Updated Monday, December 22, 2014 as of 7:51 PM ET

Never Ask for a Referral (Here's Why)

If you’ve built a productive advisory practice, you know that the single most important resource for prospective clients is your existing book of clients. For the vast majority of advisors, referrals from satisfied investors represent the primary source of growth and new revenue. In fact, an entire consulting industry has grown up in response to this question: how can I get more clients to refer friends, family members and acquaintances to my business?

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Comments (4)
Client LOVE to give referrals when asked in a way that is sincere, non-controlling, non-manipulative, non-stressful, with no pressure, and gives them options. The key is to ask in a respectful manner that leaves the integrity of all parties involved intact. Being specific in your request and being a professional not only shows you are not needy, but gets you true referrals (prospects who have a need for your service), as opposed to just obtaining a list of client acquaintances. Successful Advisors know exactly how to do this. That's one of the reasons why they are successful.
Posted by Max B | Thursday, February 28 2013 at 10:25AM ET
This is such an important topic to building a successful practice it should be a required course for every adviser. Anyone in this profession for more than a year knows that the only truly effective way to attract quality clients is through referrals. All the best practice studies confirm this. Yet, advisers are bombarded with conflicting information on whether to ask for referrals and how to do so from a variety of well known coaches and "gurus" virtually every day. No one convincingly demonstrates whether asking for referrals nets the desired result. Even more important, there is scant information to demonstrate whether asking in the wrong way, such as described in this blog, is destructive to the relationship with the client. For now, all we can do is use common sense and follow the lead of successful advisers whose style is closest to our own. For me, this blog appears to be an excellent place to begin.
Posted by Rich J | Thursday, February 28 2013 at 12:57PM ET
Ken,

This is a great article! I agree that the old-fashioned approaches to referrals, like:

"I get paid in two ways..." or
"If you want me to continue to stay in business..." or
"I require my clients to..." or
"Would you rather me spend my time working on your accounts..." etc.

do not work, and actually destroy the trust professionals need to build.

On the other hand, there's no harm taking the script you so generously provided and making it more powerful:

"Does anyone come to mind that you think could use my help that you've been holding off bringing up? Let's talk about him or her and see if there's a comfortable way to arrange an introduction." Follow this with "Who else should we talk about?" and you may have some immediate referrals. If not, ask your client not to "keep you a secret" and to remember that as busy as you are, you would never be to busy to help a friend or family member he wanted you to help.

When it's about THEM and their friends and families, asking for referrals works.

The advisor shouldn't even be having this discussion unless he's asked about the value his clients are receiving from him, and is certain they're happy with his services.
Posted by Sandy S | Sunday, March 03 2013 at 5:37PM ET
As a retired financial advisor, and now a business coach, referrals and marketing are topics much more complex than most of us realize.I agree with the general tone of the article, but . . .I know many agents/advisors who are tough as nails about demanding referrals. Others (myself included) are more low-keyed; I find most advisors fit into this category.

An issue I discovered only in my coaching career is this simple maxim: You don't choose your target market, your market chooses you. This is no small feat; most advisors only discover their natural market after many years in business, and even then it is usually an accidental discovery.
A rigorous effort should be made to clearly and accurately define those clients who you love to work with - partly because they love to work with you.

If you do this, then you redefine how you obtain referrals. You should be asking for referrals who match your ideal client profile. The goal should be to work with your ideal client 100% of the time.

The challenge: develop a marketing plan which will ultimately have you working with your ideal clients at least 80% and preferably 100% of the time. Any referral program which will help you do this - on a sustainable basis - is the one you should use
Posted by Nick R | Wednesday, March 06 2013 at 10:30PM ET
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