Referrals account for 83% of new business for advisors in a Charles Schwab benchmarking study, yet few advisors ask for them, and that’s a mistake, Scott Slater, managing director of business consulting at Charles Schwab Advisor Services said at the firm’s annual conference in Boston on Wednesday.
Nancy Allen, Schwab’s director of advisor services, added that clients aren’t reticent about referrals, but they do need to be asked for them. “Ninety-one percent of clients are willing to give referrals, yet only 4% actually gave referrals,” she said, clear proof that there is enormous potential for growth if advisors focus on this advice to build their business.
Here are 10 client referral tips from the conference that should help advisors generate new business.
Simplify referrals for clients
- Communicate the benefits. Brian Hughes, managing director at the Threshold Group gave a clear example: “You don’t buy air conditioners for the machine, you buy them for the cold air.” Determine the client’s need and then establish the benefit you are delivering. Clients need to be able to communicate this benefit to their network, so avoid using industry jargon.
- Be exclusive. Let your clients know that you do not take all types of clients. This will resonate with them. Plus, Anna Nichols from Family Office Exchange, said that “the more homogeneous your clients are, the better off you will be,” improving both operations and profitability.
- Help those that don’t fit. Laurie Chandler, partner and managing director at Vigilant Capital Management, said, “If the referral is not a good fit, we find an advisor that is.” This takes time, but it takes the pressure off clients, so they do not have to ask the personal questions.
Train your staff
- Know and improve your story. Conduct this staff exercise: “Have everyone write down their elevator pitch,” suggested Brian Hughes, adding, “it might scare you when you see what they write.” This way you have a starting point to change the culture of the organization to better gain referrals.
- Make it a team effort. Andrew Altfest, executive vice president of Altfest Personal Wealth Management, gave his service team some ownership of referrals and made the process part of their performance evaluations. He added, “Each advisor in the office developed their own scripts so they would feel comfortable.”
- Position the “ask.” Ken Hart, principal at Cornerstone Advisors, said, “We were wrong—asking clients to help us wasn’t the right angle.” He has been much more successful with the approach that they can help their clients’ friends, in which case the benefit is provided to the client.
Do some research
- Know your clients. Andrew Turner, principal at Riverbridge Partners, uses a client survey to help his firm focus on “introducers.” He said, “Then when it is possible, we use a specific strategy for each client.” This involves gathering intelligence, positioning the ask and having a specific person in mind.
- Know who you are going to meet. Laurie Chandler gave an example of checking out a charity board on GuideStar before she meets with them. Then with the internet, especially LinkedIn, she said, “you can find out a lot about the people before you ever meet them.”
Thank your clients
- Send a note. A show of hands in a standing-room-only session proved that not all advisors are doing this simple referral reinforcement, but they should be.
- Be thoughtful. Andrew Altfest said, “We make a donation in the clients’ name when referrals are made.” Reinforcing the good deed will help encourage more referrals in the future.
Mike Byrnes founded Byrnes Consulting to provide consulting services to help advisors become even more successful. His expertise is in business planning, marketing strategy, business development, client service and management effectiveness, along with several other areas. Read more at
