Stop Calling it “Referrals”

Dear K.C.,

I wish our profession could move away from talking about client referrals and move to “accepting an introduction” from clients. Every time I hear an advisor talk about obtaining client referrals, I think about the guy who came to my home years ago to clean my carpets. He did a very nice job and I complimented him, and as soon as I did he shoved a card into my hands and asked me to write down the names of three of my “closest friends” with their email and phone numbers who would also benefit from having their carpets cleaned. It was very off-putting. Much as I believed the person did a great job, I never used him again.

Someone who is paying you for a service does not “owe” you anything. They are not your partner in growing your business and they are not there to offer referrals because you ask for them. However, that said, you are providing an excellent level of support and service for one of the most important aspects of anyone’s life – helping them make the best financial decisions for their family and their legacy. Not everyone in our profession does this at the highest levels of excellence. I coach advisors to say – as “the best kept secret” around, you should ask clients about others they care for in their lives to whom they might be able to make an introduction for an exploratory conversation. You are doing your clients a disservice when you don’t make this option available to them.

It may be a nuance but it is a very important one. It has to do with your mindset, the framing to the client, and your ultimate objective. Is your ultimate objective to get help from your client so you can grow, or is your objective to help someone they care about make the best financial decisions they can for short- and long-term objectives? Intentions matter. How you approach someone, and what intention you have when you do so, is paramount.

I validate your feeling of “ick” and I don’t believe you should ignore your resistance. I’m not a fan of the commonly used line, “We would love to work with more people like you.” When someone says that to me, I don’t know what they are talking about! Who is like me? A working mother with three kids? A business owner? A college professor? An author? An investment industry professional? All of the above? Nope, sorry I don’t know anyone who checks all of these boxes.

Think introductions. Think helping others. Think doing a disservice when you don’t have the conversation with your valued clients and those they care about. But please don’t think “referrals” and helping your business to grow!

Dear Bev,

Clients who have been with us for many years have been unusually uptight and concerned over the last year plus. We hired a consultant to interview them because we were concerned we were not communicating effectively enough about what we do and how we do it. He called about 20 of our most important clients to have 1:1 conversations and compiled the feedback. We learned that many clients will retire very soon. Concerns about no longer having new money coming in are top-of-mind when retirement is looming. We knew some of this, and we are working with our clients every day. But it was stark to see the numbers on a percentage basis of how many clients are facing retirement in the next year.

This leads me to the related issue. We know we have to talk more about distribution strategies and soothe nerves about market fluctuations. There are many opportunities with rates on the rise, so we’re not worried about having a different conversation. What matters is that we have traditionally grown our business by client referrals (about 80% of our new business each year) and now we have the bulk of our clients in retirement. How do we ask for referrals when their lives are changing so much and they are no longer going to be around people in accumulation mode but rather those who are spending their money? Do we change our growth strategy? It’s been an eye-opening exercise. But like most things, it opens up new discussions and considerations.

Thanks for any insights or help.

L.A.

Dear L.A.,

What great insights you gained about the themes in your client base. This provides a great opportunity for approaching your clients in a specific way to help them and others they care about.

Similar to the previous writer above, I respectfully ask you to remove the word “referral” from your lexicon. Think about the process of moving from full-time working to full-time retirement. Financial, emotional, family and lifestyle considerations – there are so many ways you can work with clients and help them. But also think about the changing relationships. How many of these clients are still working with colleagues who may also be pondering retirement and wondering whether the timing is right and what it would look like for them? How many of these clients have friends or neighbors who have made the transition and are concerned about whether the decisions previously made are the right ones, considering what’s happening in the markets?

When in transition, it is not unusual to talk to others about their experiences and obstacles and to share your own. This is exactly when these conversations, which might have been taboo before, become mainstream for people. You have an excellent opportunity to help and to talk to your clients about making an introduction to someone they care about, just to have an exploratory conversation and see how or whether you can be helpful.

You may be able to extend this (depending on where these clients are located and your travel ability) to in-person meetings at their place of work, lunches with colleagues who are also considering retirement, or taking a friend of theirs to dinner who might already be in retirement but concerned about what’s coming next.

You can help! Tell your clients who are already going through a myriad of emotions and concerns, by evidence of the many more calls and inquiries you have been fielding from them, that you are here to help. You want to help them and their colleagues who are in a similar situation, and friends and family members they care about. This is not the time to change track and pull back; it is the time to ask about what introductions could be most important to make – be proactive when one is considering the transition to retirement!

Beverly Flaxington co-founded The Collaborative, a consulting firm devoted to business building for the financial services industry, in 1995. The firm also founded and manages the Advisors Sales Academy. The firm has won the Wealthbriefing WealthTech award for Best Training Solution for 2022 and 2023. She is currently an adjunct professor at Suffolk University teaching undergraduate and graduate students Entrepreneurship and Leading Teams. Beverly is a Certified Professional Behavioral Analyst (CPBA) and Certified Professional Values Analyst (CPVA).

She has spent over 25 years in the investment industry and has been featured in Selling Power Magazine and quoted in hundreds of media outlets, including The Wall Street Journal, MSNBC.com, Investment News and Solutions Magazine for the FPA. She speaks frequently at investment industry conferences and is a speaker for the CFA Institute.

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