Getting Referrals in An Ugly Market

In a market like this, just heading into the office every morning can feel like climbing Mt. McKinley, so the thought of asking for referrals might seem utterly insane. But veteran advisors will tell you that, in a tough market, opportunities abound for those with the patience to seek them out.  I know advisors who have doubled or even tripled their business during bear markets. 

How do they do it?  First and foremost, they focus on maintaining and strengthening their existing relationships.  In a market like this, you need to treat every client relationship like gold—and protect it like Fort Knox.

If you have one priority right now, it needs to be proactively getting in front of your clients. Call them, e-mail them, send them letters, talk to them in as many ways as possible.

Can it be tough to make those calls when performance is lacking?  Sure. When the market is whipsawing everyone around, it's only natural to get into a siege mentality. Whether you've been in the business for five months or 25 years, the last thing you want to do is to pick up the phone and deal with a whining client. But you have to bite the bullet.

The best way to guard against the ostrich syndrome is to build client calls into your daily action plan—and, ideally, into your business plan (free registration required). If you have something on paper that says you will call your clients every month, you'll do it. Yes, it's true that clients may not be thrilled with their results—but they will be a lot happier than if you didn't call at all. 

Some advisors even take their show on the road in markets like this. I once interviewed an advisor who logged almost 25,000 miles on his car during the last big bear market. He even visited out-of-state clients while on vacation. His family wasn't too happy with him, but he kept those client relationships intact.

What you need to understand is that right now, most of your competition is hiding.  If one theme resonates among successful veteran advisors, it is the tremendous business-building opportunity that exists in difficult markets. There's a ton of business to be won from the walking wounded among your competition. Clients start looking to "change doctors" when things get scary.  And they talk to their friends and family about their fears and concerns.

So be sure to build measurable referral targets into your business plan this year.  Keep your ears open for referral clues. And don't let external events distract you from your plan. To quote business coach and Horsesmouth contributor Joe Lukacs (who has a great weekly business development audiocast, by the way): "It's so easy to sit back and say, 'It's bad; the market's bad.' You absolve yourself of responsibility for your success, you become a victim, and you get a big pity party going. The people who are succeeding refuse to be victimized. They take total responsibility for their world."

Check out these articles on dealing with an uncertain market (free registration required):

10 Rules for Reassuring Clients in Volatile Markets
When markets are volatile, we're more stressed and so are our clients. That's when it's more important than ever to articulate our recommendations and provide reassurance of a positive outcome. Here are 10 rules of effective language.

Calm Edgy Investors by Renewing Their Goals
Market gyrations make for squirmy clients.  Mellow them with some sage guidance.

Cultivate Opportunities in Trying Times
When the going gets tough, the public should be more aware of your services than ever. Here are some ideas on communicating the value of your services during the best and worst of times.

Boost Referrals with Holiday Gifts for Clients

It's that time of year again.  Client satisfaction is the keystone in the foundation of any successful referral strategy and, for many advisors, holiday gifts are an important way to show clients you're thinking about them and build loyalty. 

Horsesmouth's senior editor and client service specialist Ed Klink recently solicited a treasure-trove of creative gift-giving ideas from his advisor "Brain Trust."  Here are some broad categories to consider. 

• Give a book. Inspire the best in your clients by giving an inspiring book. Inscribed with a handwritten note, a book is always a welcome gift.
• Give a treat. Let's face it, you can't beat tasty treats to get you through the long winter months.
  Give something with a "Street" theme. Silver bull and bear wine stoppers from Neiman Marcus. Or for $35 there's the bull and bear tic-tac-toe set.
• Give a charitable donation. This option has been growing in popularity over the years. By the way, this is a neat opportunity to do some referrals detective work and learn more about what your clients care about.  Explain that for the holidays this year, you would like to make a donation in their name to their favorite charity... and ask them to tell you what it is.  But don't leave it there.  Ask them some questions after they name the charity.  How did they get interested in this organization?  What's it all about?  Are they involved beyond being a donor?  You'll be amazed what you'll learn, not only about your client, but about others they know in connection with the charity.
• Give local specialties. One great strategy for holiday giving is to make a point of supporting a business in your town. You can order gift baskets at your local gourmet shop or pick up a few cases of specialty hot sauce from your city's mom-and-pop purveyor. Whatever you choose, a substantial order can be a big boon for a local business owner—and start your relationship off with a solid bond.
• Give wine and related gifts. Some wine sites allow you to add personalized notes—or even your firm's logo—to the labels of the bottles you select.

For details on all of these ideas, check out Ed's article, "Holiday Gift Strategies for Clients," in its entirety (free registration required).  And find even more ideas here:

More Advisor-Approved Holiday Gifts for Clients
Advisors across the country sent in these tried and proven ideas on how to share the holiday cheer with your clients.

Holiday Gifts for Clients: Where to Buy the Best
Don't get caught like a reindeer in the headlights when it comes to shopping for client gifts this holiday season. These innovative ideas will not only please your clients, they just might generate some prospects as well!

Client Gifts: 12 Ways FAs Spread Holiday Cheer
Looking to put smiles on your clients' faces this holiday season?  Here's a sleigh full of creative gift-giving suggestions from advisors who take the opportunity to stand out—without breaking the bank.

Want More Referrals? Get a Niche.

There is a long, long list of reasons that you should consider narrowing your focus and choosing one or more niche markets to serve. On just about every measure you can think of, from production and assets to pure satisfaction and enjoyment of the job, Horsesmouth's research has found that niche advisors are more successful than generalists.  But for our purposes, there is one especially compelling reason to "niche up": you're quite likely to get more referrals.

