Asking Top Clients for Referrals—How Not to Appear Desperate

Welcome to Day 5 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 Lynette B., who's with a wirehouse in Dublin, OH.  Congrats, Lynette!

Lynette's question will be answered by Dan Finley, President of Advisor Solutions, Inc. a business development consulting and coaching service for financial advisors.  Dan was a successful financial advisor for thirteen years before founding Advisor Solutions, Inc. 

Question: "I have done such a good job of packaging myself as an advisor to the elite that I have trouble now asking the chosen I work with for referrals without sounding like I am not who I purport to be. How does one elicit their help and ask them to help add onto my practice without looking as if I am needy or not as successful as I portray?"

Dan Finley's answer: Asking your elite clients for referrals when done properly can create a very powerful, positive image.  But setting the stage for a very successful referral campaign with your elite clientele needs a well thought out plan complete with the type of content that elite clients can relate to.

First, you have already successfully completed the very first step, which is to convey the message that you are an advisor to the elite. You are not willing to work with just anyone. Your niche is to help the elite with their complex financial challenges.

Second, you need to take the message to the next level by explaining to them that you are not growing your business in the traditional sense; meaning by adding just anyone—even people who may be considered elite clientele—because you only have so much time in the day to devote to your current client base, who are people that you like.

Third, you need to convey the message that you always have time to help your clients' friends, family and colleagues. In fact, you prefer to work with people who have a relationship with your clients.

Fourth, you need to structure the message that giving you referrals is not about helping you get another client, but rather about helping your clients help someone else.

Fifth, you need to dig deep inside and have a genuine belief system that your mission is to help your clients help others. This may or may not produce financial results for you in the short run, but it will definitely produce incredible monetary and non-monetary results in the long run.

In the right dialogue, this conveys a very powerful message that you are not needy at all, but rather very successful and again are only willing to help those whom your clients want to help.

Let me illustrate a very brief dialogue:

Client: How's business?

Advisor: Great! In fact, I've been so busy that I have decided not to take any additional clients unless they are friends, family or colleagues of my clients, people that my clients want to help.

Client: What do you mean by, “want to help”?

Advisor: Well, how have I helped you the most since we have started working together?

Client: You have helped me reduce my taxes, consolidate my investments, and make sure my estate planning is in order.

Advisor: Who do you believe needs your help the most by getting that level of service?

This is a brief dialogue that powerfully expresses the messages that you have a successful business, you are busy, you have brought value to your client and you want to help those whom your client wants to help. There is nothing needy or desperate about it.

Since you have already positioned yourself as the advisor to the elite, your clients will refer you to someone whom they want to help that will naturally fit your elite clientele. Remember, most affluent investors feel most comfortable speaking with a financial advisor to whom they have been referred.

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

The ABCs of Automatic Referrals: D is for Damage Threshold

What worries you about asking for referrals?

If you're like many other advisors, you're afraid you'll offend and alienate clients by asking.  In fact, though, that fear is completely unfounded—assuming you ask in the right way.

The problem is that advisors often view their client relationships as much more fragile than they really are. Daryl Logullo calls this line the "damage threshold"—the line you can't cross without harming the client's perception of you.

Is there really such a line?  Sure.  And if you took your client out to dinner, got drunk, and danced the Can-Can on the tabletop, you might cross it.  The line exists... but it's probably a lot farther away than you may think.

Advisors often operate as if the damage threshold for every client relationship were zero. Even when they're dealing with a long-time business associate or a client of 20 years, they actually think that the relationship is so fragile that a simple request for a referral or introduction might blow it to bits. A great analogy is the anorexic who looks in the mirror and sees a fat person instead of someone who is skeletally thin. There’s a skewed perception of reality going on here that is very destructive.

If you're deathly afraid of offending your clients by asking for referrals, there are a few remedies at your disposal.

1. Take an objective look at the evidence, which will show you that your fears are irrational.
2. Become more aware of your own value, so you feel more confident in the resiliency of your client relationships.
3. Learn to think about referrals as a way to help clients, not you.
4. Make sure you know how NOT to ask for referrals, and build confidence in your ability to do it gracefully and effectively.

Don't let imaginary barriers stand between you and success.  Get past the damage threshold.

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More on comprehending your value

Last week we talked about adopting a client-centered mindset toward asking for referrals.  I said the key to that mindset is recognizing that you offer people valuable knowledge and expertise, and focusing your referral efforts on sharing those gifts with OTHERS, rather than on helping yourself.

