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.