In their survey of more than 2,100 advisors, Horsesmouth asked the question, "Are you getting more referrals since you started working in your niche?"  Check out this chart.

   

It's hard to argue with those results.

Read The Advisor N-Factor, a Horsesmouth special report, and learn more about why niche marketing is so powerful and how you can start marketing to your perfect niche—and rev up your referral results along the way.

The Five-Minute Referral Secret

Here's the shortest great referral idea you'll ever get, courtesy of the Golden Practices blog:

"Find your five favorite clients.  Take them to dinner.  Don’t let them leave until they answer this question:  What can I do to get more clients like you?"

I know an advisor who started using this approach after going through the Automatic Referrals Jumpstart program.  Dennis words it a bit differently, but the idea is the same: "How do I find more of you?" 

He asked one of his favorite clients this question; she was delighted and complimented, and soon thereafter referred him to the man she was dating, who is the executive of a corporation.  Dennis got his accounts.

Now, this gets hard to follow, but next, she referred him to the son of her ex-husband, who is an executive at Microsoft, and his wife. Dennis got that account too.  Then the son's wife introduced him to her parents, who are a very wealthy retired doctor and mathematician.  He got that account too.  When he was telling me this story, he said, "This one million dollar account will be worth $20 million when it's done."

Can you afford NOT to try this great idea?  (Oh, and if you want to take it to the next level, consider a client advisory board (free registration required).

The Simplest Way to Get Referrals

In the most recent edition of his Referral Minute e-newsletter,  Bill Cates suggests the following "7 Simple Ways To Get More Referrals"—all of which have come from actual advisors who are successful referral-gatherers:

1. Call clients 2-3 weeks before their birthday and offer to take them and a few friends to lunch.
2. Valentines Lunch for women—especially widows, divorced, or single women.
3. Print social cards for retired clients. They no longer have business cards, but could probably use them from time to time. You can put a graphic on it that reflects one of their hobbies.
4. Host fun bi-annual or quarterly events for single clients and their referrals (focus on the fun, not finances).
5. Invite women to "High Tea" at a fancy hotel.
6. Become a Resource Center for your clients. Gather the names of CPAs, attorneys, painters, HVAC, plumbers, handymen (who actually return your call and show up on time), etc.
7. When your client is in your office, have your assistant take their car for a wash. (Bill warns that you should be careful and always go brushless, because "some people are VERY particular about how their car is washed."

These are great ideas, but one caveat.  Most of them (the exceptions being those events where you invite clients to bring their friends) are NOT ways to get more referrals.  They are, in fact, ways to delight your clients. 

You want delighted clients, don't get me wrong.  But I don't want you to fall into that all-too-common trap of thinking that if you just do a good enough job at client service, you'll get all the referrals you could ever want without ever bringing up the topic.

Not true.

The truth is, only a small percentage of clients will refer proactively, even if they think you're the cat's pajamas.  Most people are busy thinking about their own problems and schedules. They're not walking around with you at the top of their minds, waiting to shout your name from the rooftops.  But nearly all of them WILL be more than happy to introduce you to their family and friends... IF YOU ASK.

So first and foremost, YES, delight your clients!  (Here are nine more creative ways to do that... free registration required.) But make sure you also learn to identify great prospects in their networks and ask for introductions.  Because THAT is truly the simplest way to get more referrals.

Have You Earned the Right to Bring Up Referrals?

A big concern that we often hear from advisors is, "I'm afraid that I haven't proven myself enough to my clients to talk about referrals."

I certainly agree that until someone trusts you and believes in you, there is little point trying to position yourself as someone to whom they should refer their family or friends.   However, it's also fair to say that most of your clients would not BE your clients if they didn't feel this way about you.  Many advisors many advisors feel irrationally insecure about where they stand with their clients. This goes back to the whole issue of undervaluing yourself.

If you generally feel secure about your value to clients but have red flags waving about one client in particular, heed them! Hold off trying to get introductions from that client until you've uncovered what's going on, and if your uneasy feelings are justified.  If you have real reason to avoid discussing referrals with that client, you've got bigger problems than referrals—you've got a client at risk, and keeping that client should be your top priority.  Where they are concerned, worry about the referrals later, and focus those efforts on other clients about whom you feel more certain.

However, if you experience these insecure feelings about most or all of your clients, chances are very good the problem is in your own mind—and you need to do something about that.  In addition to doing some referral confidence-builders, another remedy is to start soliciting client feedback more actively.  You can survey your clients, form a client advisory board, or just ask some good questions at meetings and really pay attention to the answers.

When you do solicit client feedback, stay alert for positive comments. They are door-openers for you to discuss referrals.  For example, one advisor who went through the Automatic Referrals Jumpstart Program was conducting a quarterly review with her clients, a married couple who were both medical technologists, and they were marveling at how well their funds had done.  The advisor had been wanting to penetrate this industry and get more medical technologists as clients,  so she jumped on that opportunity and said, 'Do you know a lot of people you work with who maybe don't have this type of portfolio? What about your trade association?' And they said, 'Of course!  We'll send you the roster.'  The advisor got 50-something names and email addresses and phone numbers because she recognized the client's praise and gratitude as a referral opportunity—and because she knew how to ask for referrals in a targeted way.

The articles listed below (free registration required) are just a few of many resources on Horsesmouth that can help you figure out the best approach to getting more feedback from clients—and open more doors for referral conversations.

