Successful advisors rely on referrals to grow their practice. But getting referrals from centers of influence requires legwork.
Advisors can ask satisfied clients to refer friends. But why stop there? Another source for referrals is professional service providers in related fields. Attorneys, accountants and insurance specialists are centers of influence: respected figures in the community who are well positioned to refer friends and clients to their favorite advisor.
For advisors, the challenge is cultivating relationships with top influencers. By earning their trust, you can tap a wellspring of clients for years to come.
But first, you need to prequalify these service providers. How? Confirm that you fill a hole in their professional network.
When meeting a potential center of influence for the first time, Ed Gjertsen II likes to ask, "Do you have people like me — a fee-only planner — in your circle?"
"That helps to create clarity with that relationship," said Gjertsen, a certified financial planner at Engage Wealth Group in Northfield, Ill. "It also gives you an opportunity to educate them on how you're different from your competitors."
Ditch The Quid Pro Quo Mentality With Centers Of Influence
It's easier to forge bonds with centers of influence when you're both guided by a similar business philosophy. If you share the same values and establish an easy rapport, you're more likely to enjoy a mutually beneficial relationship.
"The professionals in our circle generally align with our approach: client first above all else," Gjertsen said. "This may mean providing advice and guidance without the prospect of selling a product or service."
Reflecting on his nearly 30 years as an advisor, Gjertsen says that patience pays off when reaching out to centers of influence. Instead of entering into the relationship expecting instant reciprocity, treat it as a chance to add a long-term ally.
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"Often, people look at centers of influence as a quid pro quo," he said. "It's 'I'll give you a big client. You give me a big client in return.' But it's better not to expect anything upfront. Trust is earned over time."
Gjertsen warns advisors not to track the number of clients they send to attorneys or accountants. Getting too caught up in keeping count can lead an advisor to think, "I gave you two clients and you haven't given me any in three months. So I'm moving on."
Like many advisors who provide comprehensive financial planning, Gjertsen strives to offer wide-ranging assistance to simplify clients' lives. In addition to referring them to traditional centers of influence, he might also guide them to mortgage brokers, eldercare providers and even a handyman.
Of course, there's always a risk that the referral backfires. On rare occasions, Gjertsen's clients may not like the person that he recommended.
"When that's happened, we will talk with the client and the service provider to understand where the mismatch occurred," he said. "Generally, it comes down to personality and expectations on both sides."
Focus On Three Keys: Expertise, Transparent Pricing, Client Satisfaction
To avoid a bad match, advisors may set specific criteria before they make a referral. That way, they can easily assess if a service provider passes the test.
John Morris, an advisor at Boston-based Crestwood Advisors, seeks to refer his clients to service providers who meet three conditions: They possess expertise, offer transparent pricing and deliver client satisfaction.
"It requires ongoing engagement to ensure they're keeping up to speed," Morris said. "So we try to connect periodically just to keep in touch."
In these conversations, Morris may ask about new products, strategies or innovations in their field.
"Educate me about new developments in your industry so that I can update my clients," he often says. Respondents readily share the latest news to demonstrate their knowledge.
Follow Up On Referrals
When the referral works out well for everyone, advisors seek to close the loop.
After serving a new client who's referred to him by a center of influence, Gjertsen might invite the client to relay their satisfaction to the referral source. He places a high value on follow-up.
"If the client is happy working with the advisor, make sure that client goes back to the attorney — or whoever referred them to the advisor — to let them know," he said.
Like Gjertsen, Morris doesn't treat referrals as a quid pro quo. Instead of adopting an I-give-you-one, you-give-me-one mentality, Morris says he comes out ahead simply by referring clients to a stable of top professionals.
"If I refer clients with a measure of confidence, and they are satisfied with that (expert), it enhances the client's relationship with us," Morris said. "Not only have we achieved a goal for our client, but that client may refer more people to our firm because they were so pleased with their overall engagement with us."
