive Business Solutions, a firm that trains advisors on how to identify, meet, and cultivate high-net-worth individuals.

Question: "I am a member of three Boards of Directors for non-profit organizations and have come to know many community business leaders and HNW individuals through these organizations. How do I approach these individuals to ask for referrals without appearing too aggressive or money-grubbing?"

Bryce Sanders' answer:

Let's start with a few assumptions.

1. They are prequalifed—you would like to have them as clients themselves
2. They would be a good source of referrals 
3. They know what you do and where you work yet have never approached you
4. The perceived "risk to friendship" is the barrier.

Strategy One:

Convert the barrier into the opportunity for the approach:

"Sean, we've known each other for a long time. I've never approached you for business because I value our friendship.  I wouldn't want to put our friendship at risk.

Besides, you probably work with someone already who takes great care of you. Most successful people do.

It's been a difficult 5 years in the market. You may know some people who haven't been as lucky as you. It would be worthwhile to spend a few minutes talking about what I do, so when you encounter some of those people you will know how I may be able to help them."

Rationale:

• You have 'led' with the unspoken 'risk to friendship'.  It shows you value their friendship highly.
• You have made a few assumptions:  They work with someone, they get great service because they are an important client to their adviser.  At this point they may respond - "I don't get attention and great service"  The door is open.
• You are offering to help people they know who haven't been getting attention and great service like them.  It becomes your rationale for launching into a brief overview of what you do.
• You do different things for different people.  You can tailor what you do to their needs (business owner, fixed income retiree, etc.) to make the connection you help people like them.
• You have explain what you do in the context of their needs without making them feel uncomfortable.

Strategy Two:

Don't approach them as a friend.  Don't approach them as an individual prospect.  Approach them as you would an investment professional who runs an endowment or scholarship fund.  In that approach, two of the many questions you would ask are:

1. When do you review the performance of the money managers you use within the endowment?
2. Are you open to presentations from outside money managers at that time?

"Sean, you've explained you use professional money management for your personal investments at ABC Securities.

We offer professional money management at my firm.  We are competitively priced.  We have good performance figures.

When do you review the performance of the money managers you use at ABC Securities? I'm interested in winning some of the business. Are you open to presentations from outside money managers at that time?"

Rationale:

• You are approaching them as a professional although they are a friend or acquaintance
• You recognize they use professional money management with a competitor
• You asked when they get their periodic review from their adviser (This may reveal they don't get them)
• You have asked to "be in front of them" when they are considering making changes.  Tom Stanley has advocated good timing for years.  When their adviser reviews a portfolio with multiple money managers, what do they do?  They recommend rebalancing and reallocation. The friend is in the mindframe to make changes. Perhaps they accept the sell recommendations and move those funds to you. Now you have the initial funds to establish a new relationship.

Got questions or thoughts about today's challenge or Bryce's response? Post a comment.

Comments

[Greg French]

Thanks for the answer to my question. I like both proposed solutions but I think the first one is more suitable to my personality.

I'll give it a try!

Greg

[Bryce Sanders]

Dear Greg:

You've made a good point when you mentioned the first strategy is a better fit for your personality. Words and approaches are like clothing - they have to fit properly or we feel uncomfortable "wearing" them. Too often people assume prospecting or closing is like a book of spells from "Harry Potter" - If they "say" the right words the prospect will agree. Those FAs are "wearing something uncomfortable" and it doesn't come across right.

You're on the right track in choosing the strategy that is most comfortable.

What other challenges do you face?

Bryce