Survey Your Clients Now!
The benefits of surveying your clients are enormous, and yet less than 1% of advisors have ever sent out a formal questionnaire. Find out exactly what you're missing by not surveying your clients.

Ask Your Clients, 'How Am I Doing?'
If you're not sure what your clients think of you, ask them. Here's a step-by-step approach to using a client advisory council to elicit the most useful feedback from your top clients.

How Well Do You Listen to Your Clients?
Many FAs have no structured method for compiling feedback. Business practice expert Tom Olivo shares strategies for measuring client loyalty and alerts you to its significance for your business.

How an Advisor Generated $4 Million in Referrals in 3 Months

We had a very exciting event at Horsesmouth last week: our first-ever "Nitty-Gritty, Roll-Up-Your-Sleeves, Make-It-Stick, Million-Dollar Workshop."   One of the highlights was the collection of fabulous marketing ideas shared by the attendees—advisors from across the U.S. and Canada, including many veterans—during the course of the 2-day workshop.

One idea in particular caught my attention. James Crosson, an advisor from Fall River, Massachusetts who's been in the business for 23 years, formed his own networking group comprised of  professional centers of influence such as attorneys, a chiropractor, a CPA, a dentist, an electrician, a moving company, and others.  The one thing they all have in common—and this is key—is twenty years of experience or more.

In addition to meeting with his group once a month, James did something really different: he offered to list them all on his Web site, on a "Preferred Professionals" page.  He featured lengthy bios and photos for each (he says he used his own digital camera to take the pictures, because some of the photos they sent him were just atrocious!).  As you can see, James has devoted a lot of real estate on his own site to promoting his strategic allies.

The group also instituted a rule that everyone must provide referrals.  If you don't, you're eventually asked to leave. 

Unlike groups like BNI and the Chamber of Commerce, which James says he found less than inspiring, his group's results speak for themselves. He says that $50 million worth of referrals were exchanged among the members of his group in the first three months—$4 million of which were referrals to James himself.

Forming your own group, tailored to your personality, interests, and business, is often the best way to generate real referrals. Check out these stories (free registration required) about other advisors who have done it successfully:

Case Study: How to Start a Business Networking Group
Here’s how an advisor started his own business networking group, cultivated an association of lucrative contacts—and tripled his book in 18 months.

Case Study: Create Your Own Elite Dinner Club 
Dining with prominent members of the community turned into a networking sensation for this veteran advisor. See how a top producer parlayed a one-time $1,000 restaurant expense into a steady flow of million-dollar connections—and friendships.

Advisor question: How do I handle performance-based objections?

Today, the answer to another question submitted during our Morningstar Advisor webinar "How to Trigger Natural Client Referrals by Conquering Referral Anxiety" (replay available here).  This one comes from J., an advisor with Charles Schwab:

I have been asking for referrals and the clients say, "Okay, I will think about and it and get back to you after seeing the portfolio performance."  So what does that  mean?

Well, to me it means a couple of things. First is that you're asking the wrong clients for referrals, and/or asking at the wrong time.  Second, you may want to rethink your value proposition and how you are positioning yourself in the minds of your clients and prospects.

These particular clients have not yet decided that you are referable.  Either they haven't been working with you long enough, or for whatever reason, they are not yet convinced that you are bringing them the kind of value they expect. And you will never get high-quality referrals from people who don't have full faith in you.

Learn to listen for statements indicating that clients recognize your value and how much you're doing to improve their lives, and use those statements as indicators that it's time for a referral conversation.  For example, one advisor who's had great success with our Jumpstart Program told us this story about a couple she works with:

"They had been clients quite a few years, and they were marveling at how their funds had done. They have almost a seven-figure portfolio at this point.  So I said, 'Do you know a lot of people you work with who maybe don't have this type of a portfolio?  What about your trade association?' And they said, 'Of course! We'll send you the roster!' and all of a sudden I get 50-some names and email addresses and phone numbers."

Notice that she positioned her request in response to specific value-recognition comments made by the clients.

If you're not hearing any of those types of comments, ask yourself if you're engaging in enough conversations about their expectations and your service. Try asking more questions, such as "What have you found most valuable thus far in our working relationship?"  Make sure you're conducting a sufficient number of reviews with your best clients, because quarterly and annual reviews (especially when performance has been good) are terrific places to have conversations that lead to confirmation of value—thus providing a great opportunity to ask for a referral or introduction.

It also sounds as though, in these clients' minds, your value equals their portfolio performance.  Performance matters, of course, but if that's the only thing they're thinking about, something is missing. You're trusting your professional fate to the ups and downs of the market—and even if you're consistently able to achieve fabulous performance, you're limiting your ability to differentiate yourself from the competition.  What if another advisor comes along who can point to good performance? What will stop your clients from defecting? 

Job #1 for you is figuring out what is special or unique about you?  Step back and invest some time and energy in your value proposition, your branding, and your client service and communication strategy. When those pieces come together, referral conversations will flow more naturally, and I suspect you'll start to find that your other marketing and prospecting strategies get easier too.

If you need help, Horsesmouth is loaded with resources on these and related topics. For example (free registration required):

The 'Everyday Advisor' vs. the 'Branded Advisor'
When you follow the three key elements of a disciplined branding system, you'll absolutely clobber the competition. The reason: A focused, concentrated effort shows people who you are, what you stand for, and why it matters. Compare that to the "everyday advisor" and see the difference for yourself.

