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How to Turn Clients Into Effective Advocates

If you are like many advisors, you work hard to earn the trust of your clients. Once you have earned their trust, you do everything in your power to deliver a great experience that will keep them happy. Your ultimate goal as an advisor should be to bring your clients so much value that they feel compelled to refer you to others on a frequent basis. This is where most advisors become frustrated. They are surrounded by clients who seem to like them, trust them, and appreciate what their advisor has done for them, but the vast majority of these satisfied clients have not referred anyone. What is preventing referrals from taking place?

Over the past ten years my consulting firm has interviewed thousands of clients about referrals. We have asked questions that advisors sometimes feel uncomfortable asking their clients. We ask clients why they refer their advisor to others and more importantly, why don’t they refer. Why would they trust the advisor enough to put their financial livelihood in the advisor’s hands, but not insist that those they care about also work with the advisor? Over the ten years we have been interviewing clients, we have been obsessed with that topic. Why do clients behave the way they do when it comes to referring people to their financial advisor?

One truth we have found is that there is no shortage of clients who say they are willing to refer. More than 80% of clients say they value their advisor enough to take the risk (however they define that) of referring. When we present advisors with a list of their clients who have said they are willing to refer, most advisors are quick to point out a painful fact – most clients on that list never have.

I believe that many good advisors already have the hard part figured out. They have built strong relationships with clients who are very willing to refer. The question is whether these clients are actually capable of making an effective referral. When we interview clients further, we often discover that they don’t understand some of the things that must be in place before they can make a referral.

Our research has uncovered five key elements of an effective referral source. If a client has all five, they will be a great asset in building your business. If they are missing one or more of these elements, their willingness to refer is irrelevant.

1. The client must believe that the value of their own experience with you greatly exceeds the risk they associate with referring. 

Any time a client decides to refer someone to you, they are taking a risk. If things go badly for the person that they care enough about to refer, it could harm their relationship. Every client defines the risk of referrals differently. To compensate for the risk, a client needs to feel that the value of the experience would be worth it to the person they are referring. Again, every client defines value differently. The question to ask yourself is simply this: Would your best clients say they value their experience with you enough that they would take a risk and refer someone who is very important to them? Most advisors don’t know the answer to that question. We think their answer will be yes. We hope so. But in reality, we don’t know for sure that they feel this way. The only people who can answer that question accurately are your clients. Soliciting honest feedback from your best clients can help you learn their perspectives on the value you deliver and can also help you learn how to enhance the value of their experience, and thereby increase your referability.

2. The client must fully understand your value proposition and all of the services and products that you are capable of providing to others.

Most clients have a very limited understanding of what their advisor is capable of doing. Clients stereotype their advisor based on whatever products and services they themselves use from the advisor. As a result, the average client can list only about 20% of the services that their advisor provides. This means they are unable to make referrals for 80% of what the advisor does. This limited understanding dramatically impairs their ability to refer. Rather than cross-sell, you need to cross-educate clients on an ongoing basis. You likely provide a host of valuable products and services, but they are all invisible. If you don’t describe them to your clients, they won’t know they are there. If you cross-educate clients frequently, they will use you for more services and also make more referrals.

3. The client must understand exactly what type of client you work well with.

Most clients I interview cannot describe the ideal client profile of their financial advisor. In fact, many of the clients I interview are not even sure their advisor is interested in taking on new clients! How can we expect a client to refer someone who needs help if we haven’t clearly defined for them who that prospective client might be? I always ask clients this question: “If you were to walk into a room full of people and had an opportunity to learn everything about each of them, how would you know you were talking to someone who needs to meet your advisor? How old are they? What do they do for a living? What is going on in their life? What challenges do they face?” Most clients don’t really know, with clarity, what type of client would be the right fit for their advisor and thus do not know which people within their own circle of influence should be referred. This prevents them from making referrals.

4. The client must know how to make an effective introduction. 

If all the advisors reading this article were in the room with me right now, I would ask how many of you have heard the following statement from a client in the last 24 months: “Hey, I gave your name to somebody the other day. They will be calling you.” Based on past experience, I am certain that every hand in the room would go up. If my next question was “How many of those people actually called you?” I know that everyone in the room would groan. Most of your clients have no clue how to make an effective introduction because no one has taught them how to do it. As a result, the vast majority will simply give your name to people who will never call, and as a result, those people will never get your help.

5. The client must be comfortable discussing referrals. 

Most advisors are not quite sure which of their clients are comfortable referring and which ones are not. I believe that this is a very important conversation to have with each of your clients. If a client is uncomfortable making referrals for any reason, it will make things awkward if you bring it up. For this reason, most advisors avoid bringing up the topic of referrals altogether. The problem with this approach is that it ignores the majority of clients who are perfectly comfortable talking about referrals. I recommend that you take the time to find out who is comfortable referring and who is not. Here is a simple statement that you can use to bring up this topic: “I wanted to ask for your feedback on something. We have primarily grown our business through helping our clients and the people who matter most to them. This can bring up a topic that is uncomfortable for some… referrals. I don’t want to bother my clients by talking about it frequently, but I have learned that if I don’t have a discussion with clients about it they may end up knowing people who need our help and be unsure whether we have the time to take on new clients. For you specifically, how would you like me to bring up the topic of referrals periodically, if at all, in a way that is comfortable for you?” This simple and straightforward approach will either give your clients an easy way to tell you that they are uncomfortable referring or will open up a great discussion about referrals. It will quickly help you identify which clients will be great advocates and which clients may never bloom into more than just their relationship with you.

That’s it. Those are the five things that a client has to have to be a great advocate. I would recommend that you make a list of your top clients and ask yourself the following simple questions about each one:

  • Does this client value the experience that I have given them so much that they would confidently take the risk of referring me to others?
  • Does this client fully understand all of the services and products that I can provide?
  • Does this client understand what type of client I work well with to such an extent that they can easily identify people who may need my help?
  • Does this client know how to make an effective introduction? Have I had that conversation with them?
  • Is this client even comfortable with the idea of referring?

If you answer no to any of these questions, you have identified a client who is unable to be an effective advocate. If you clarify each point with them during your next meeting, you will be able to say yes to each question for nearly all of your top clients. When you do this, you will create better advocates and receive more referrals.