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Why Your Clients Don’t Refer

Most advisors prefer to get new clients through referrals, but they often find that referrals do not occur as frequently as they would like. They work hard to earn their clients’ trust and to provide the best experience possible, and they hope their hard work will pay off in the form of referrals. But why don’t referrals happen as frequently as they could?

Many advisors believe they have two options when it comes to referrals: to be proactive in asking for referrals or to avoid the topic altogether. Unfortunately, asking for referrals often involves reciting some cheesy script that feels insincere and forced. Because this approach is so uncomfortable, many advisors sit back passively and wait for referrals to fall from the sky. Although this can happen, it is rare. So how do you find a middle ground and bring up this difficult topic in conversations with your most important clients without compromising the relationship?

Over the years, I have conducted, structured, or implemented countless focus groups and interview sessions with advisors’ clients.  Although the nature of these feedback sessions has varied, one of the consistent areas of focus has been referrals. In all of the interviews and focus groups I have conducted with advisors’ clients, I have tried to understand why clients don’t refer their advisor to as many people as they probably could. I also wanted to discover what advisors could do to change that.

In the interviews and focus groups that I have conducted, five consistent themes have emerged again and again. I have concluded that these are critical components of any advisor-client relationship. If these five components are in place within each relationship, referrals will occur frequently without the need for any high-pressure techniques. If any of the five are missing, as has been the case with most advisory firms I work with, referrals will trickle in at best.

To ensure that the information in this blog post will have a positive impact on your business, I suggest that you begin by making a list of your top 20 client or colleague relationships. These should be your best clients, your best professional relationships, or simply the circles of influence that you approach for referrals. Look at each name on that list and ask yourself if the following five components are in place with that person. You will quickly identify the missing elements in your relationships and realize that making potential advocates more effective at advocating may simply require you to clarify a few basic points about what you can do, who your ideal clients are, and the best way to introduce you to people who would benefit from your services.


  • Does this client or colleague value your products and services enough that they would recommend you to someone who is important in their life?

Although that question may appear simple, most advisors can’t answer it for their most important relationships. Regardless of how cleverly you ask for referrals, if a client doesn’t value you and your service enough that they would be enthusiastic about referring people to you, everything else is pointless.

I have found that most advisors have no method for soliciting honest feedback within even their most valuable relationships. Obtaining honest feedback will help you find out whether the client values what you do enough that they would not hesitate to recommend you to a family member or friend. Having a structured way to get face-to-face feedback on the experience that your clients have is critical to strengthening relationships and ensuring that your clients are not merely satisfied, but are raving fans.

  • Does this person fully understand everything that you do, or do they stereotype you based on the services they are currently using?

 I often ask advisors to write out a list of all of the services that they can provide. Consider this scenario:    I have a wife and two children. I have two sets of aging parents and several siblings. I have influence over all of them and can refer them all to you. Combined, we are business owners, employees, executives, wealthy and mass affluent. We have children, grandchildren, retirees, and pre-retired members in our family. What are all of the different services that I should call you about that my family may need?

 Most advisors provide an extremely comprehensive list of services, including investments, life insurance, college plans, long-term care insurance, buy-sell agreements, estate planning, and many others. When I ask their clients a similar question, however, they typically list only one or two services that the advisor currently provides to them.

Advisors need to ensure that their most important clients and other potential referral sources have a thorough understanding of all the services that the advisor provides—not just the ones that they use themselves. If a client has a limited understanding of the services an advisor provides, two problems may occur. First, the client may use someone else for services that they should have gotten from the advisor. Second, the client will have a very limited understanding of exactly who might benefit from the advisor’s services. This will reduce the number of referrals they can make.

Advisors should sit down annually with each client and review all of the services that they provide so they can ensure that clients are aware of everything they offer. This is not cross selling—it is cross educating—and it is critical to increasing referrals.

  • Does this person know that our firm wants to bring on new quality customers, and do they understand what an ideal referral would “look” like?