6 Ways Value Statements Boost Business
A value statement is not just a catchy marketing slogan—it's a tool that enables you to set more meetings, close more sales, and make clients tell their friends you're the best FA they've ever had.

A 6-Step Client Service Strategy That Works
A Horsesmouth member called recently and said he needed to create a systematic client service strategy—fast! We said we could help. Here's the action plan.

How do I Get Clients to Refer "Up"?

We're continuing to revisit some of the great questions we received during our Referral Clinic and Blogathon in May and June.

Ginita Wall will be responding to today's question, which was sent in by Caragh, an advisor in Syracuse. A CPA, CFP® and CDFA practicing in San Diego, California, Ginita is co-founder of the non-profit Women's Institute for Financial Education and author of eight books, including The ABCs of Divorce for Women.

Caragh's question: My client has quite a few friends and associates who are much wealthier than her, but she is more comfortable introducing us to people closer to her worth level. How do we get her comfortable with referring us up?

Ginita Wall's answer: Well, let’s look at it from her perspective. "Who am I to give advice to people who are more successful than I am?" she is probably thinking. And in a way, she’s right. So the trick is to move it from a professional referral plane to a more social one.

Here’s an idea: When her birthday rolls around, tell her you’d be happy to host a celebratory luncheon in her honor at a local eatery for her and five of her friends. And you might even suggest some names of her friends (if you know them) that include the wealthier ones, as well as those nearer her income level. You are looking for an introduction, and a social context is great.

Here are some other social events that have been successful:

• charter a boat for a ride around the lake
• take a special group tour of the local Wild Animal Park
• sponsor a spa day in a local hotel
• afternoon tea at a local hotel

Anything that will get her off the plane of thinking of introductions being in a strictly business context is great.

Good luck!

Editor's note: One advisor, Phoenix-based wealth manager Becky Gaylor, actually used an idea like this as a full-on marketing strategy. For one year, she hosted birthday parties each month for top clients, at a budgeted cost of roughly $1,000 per event. She phoned the clients a month in advance and offered to host a party for them and 10 to 12 guests as a way of saying thanks for being one of her best clients. Five years later Gaylor says she's still getting referrals from these events.

You can learn more about Gaylor's strategy and other great marketing ideas in Nicole Coulter's Horsesmouth article The Best Marketing Money I Ever Spent (free registration required).

More on client service expectations and referrals

I wrote last month about how the REAL reason for lost clients (and referrals) is the failure to communicate about clients' service expectations. 

Nicole Coulter has an excellent article on Horsesmouth today about this very topic, and how to deal with this sticky topic.

Nicole writes:

Setting clients' expectations is a process, and one you must begin even while you're prospecting. The process breaks down into two areas of responsibility: (1) profiling new clients; and (2) communicating with existing clients. You've got to do well in both areas to ensure that you and your clients are on the same page throughout the relationship.

Remember, the first step in getting more referrals is keeping your existing clients happy and, ideally, turning them into raving fans.  And setting appropriate expectations is 90% of that battle.

Read the rest of the article to learn how to get started on the right path (free registration required if you're not already a Horsesmouth member):

6 Ways to Manage Clients' Expectations--And Retain Their Business
Follow a systematic process to make sure you consistently deliver what your clients and potential clients expect, not only in the first meeting but throughout the client life cycle. (Plus, see great examples and checklists you start using now.)

How a $300 million advisor used referrals to build a niche business

Horsesmouth editor Nicole Coulter published a great case study today about Dominic Musso, a now-retired wirehouse advisor who built a $300 million practice in a targeted niche, all through referral. 

In a nutshell, here's the approach that Musso used:

Tell the niche members about your plan to serve other members of the niche and ask for their opinion on reaching out to that group. "Ask for help formulating a round-table agenda that would be attractive to other members of the niche," [business coach David] Leo says. "You want to go into a round-table meeting knowing some of the concerns of the group."

Musso, who attracted more than 800 oil industry clients over a 15-year period, concurs: "Take one person or couple in the niche. Take them out to dinner and learn everything about them. Identify issues beyond investments that could pose problems for them," he says. "When you focus on knowing your client, and identifying their issues-if you do that with one couple, that couple can eventually take you to 12 other people. The more you satisfy them by making them happy and demonstrating your interest in their welfare, and teaching them what they need to know about their life, the numbers get bigger and bigger."

The article goes into much more explicit detail about the "how" behind this prospecting-by-introduction approach and considers how it could work for a less experienced advisor struggling to break into a new niche. 

You can read the entire case study (free registration required) here:

Case Study: How to Crack Hard-to-Enter Niche Markets

Why you need a diverse network

I just happened across a post by Ron McDaniel of Buzzoodle Marketing about "networking diversity." Ron writes:

"How deep is your network? How many people do you know who are very different from you? A diverse network is going to be more interesting and more powerful, because it gives you access to more varied groups."

He goes on to suggest auditing the top 50 people in your network to see how diverse you are.

Ron's point resonates with the writings of Horsesmouth co-founder Bill Nicklin.  For those who don't know him, Bill is a 35-year veteran who has been a multi-million-dollar producer for at least 20 of those years and whose AUM is now bigger than the GDP of at least a few small countries.  He's built much of that wealth thanks to his ability to cultivate relationships with a truly remarkable range of people, from farmers to high-tech executives.  In two different articles, Bill writes:

"If there is one prevalent tendency among financial advisors, it's to stay within their comfort zone. I have seen FAs talk to the same clients over and over, day after day, in what becomes a social ritual. These are the people who provide referrals from a small pool of extended friends. Those same FAs lunch with their closest friends and associates. They take the same clients out to dinner (check out your credit card receipts). If they come up with an investment idea, they try it out on their "best friend" clients first. Rarely, if ever, do these FAs prospect for new business using an original thought. They stay within their social walled garden."

