One of my favorite ways to promote the referral process, that many reps are having great success with is, “Don’t keep me a secret.” Sometimes it’s appropriate to come right out and ask for referrals—once you know that your client has recognized the value you bring to the relationship.

But when don’t you ask for referrals? It’s a good question.

There are three basic scenarios in which you should consider not asking for referrals.

1. When your client’s portfolio is significantly below average.

Don’t ask for referrals when the performance of your client’s portfolio is not performing well and your relationship is suffering because of this. After a recent seminar, a participant asked me, “How do I ask for referrals when a client’s account is down by 70%?” I told her two things, one of which I knew she didn’t want to hear, but needed to. First, you can’t ask for referrals right now, you’re engaged in damage control. Focus on rebuilding your relationship with that client and making sure sound portfolio strategies are in place. Second, reconsider the financial strategies you bring to your clients—or what you allow them to do to themselves.

Of course, make sure that a client judges your performance as something separate from the performance of the market. That’s not always possible. There will be times when some relationships get hurt because the market is hurting. In these cases, be as present as possible to the problems. Work on restoring your client’s trust in you. If your client lets you do this, you will become referable in their eyes once again.

2. When your client is very guarded.

Take a client's personality into consideration. One way to measure a client’s personality is a continuum from Very Open to Very Guarded (contained). Obviously, a more open person will be more likely to play the referral game earlier in the relationship. A guarded person will take longer to warm up to referrals. Some guarded clients may never warm up to the referral process.

I don’t recommend asking a guarded person for referrals in the first or second meeting (while this could be easy to do with a very open person). When you do ask a guarded person for referrals and it’s clear they are uncomfortable with your request, you have to back off quickly.

Now, with this said, you do have guarded clients who will give referrals, but only on their terms—not yours.

3. When a client doesn’t fit the profile of your ideal client.

It is critical for you to develop a very clear sense of who fits your business and who doesn’t. Resist doing business with clients who do not fit your profile. The one exception to this thinking is when a client refers you to a very close family member.

There is no question that some of your B and C clients can refer you to A clients. But can you ask a B or C client for referrals, if you’re only pursuing A clients? No, and yes. In most cases you can’t, unless you have an unusually strong relationship with that client. When that client has become a business friend, you can talk about where you’re headed with your business and how they might help you get there. This is a conversation usually reserved for close relationships.

There is no one approach to referrals that will work with every person every time. There is the skill—having the right tactics to apply, and there is the art—knowing what to apply when. The more tools you have in your referral kit, the more likely you’ll have the right one for the specific job.

Sometimes I’m asked, “What’s the most important ingredient in being successful with referrals?” My answer is always the same: Your commitment to mastering referrals. When you make an internal commitment to mastering referrals and you become a student of the game, you will more naturally pick up the skills and awareness that will work for you. Don’t let anyone tell you there is one best way to get referrals.


Bill Cates is president of Referral Coach International, the author of Don't Keep Me a Secret, and an AdvisorMax coach.