I often ask advisors’ clients the following question: Let’s say there were 100 people in a room and you could get to know each of them socially. You could find out about their family situation, their profession, and any other personal information about them. If you could pull anyone out of that room of 100 people and hand them to your advisor as a “perfect” referral, who are you looking for in that room?

Most clients simply can’t answer that question. This illustrates how hard many advisors have made it for their clients to refer them. If the client doesn’t have a clear understanding of what an ideal client or referral would look like, their internal alarm will not go off when they are talking to that person.

Clients need to fully understand that you want to grow your business by taking on new, quality clients, and they have to know what that actually means when it comes to their own relationships.

  • Does this person know how to make introductions to people who need your help?

 In the interviews and focus groups I have done, I ask clients this question: If you had somebody important to you who needed your advisor’s help, what would you do to recommend that they see your advisor?

 Most clients tell me that they would simply give the advisor’s name and number to that person. We all know how ineffective that is. We frequently hear our clients tell us, “I gave your name to so-and-so the other day. They will probably be calling you.” We all know that receiving the phone call is rare. This is a sign that you have a great advocate for your business, but the method they are using is broken. If a client doesn’t know how to make effective introductions, you will receive few referrals.

Next time you hear a client or referral relationship tell you that they gave your name to someone, say the following:

I appreciate that, but I want to talk about that for a minute. Our goal is to provide enough value to our clients that they want to get our help out to other people that they care about. In this case, you identified somebody who may need some help. Unfortunately, the method that you used will rarely lead to that person actually getting any help. Is there a different approach that will be comfortable for you and comfortable for them but will lead to an introduction so they can make an informed decision about whether to get help?

 Advisors should have conversations about introductions with all of their clients. It is one thing to try to force your clients to refer, but it is an entirely different issue to ensure that the ones who want to make referrals know how to do so.

  • Do you know how to approach this client or colleague about referrals in a way that is comfortable for everyone involved?

 Most advisors don’t ask for referrals as often as they could because they are concerned that the situation might be uncomfortable for their client. Advisors are typically taught “clever” one-liners and a one-size-fits-all approach to referrals.

One size does not fit all. Every client has a different comfort level when it comes to making referrals. I recommend that advisors simply ask the client for their feedback on the actual topic of referrals so that they can better understand their client’s comfort level with referrals. I recommend that advisors simply say the following to their client:

I wanted to get your feedback on something. Our firm really likes to grow through helping our clients and people who are important to them. This can involve our clients referring us or introducing us to people that they know. As you know, this can be an uncomfortable topic. On one hand, every time I see my clients I could say “Who do you know?” but I avoid doing this because I never want anyone to feel uncomfortable. On the other hand, if I avoid the topic altogether I may have an entire client base that doesn’t even know whether or not we want to help more people.

How can I approach the topic of referrals with you, if at all, in a way that will be comfortable for you and will not compromise the relationship that we have?

After coaching advisors over the years, I have learned that this is the most important question you can ask your clients. You will find that the majority of clients will tell you that you need to ask for referrals more frequently so that they are reminded that you want referrals. This will give you the confidence to bring up the topic more frequently without feeling awkward.

The worst-case scenario is that the client confirms that the topic can be uncomfortable for them, in which case you should not mention referrals again. Asking this question will help you understand which clients are gold mines and which clients are land mines. All you have to do is ask the question and implement whatever they tell you.

Examining these five simple aspects of each potential referral relationship will have a dramatic impact on your ability to be referred. If you ask yourself these questions for each of your clients, you will easily identify what may be preventing referrals. Then all you have to do is have a conversation about the things that are missing from the relationships.

Growing your business does not have to be an uncomfortable topic to discuss. Every company in the country wants to continue to thrive by serving additional high-quality customers. Financial advisors should be no different. If I have learned one thing in interviewing advisors’ clients, I have learned that referrals are not a taboo topic. Typically it is only the way we have been taught to ask for referrals that is taboo.

Print out your list of clients and begin asking yourself the five questions above. You will quickly be on the way to improving your client relationships and developing a steady stream of referrals without having to compromise your integrity or your professionalism.