"When looking for new information, opportunities, and relationships, weak ties tend to be more important than strong ties because the cluster of people knit tightly around you at your school, sports club, or church all occupy the same world that you do. Casual acquaintances, on the other hand, are much more likely to know people, and have information, that you don't. This is why the most important people in business development, just as in job hunting, are those who aren't closest to you. The greater the number of peripheral acquaintances, the greater the likelihood of creating a robust network of prospects, clients, and sources of knowledge."

Whatever your usual networking rut is, bust out once in a while.  Find a new watering hole.  Attend a conference focused on some industry that interests you where you currently don't know a soul.  It may do wonders for your business.

Read more (free registration required):

Jump the Walls of Your Comfort Zone
When you venture outside the boundaries of comfortable relationships, you'll open new doors of opportunity and diversify your business platform. Part 1 of a five-part series explores the safety of our "walled gardens" and offers new ways of venturing outside your comfortable confines.

Prospecting: The Strength of Weak Ties
Though it sounds counterintuitive, your best friends are rarely your strongest links to new business—you already know what they know. But casual acquaintances have much to offer.

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The ABCs of Automatic Referrals: G is for "Give to Get"

Whether you're trying to establish a relationship with someone you met at a cocktail party or get referrals from your clients, there are a few basic principles you must master in order to be successful. 

Here they are:

1. Give
2. Give
3. Give
4. Give...

Yup, you've got it. The key to success is a mindset of creating abundance for others.  How can you help your clients' friends and family members?  How can you help that accountant or lawyer you just met? How can you help the contractor who just did the remodel on your house, or the funeral home director down the street?

In my last post, I referred to an article by Jeffrey Gitomer in which he listed five and a half principles for making yourself referable. The "half" was a subset of this "give to get" principle: give the OTHER person a referral first.  This doesn't include just CPAs and attorneys you're hoping will refer back to you. You can also do it with your clients. 

There's the one-on-one method: if your client is a professional or business owner, send some business her way.  If he is very active in a non-profit, volunteer some time or offer to do some pro-bono planning work for them.  Help his college-age kid find a summer job or internship.  The list of opportunities to give in this way is as long as your client list.

Or, you can take a broader approach and make yourself a resource where clients know they can always go to find a referral for just about anything.  That's what Dawn Janes does. Dawn is an insurance agent I interviewed for an article on sharing referrals with other professionals (free registration required) a few years back. She has an entire PAGE on her Web site devoted to referrals for her clients, from hair stylists to estate planning attorneys to custom cabinet makers—and yes, financial advisors.  She meets with all of these professionals and vets them before they make it to her Web site.

As it turns out, these referrals have not only won her lots of points with clients—they've also benefited her in terms of bringing in referrals from the other professionals listed on her page. In fact, she notes, "My largest client is a result of networking with a referral resource." 

There's nothing like telling people you'd like to get to know them better and perhaps refer business their way to rev up your networking.

Believe it in your bones: when you give, you get.  Ironically, the less you concern yourself with the getting, the more wealth and success will come your way.  No matter how much you're struggling to get your own business off the ground, focus on lifting others up as you climb.  Let that be the polestar that guides your professional life.

How to Execute on Your Referral Strategy--Efficiently and Effectively

Welcome to Day 17 of our Referral Clinic and Blog-a-thon.  We asked advisors to send us their toughest referral challenges. Now we're featuring the 20 best, along with solutions from top referral experts and veteran financial advisors. 

Today's winning question comes from Jeff R., a wholesaler from New York City. Congratulations, Jeff!

Jeff's question will be answered by yours truly, Miriam Lawrence, resident referral expert at Horsesmouth and author of the Automatic Referrals blog.

Question: "As an Inside Wholesaler with 6 years of experience, always trying to add value by talking about referral generating strategies, prospecting strategies, etc, I've talked to every type of Financial Advisor in the business and the most common roadblock that I've seen is execution or implementation of an actual plan. Every Advisor knows that they need to generate more referral business and every one of them wants to do it and every one of them likes to share ideas and talk about strategies. But when I make my follow-up calls asking if action has been taken, the most common response is... 'No, I haven't had time.'

When an advisor finds a specific niche, or a strategy that might work, how do they implement a plan around that strategy to maximize efficiency? Should there be specific hours of the day dedicated to the strategy, specific questions that are always asked during a client meeting??"

Answer: Excellent question, Jeff. You're spot on with your observations about the difficulty advisors have implementing a referral strategy. 

Advisors absolutely do need to figure out how to integrate their referral process into their business in a way that makes sense and allocates time efficiently.  How that's done will vary from advisor to advisor and from strategy to strategy—there's no "off the shelf" answer. 

The process that we teach in Automatic Referrals is largely centered around client conversations.  The most important task entails listening for clues about the people that clients know, identifying the people who might make good referrals for you, and then asking for introductions to those people. 

So, the first step once an advisor has identified a niche and ideal client is to start asking some basic conversational questions during meetings.  Some FAs already ask these questions, but think of them as rapport-builders or just conversational filler and don't pay much attention to the answers. In fact, they are the cornerstone of the investigative referral process we call "network mapping."