This is a difficult paradigm shift for many advisors. In this new paradigm, you're focused on enhancing your client's life and the lives of people they know. But if you're like many advisors, you are so immersed in your own need to generate business that you tend to forget that your clients perceive you as someone who does, in fact, enhance their lives.

To comprehend the client-centered mindset, you've got to be able to think like your clients, and see yourself through their eyes. Your clients see you as someone who brings value to the table. That means you've got to recognize that value too. But this is something advisors often have trouble doing.

So today I'm going to suggest an exercise that may help shift your thinking. I want you to close your eyes and think of a trusted professional in your life—someone who has contributed to your life in some way and counts YOU as a loyal client. This could be an attorney, an accountant, an architect or real estate agent, a doctor—any professional whose services you truly value.

Take a moment and think about this person. Visualize the role they play in your life. If they've done something tangible for you (like built a house or healed your child), picture that. Think about how they've helped you or your family, and how their help has made a difference in your life. Really feel that relationship and their value to you.

Now, imagine that this person has just asked you to introduce them or recommend them to a specific person you know—someone they could help in the same way they’ve helped you.

For example, imagine that your cardiologist (who saved your life with open heart surgery) remembers that you mentioned your mother was having heart trouble, and asks if she might be open to a second opinion. Or your accountant (who saved you $20,000 on your taxes last year) says he recalls you play golf with the owner of a certain small company every Tuesday and asks if he might join the two of you in a round, on him?

Pay attention to how you feel about this request from this special professional in your life. Are you angry or offended? Do you feel they were out of line?  Are you likely to say yes to their request? How do you feel as you think about this scenario?

For most advisors, a light bulb goes off when they go through this mental exercise. Suddenly, they see THEMSELVES as that essential, valued professional their clients see.

Try it. It may transform how you think about referrals—and your relationships with your clients.

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The ABCs of Automatic Referrals: C is for Client-Centered Mindset

Do you feel like the Cowardly Lion every time you think about referrals?  Does the mere thought of asking make you feel uncomfortable ?  If it does, chances are you think that referrals are about YOU and building your business.

Ironically, not only does that mindset make many advisors reluctant to ask for referrals, it also makes the requests less effective. That's why one of the first keys to referral success is adopting a client-centered mindset.

What does that mean?

When you adopt a client-centered mindset, you begin to recognize that referrals are not all about YOU. In fact, a referral is an opportunity for you to help someone ELSE—a new client—as well as the person who referred you.

Here's an example, a true story we heard from Laura, an independent CFP. One of her clients mentioned in passing that he had a friend who was sick and had to go on disability. A week later, Laura was meeting with the client, and because she’d read the Automatic Referrals report and was wearing her referrals detective hat, she thought to ask after the disabled friend. She asked how he was doing, then mentioned to the client that she has a lot of experience helping people with disabilities, and perhaps she could help his friend.

Laura's client got on his cell phone right then and there—still sitting in Laura's office!— to call his friend and tell him he must IMMEDIATELY call Laura and schedule an appointment.  The friend took the advice. It turned out that he and his wife were quite wealthy, and became clients.

This is a textbook example of the client-centered mindset. But it doesn't have to be about disabilities. Whatever your specialty or target market (free registration required) happens to be, remember that your job is helping your clients overcome certain challenges and achieve certain goals.  Their friends, family members, and colleagues most likely have similar challenges and goals with which you can help.

So, instead of thinking of yourself as scrounging for new clients when you ask for introductions or referrals, realize that what you are really doing (or should be doing) is offering guidance and expertise to the people your clients care about.

You're not asking for help. You're OFFERING it. That's the client-centered mindset in action.

By the way, asking for help is fine too.  It's all in how you do it.

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Referral fear--or just good timing?

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):

12 Types of Call Reluctance: Are You Plagued by Any of These? 

How Sales Shame Kills Your Prospecting--And How to Stop It

Stop Freezing in Front of HNW Prospects

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Referrals: More on "failure to launch"

Do you wonder why your referral requests always seem to crash and burn?

Bill Bachrach has a theory:

If nobody's finding you, maybe you're not as attractive as you think you are. Do your clients make excuses when you ask them for referrals? Do you they tell you, "I don't know anybody who's looking right now, but if I come across someone, I'll let you know. Why don't you give me a couple of your cards?"

In "Referral failure: it doesn't mean you're unworthy," I respectfully disagreed with Bill's premise that advisors are afraid to ask for referrals because they know deep down that they're not really referable.  I also take exception to this notion that clients respond to referral requests with "I don't know anyone," because their advisor is not good enough to refer. 