With this approach, the primary day-to-day task is integrating a simple question or two into client meetings. The actual questions can vary from advisor to advisor, and from client to client. 

For example, one advisor started asking "How's the family?" in review meetings and found himself learning all kinds of new details about his clients' families that he never knew. In one case, that simple question uncovered the fact that both of the client's grown sons could be perfect referral candidates.

Another advisor also started asking a variety of questions in every quarterly and annual review. The questions vary depending on the client and the context.  In one case, he asked a client "What do you like to do?" and learned that the client loves to fishing.  A few follow-up questions later, and the client had revealed that he has a cabin on a lake where he fishes during the summer, and one of his neighbors there, with whom he regularly fishes, is a multi-millionaire.  The advisor just had to say, "Wow, I sure would love to meet him," and the client said he'd be happy to set something up over the summer. 

This same advisor has made it a point to start asking his retired clients for introductions to their adult children during reviews, and got 3-4 new accounts in just a couple of months as a result.  When these methods become habits, they begin to bear real fruit.

However, we're getting a bit ahead of ourselves.  Advisors often don't take even the very first steps in getting their strategy off the ground: figuring out what their niche or target markets are, identifying their ideal client, determining who their best existing clients are, setting goals, etc.

For any strategy to work, there must first BE a strategy, and that requires a bit of work and time on the front end.  Unfortunately, advisors often defer planning activities of any kind because they take time that never seems available.  "Working ON the business rather than IN the business" never seems to make it to the front burner.

The only way an advisor can combat that fundamental problem is literally to schedule the time needed for these planning and strategizing activities.  Block the time, and do it officially—break the tasks down into discrete manageable steps, and set aside time for them in your appointment book, just as you would do for a client meeting.  Ask your assistant to hold your calls.  Better yet (much better, in fact) get out of the office altogether and do your ideal client profile and other strategic thinking at Starbucks or the library or sitting on a park bench—wherever you feel comfortable and able to think. 

Similarly, block time each day or week for the follow-up activities that keep a referral process humming along—such as writing thank-you notes, calling referrals to whom you haven't been able to obtain a direct introduction, etc.  Time blocking is also necessary if an advisor wants to cultivate relationships with CPAs or other professionals.  And sometimes it helps to do research on people your clients know before you speak to your clients about them, if those people are prominent, run a business, sit on boards, etc. and you can find some advance information about them.

The time to implement a referral strategy will never just appear in your schedule. You've got to build it in.  The good news is, once you do, it's pretty self-sustaining and very rewarding.

Have you been able to follow through on a referral process? Do you have tips to share, or other thoughts about today's challenge or the response? Post a comment.

How to Provide a 'WOW' Factor to Thank People for Referrals

Welcome to Day 16 of our Referral Clinic and Blog-a-thon.  We asked advisors to send us their toughest referral challenges. Now we're featuring the 20 best, along with solutions from top referral experts and veteran financial advisors. 

Today's winning question comes from David I., an independent advisor from Waltham, MA. Well done, David!

David's question will be answered by veteran advisor Jay Eshbach of Eshbach Retirement Planning in Baytown, Texas, just outside Houston. Jay has been in the financial planning field since 1987 and manages over $80 million for over 500 clients throughout the United States and overseas.

Question: "Other than a timely, sincere hand written note to someone who has referred me business, what can I do to provide a WOW factor? In some cases I have given out mint silver dollar pieces that come in a blue velvet box. I do not want to be too commercial, but I want it to be memorable."

Jay Eshbach's answer: I have provided "WOW" referral gifts for years.  Sure, I do the thank you cards.  But, in addition to thank you cards, I have given two, 1 inch thick Rib-Eye steaks for each referral.  A 1 ½ to 2 pound Rib-Eye steak will impress anyone, even in Texas.  Then, I started giving one share of Disney Stock.  Disney has one of the most colorful stock certificates out there because it includes Walt and all the Disney characters on the front of the certificate.

In 2005, I started giving out 1889 Morgan Silver dollars in "BU condition" (brilliant uncirculated condition). 

The "WOW" referral gifts are important, but how you ask for referrals is equally important.  Below is a sample of how I ask for referrals in my newsletters and mailings:

"The first U.S. Morgan Silver Dollar appeared in 1878.  The last Morgan silver dollar ever minted was produced in 1921!  Between 1878 and 1921, millions were struck (minted).  Some years had high numbers minted and some years were vastly lower. An extremely high number of coins were lost in government melts during World War I and World War II. 

You ask, 'So what does all this have to do with Jay Eshbach and Financial Planning?'

Well, the number of new clients calling us and setting appointments in 2006 is higher than it has been in five years!  All of these new clients are being referred by people like you.  We want to say THANKS!

As my way of saying THANKS FOR THE REFERRAL I have secured ten 1889 Morgan Silver dollars in BU (brilliant uncirculated) condition.  BU indicates the silver dollar has nice original luster and absolutely no wear.  (Can you believe anything 117 years old has no wear?)

So what does all of this have to do with you, me and a 117 year old silver dollar? The next 10 people that refer someone to me for Financial Planning will receive one of these 1889 Morgan silver dollars, free of charge, as my way of saying, 'Thanks for the Referral.'

Talk to your friends, neighbors or co-workers about Eshbach Retirement Planning.  When someone you talk to calls my office to schedule an appointment, I will send you an 1889 Morgan Silver Dollar."                            