I understand where Bill is coming from; certainly, there are some FAs out there who have some improving to do.  But our research suggests that nearly 90% of advisors routinely get the "don't know anyone" or "can't think of anyone" objection when they ask for referrals. And it's not because all of those clients are unwilling to refer.  It's because advisors usually don't ask in a way that makes it easy for clients to think of appropriate referrals.

Your client's brain is basically a big database. When you ask for referrals, it's essentially the same as doing a Google search. Ever try Googling without being specific? I don't know about you, but I don't have time to sift through 42,356,356 hits because I didn't type in specific-enough search terms.

If your client is just average, she knows more than 200 people. If she's well connected, that number is much higher. So, when you put her on the spot and ask her a question as general as "who do you know who might benefit from my services?" is it any surprise she comes up empty?

On the other hand, consider what might happen if you gave your client some parameters, such as "Do you know any other women who are also going through a divorce right now?" Now you've narrowed the field from hundreds of acquaintances to a much smaller group. That makes it easier for her to think of specific people and their situations.

So, if you typically hear some variation of the "I don't know anyone" referral objection, odds are the problem is not with your referability, but rather with your referral methodology. Once you figure out who your ideal client is, learn to convey that information to your existing clients, and understand how to ask for referrals in a targeted way, you'll stop hearing those unpleasant words and start getting introductions instead.

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Referral failure: it doesn't mean you're unworthy

If you're uncomfortable about asking for referrals, does that mean that somewhere, deep down inside, you know you don't really deserve them? 

That's what Bill Bachrach asserts in his article "A Boomer-Smart Business" in the March issue of Advising Boomers magazine. He writes:

If you’re great at what you do, you won’t be uncomfortable asking people to introduce you to others. You’d never hear someone say, “I’m a great pilot, but I wouldn’t want to ask anybody to fly with me.”

With respect to Mr. Bachrach, I have to disagree with this premise that advisors are reluctant to ask for referrals because on some level they know they're not really referable.

The truth is that some of the best performing, most client-service-oriented and most conscientious advisors in the business feel extreme discomfort about asking for referrals.   

It's not because they doubt their ability as advisors—not on any level.   In fact, they have the opposite problem. They consider themselves to be professionals of the highest caliber, and they mistakenly view asking for referrals as unprofessional and "salesy." They're afraid that asking will make a poor impression on their clients.

It's that erroneous belief—the idea that asking for referrals is somehow beneath an advisor or will make clients uncomfortable—that prevents most advisors from being more proactive about referral marketing.  Fortunately, these referral fears are unfounded and relatively easy to eradicate.

Is it possible that you're afraid to ask for referrals because on some level you're not fully confident in your abilities, or suspect you're not giving your clients all the attention they deserve?  Sure, it's possible.   It's also possible, and much more likely, that you're a very good or even exceptional advisor who doesn't realize how much you do for your clients and how much they value you. 

If asking for referrals makes you anxious, you owe it to yourself to take an honest and objective look at your skills, your practice, and your client relationships.  If something does need improvement, you can get to work.  And if you're already pleasing your clients more than you've been giving yourself credit for, you can start trusting those relationships and making the most of them. The truth—whatever it may be—will set you free.

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Why your referral fears are irrational

Does the thought of asking your best clients for referrals make you feel queasy? Do you avoid asking because you're convinced your clients will run screaming, convinced that you're, in the words of one advisor, "a greedy bastard?"

By far, the greatest fear among advisors is the concern that asking for referrals will erode their existing client relationships—that clients will feel put upon and burdened by the request. But this fear is unwarranted. In fact, multiple studies have been done establishing that some 85% of clients are happy to give referrals—if asked (unfortunately, most never are). And in all the years that my colleagues and I at Horsesmouth have been interviewing advisors, we've never once heard a story of damage to a client relationship from asking for referrals.

So, if you're afraid of asking, chances are you have a distorted view of how fragile your client relationships are. You can overcome this challenge with just a small set of mental adjustments. Step back and take an objective and realistic look at your client relationships. For the most part, you're delivering value, right? In some cases, you may actually have changed a client's life—literally. They can retire earlier, or care for their elderly parents, or send their kid to a better college, because of what YOU have done for them.

Unless you have serious problems in your practice, it's probably fair to say that most of your clients like you and trust you and think you're worthy of their friends, family, and colleagues.

After all—if they didn't, would they even be your clients?