Editor's Note: Thanks, Jay!  And here are a few other "wow" thank-you ideas that have worked for advisors:

• Candy, sweets, wine, gift baskets
• Waterford Crystal
• Time together-treat to lunch, dinner, golf
• Restaurant gift certificate or Starbucks gift card
• Movie or sports tickets
• An orchid, or flowers
• Book, magazine subscription, bookstore gift card
• Nice pen
• Donation to favorite charity

How do you say "thank you" for referrals?  Got other thoughts about today's challenge or Jay's response? Post a comment.

How to Get Divorce Attorneys to Refer

Welcome to Day 13 of our Referral Clinic and Blog-a-thon.  We asked advisors to send us their toughest referral challenges. Now we're featuring the 20 best, along with solutions from top referral experts and veteran financial advisors. 

Today's winning question comes from Joel H., an independent advisor from Chicago, Illinois.  Congrats, Joel!

Ginita Wall will be responding to Joel's question. A CPA, CFP® and CDFA practicing in San Diego, California, Ginita is co-founder of the non-profit Women's Institute for Financial Education and author of eight books, including The ABCs of Divorce for Women.

Question: "I am targeting divorce attorneys in the Chicagoland area since I have divorce financial planning accreditation. I am finding it difficult to get referrals from the existing divorce attorneys I know, to give me other divorce attorney referrals. Any suggestions?"

Ginita Wall's answer: Getting referrals is always a dilemma. Here are the top five reasons that attorneys don't refer:

5. Don't want to be responsible for referral if it doesn't work out

4. Don't understand how you would benefit the case

3. Don't think of you when facing an issue

2. Don't understand your areas of expertise

1. Don't know you want referrals!

Number 1 is a biggie. Do you ever ask for referrals? I don't mean in the hemming, hawing, hinting sort of way—I mean straight out: "I like working with you, and I'd appreciate you letting any colleagues you know about me and what we are able to accomplish together on cases."  Or "I'm wanting to meet some new attorneys—why don't you invite a colleague to come to lunch with us, my treat."

At the other end of the list, Number 5, some people simply don't feel comfortable with making referrals, but fortunately there aren't a lot of those overly-cautious people around. Most people are comfortable referring you to others if they know you, trust you, and understand how you can help. So get to know the attorneys well, keep in touch on a regular basis, and let them know how you can help. And remember, the more you refer to them, the more they will feel obligated to refer back again.

And that leaves Numbers 2, 3 and 4, which are all related. Here are some suggestions to improve your odds in these areas:

• Crow about your successes. Make it a practice to describe situations in which you were helpful, and how your talents contributed to a successful outcome (or mitigated the problems, if the outcome wasn't so successful as you might have liked.)
• Tell the attorneys something they don't know. Give them a financial tip they can pass onto their clients, talk up something in the financial news and how it applies to them, anything to bring your world of finances to their world of law and clients.
• Create a newsletter that you send to attorneys, in email or printed form. Tips, success stories, whatever you believe is of interest.
• Create a financial seminar to which attorneys can invite their clients.  Or even better, create regular program on divorce for your community. 

Years ago I started a divorce program in San Diego called "Second Saturday: What Women Need to Know About Divorce," and in June we begin our eighteenth year.  The workshop takes place once a month at a local community college, and we have a rotating roster of speakers that includes attorneys, therapists, mediators and myself. 

More than 7,000 people have gone through the program, and we have raised over $65,000 for the scholarship program at the college.  And to top it off, the seminar has been a pivotal resource in my success in the field of divorce.

You are welcome to adapt the format for your use. Visit www.SecondSaturday.com for more information).

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

What to Do About Sub-Par Referrals?

Welcome to Day 10 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 comes from Edward K., a regional advisor from Atlanta. Thanks, Edward!

Top advisor Gregory D. Gardner, CFP will tackle Edward's question. Greg is president of Dallas-based The Gardner Group, a comprehensive wealth management firm specializing in high net worth investors. Gardner is also actively involved with his alma mater, Southern Methodist University, where he played football. He is the chairman of Planned Giving for SMU Athletics, and also serves on the university's Planned Giving Board.

Question: "I've always tried to paint a vivid picture when I tell my clients what kind of new clients I'm seeking. I'll even say a minimum asset size of $200,000. I still continue to get some referrals with accounts under $100k. How do I decline to work with these folks without creating ill will with the referring clients?"

Greg Gardner's answer: I went through a phase of being referred "downward" by some of my better clients. We were getting a lot of referrals, but they were introducing me to their debt-ridden children and administrative assistants. We were doing a lot of charity work, explaining how to get out of credit card debt, etc.

After re-reading Nick Murray's The New Financial Advisor, I remembered why it was so important to stick to my firm minimum. For every client I brought on under $400,000… the next one would have to be that much larger. That made me reiterate my value proposition with my very best clients. For every minute I'm dealing with someone with $50,000... I'm not dealing with you.

I have taken on several steps to help improve this situation. I've done a better job lately letting clients know who we're going to work with and who we're not. We reworked our brand image to make them understand they were referring people not just to me, but to a process and a company. I explain to them how many families I believe we can manage. 250 relationships is our magic number. I tell them not to worry, we still have room to grow. It puts them at ease. They don't want to be passed on to paraplanner for their investment questions.

Unfortunately, the downward referral still happens from time to time. One client referred me to one of his employees, a guy making $75,000 who had $35,000 in assets. Taking on that person didn't make sense. I still talked to the referral on phone for an hour.  I gave him some free advice, but I didn't take him on. I told my client I work with people like him, who have $1 million in net worth and $500,000 in investable assets.