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Why referral success is entirely up to you

Business coach Joe Lukacs makes a powerful point in his most recent Practice Power Audiocast  (make sure your speakers are on before you click), part of his series on the Seven Myths of Success for Financial Advisors.  The myth he busts this week is the idea that external forces play a significant role in your ability to succeed. 

Poppycock, says Joe. "If you look at people in any business, in any area, that achieve at high levels, they take responsibility for their success, and for their failures. They don't blame somebody else, they don't make excuses. They say, 'Look, I achieve, or I fail.'"

Joe points to the bear market of 2000-2003 as an example.  He says that many of his coaching clients simply ignored the things they couldn't control and were able to grow their businesses by 20%, 30%, and even 40%.   We found the same thing at Horsesmouth through our interviews with advisors.  While many FAs were crying in their coffee about how the market made it impossible to do business, a select few advisors were busy stealing their clients and growing like gangbusters.  Take Scott Carr, for example: using a targeted referrals approach, he more than doubled his revenues (free registration required) and increased AUM by 60% between 2001 and 2003.

So don't use external forces and events as reasons not to succeed.  If you want more clients or more assets, decide today to take responsibility for making that happen.  Make a commitment to learn how to ask for referrals effectively. Decide you won't "forget" to ask anymore.  If the idea of asking makes you anxious, commit today to overcoming that fear (the Automatic Referrals report devotes an entire chapter to this issue). 

Success really is there for the taking.  All you need to do is reach for it.

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Referral anxiety--how to handle a nervous client

In my last post, Should you contact referrals by email?, we talked about a client who's promised to email some acquaintances and tell them about you, but then failed to follow through.  We said the most likely explanation is simple distraction—the client may simply be busy. 

But there is another possibility.  Maybe she's procrastinating because she's anxious.  Maybe she's worried (and not even aware of it) about what you'll say to her friend or colleague.  What if they're not interested? What if you put on the hard sell? 

If you suspect this may be the problem, it's perfectly fine to raise the subject (gently) with the client.  "It is very kind of you to offer to email so-and-so about me, Joan.  I'm sensing, though, that maybe you're having second thoughts or feeling a little uncomfortable about it?   If so, perhaps we can talk about your concerns to make sure you're comfortable with the process." 

At this point the client might simply say, "Oh, no, not at all... I'm sorry, I've just been very busy at work and hadn't gotten around to it yet.  I'll get that email out tomorrow."  Or, she might agree that yes, in fact, she's got some concerns, and you'll have a chance to allay them.

It can be difficult to initiate these types of conversations. We all have a tendency to want to avoid them, afraid that if we talk about it, the client might decide to rescind the offer of an introduction.  But we have to remember that if a client offers an introduction or referral without being 100% comfortable about it, chances are the promise may never come to fruition anyway—plus, now we've got a tense client.

So get whatever's bothering her out into the open air.  Chances are very slim you'll lose the referral, but even if you do—better to lose a referral than a client.

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Consistency drives referral success

I played basketball in high school. I didn't play well, mind you—but I played. The one area where I did stand out a bit was in free-throw shooting. I routinely made 85-90% of my foul shots, both in practice and in games. I didn't get to use my one skill in games very much—that would, after all, have entailed getting out on the court—but it was still a comforting skill to have.

That's why I was so thrilled when I heard about Deb Remmerde, a sophomore at Northwestern College in Orange City, Iowa. She did something no one else has ever done in the history of basketball, at any level (including the NBA): she made 133 free throws in a row in competition before missing for the first time.

The CBS Early Show decided to put Remmerde to the test earlier this week. They put in her a gym full of supportive fans and asked her to shoot free throws for two hours. When it was all over, she had made 580 out of 585 attempts. What I found most striking was her consistency of form. Her timing and motion were absolutely identical from one shot to the next. And she said as much when Harry Smith asked her what her secret is: I don't think there's really any secret," was her response . "I think it's... having a routine that works and just having a lot of repetitions."

I was also struck by the fact that those exceptionally rare occasions when she DID miss didn't seem to phase her at all. She'd made 256 in a row when she missed one. That would rattle a lot of people, but Remmerde just got right back in the groove and made another 100+ in a row before missing again.

What does this have to do with referrals? A lot. Lack of consistency is one of the most common referral saboteurs for financial advisors. Once we find a referral approach that works, we need to apply it systematically and consistently. When we do that, the referrals will start to flow. And no allowing "missed shots" to throw you off your game. Get your routine down and stick with it (free registration required) and it won't be long before you start blowing away your own personal best.