That being said, you gotta take the children of your clients--regardless of account size.  I always meet with relatives of clients. From there, I usually spend 3-5 hours educating them on why they should NOT work with me until they are out of debt, investing faithfully in their 401(k), and some financial basics are established. This eliminates the operational headaches that smaller clients often bring us.

Next, I have brought on a junior wealth advisor to help with these smaller clients, if and when it makes sense. We also employ technology. Lower-tiered clients who come in via referral often report surprise at the high level of contact we provide--weekly e-mail market updates, a monthly electronic newsletter, and an annual face-to-face review. Based on their experiences at other firms, they didn't think we'd have time for them. Even clients with $10,000 invested with me are getting contacted by us frequently. They can opt out if they want to, but with technology, we can deliver that level of service at no additional cost or time commitment.

So, I have the technology and systems in place to handle the smaller accounts. However, just like you, I only have 168 hours in the week.

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

My Clients Won't Set Up Direct Communication With Referrals

Welcome to Day 8 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 D. Jones, an independent advisor from Golden, Colorado. Congratulations!

D's question will be answered by Michael Brizz, creator of the Referral Mastery System. Since 1988, his Center for Professional Achievement has been helping financial advisors elevate their business to operate "by referral only."

Question: "I frequently have clients who seem to want to refer to me but will only ask for marketing materials rather than setting up more direct communication. While marketing materials are good, I feel there is no substitute to direct communication. What do you recommend?"

Michael Brizz's answer: You are right to want direct communication. Without direct communication, the odds of securing an appointment fall significantly. 

Your setup is very important.  In the Referral Mastery process, we make sure the following is in place before we discuss the actual introduction method—make sure the client:

1. can articulate your value
2. knows precisely to whom you want to be referred, and
3. understands why it is beneficial for the referral to meet you.

If you have done these steps, your client will want to make sure you and the referral connect.   

When you have completed the steps above, the next step is to develop a method of introduction that is comfortable for the client and workable for you.  It is important to have an open discussion about this and that you are open to different forms of introductions.  Pay attention to the shared interests of the client and the referral. 

Here are some examples.  We have a client this week that is going on a fishing trip to Costa Rica with a client, and one purpose of the trip is to arrange a power introduction between the advisor and a wealthy investor.  Another advisor client of ours just got back from a golfing trip to Hilton Head with a client and a group of referrals. 

This is much different from just having a name and a number or having a client give someone your marketing piece. Strive for quality personal introductions. 

You need to balance quality of connection with practical limitations.  Just because the client suggests you come along on an ice fishing trip to Alaska in January doesn't mean you have to go.  However, you very well might go if the quality of referral is high enough.  There will be plenty of time to develop rapport as you sit around that hole in the ice waiting for something to bite. 

The introduction does not have to be exotic.  Just yesterday, I suggested to my advisor that he come to my house for a picnic so he can meet a wealthy friend of mine.  I will make a point of briefing the advisor and setting up the conversation so the two of them will talk about investments.  They will have a warm and comfortable conversation over brats and beer on my deck.  They will have time to establish rapport and I will bet that my friend's curiosity about investments will push the conversation until they talk about specific investments and about Ed's technical methods of managing money.   

The higher the quality of referral you want, the more attention you want to pay to the method of introduction. Where at all possible, you want a personal introduction.  Agree on a method where there is time to have a conversation so the referral will feel comfortable with the next step - agreeing to the next conversation.

The meeting does not have to involve a week in Costa Rica.  It might be a cup of coffee at Starbucks.   It could be a 3-way conference call.  You want to make the connection happen in a way that is comfortable for both the client and the referral.  Pay attention to the shared interests and more direct communication will happen. 

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

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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Center-of-influence referrals require energy and patience

I was struck last week by this passage in Jeff Thorsteinson's Horsesmouth article A 5-Step System For Building Centers of Influence (free registration required):

Some advisors fail to maximize their referrals from professional sources because of their inability to stick with a referral strategy. The fact is, it takes four or five times longer to secure a referral from a professional source than it does from an existing client. If you don't secure a referral from a given source within 12 months, don't give up. Conversely, if you've had some success at first, but then referrals have dropped off, that's not necessarily a reason to change your strategy.

Thorsteinson goes on to explain that you've got to treat COIs like your most important clients. He recommends 20 contacts a year, including a monthly COI-focused newsletter, as well as quarterly events just for COIs.

Is all that effort really worth it? You'd better believe it. For example, take the story of an advisor who started his own business networking group (free registration required). Peter Reuss invested $5,000 and hundreds of hours to get the group of the ground... and his perseverance paid off: he grew assets from $18 million to $55 million in just two years, mainly through referrals from members of the group.

If you understand that referral marketing requires time, patience, and strategic thinking, you can harness its tremendous power. The results will come. Just develop a strategy and stick with it.

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Take a walk and get some referrals

Here in northern Vermont, we endure about six months of winter every year. Sure, we get to ski... but that doesn't help much in March, when the ground is muddy, the trees are bare, and the thought of having to bundle the kids up in a snowsuit yet again is enough to send everyone who can find the time and money packing off to Florida for a few weeks.

That's why, when you go for a walk on a glorious spring day like today (68 and sunny), complete strangers nod and smile knowingly at you, and you return the grin. Maybe you even say, "Great day, isn't it?" and strike up a conversation.

Yup, days like today are absolutely perfect for cold-walking. And what does cold-walking have to do with referrals, you ask? 

Plenty.

If you follow th