Referral-Generating Techniques of Top Financial Advisors

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1 INDEPENDENT Referral-Generating Techniques of Top Financial Advisors For Financial Advisor Use Only

2 By following the simple methods described in this report, you can consistently generate high-quality referrals to the types of people you most want to meet and work with and increase your gross income by 20 30%. Contents Referral Myths and Realities... 3 The Real World of Referrals... 4 Target Prospect Lists and Profiles Referral Marketing Scripts... 7 Increasing Client Service, Satisfaction and Appreciation... 8 How to Build Asking Confidence Meeting COIs and Participating in Networks...13 Increasing the Quality of Your Referrals Social Referrals...16 Social Networking Referrals One Final Thought...18 Appendix...19

3 Referral Myths and Realities If you studied the techniques of top referralgenerating advisors, you would quickly see what sets them apart. To get referrals consistently, they know that they must invest time and money in disciplined ways, almost every day. They also know that money and time invested in this activity can pay back astounding rates of return. As a rule of thumb: If you commit 2-3 hours per week and about 2-3% of your gross income to referral marketing, you can quickly increase your top-line earnings by 20-30% or more. Top referral-generators also know a few basic realities about this activity, as opposed to popular myths: Myth #1: Your clients owe you referrals, especially if they care about your success. Reality: A referral is not a matter of friendship or goodwill. It is part of a business relationship, often involving some responsibility or risk on the part of the referring client. Some clients are reluctant to give referrals because they have had bad experiences in the past. Others can t see the benefit of giving referrals. Myth #2: If you want referrals, just ask for them. And keep asking. Reality: There is nothing less professional than a financial advisor who constantly badgers clients for referrals. This is especially true when the question is put vaguely, as in: Do you know anyone who could benefit from my services? Clients often feel put on the spot by such questions. They may question how desperate an advisor is for business if just anyone they know is attractive. The keys to getting referrals are to: 1) target the types of referrals you want; and 2) make referrals easy, natural and rewarding for those who give them. It s definitely a good idea to ask your clients for referrals. But it s important to select the right clients and ask them in the right way, at the right time. In this report, you ll learn the best ways to ask. Myth #3: Clients will only refer you to people whom they know pretty well. Reality: Some of the best referrals your clients (or anyone else) can give are not direct introductions to people they know well. Rather, they help you connect to qualified prospects through mutual friends, networks, and centers-of-influence (COIs). Referral-generation is the art of approaching the most qualified prospects in your market in ways that aren t totally cold. Any activity that is targeted and helps to turn cold calls into warm calls can work. Myth #4: Every financial advisor can benefit by following a few tried-and-true rules about referral marketing. Reality: Your referral marketing program should be customized for your practice and clientele. You are the only person who has the knowledge, experience and motivation to create that plan. In this report, we ll tell you how. 3

4 Referral-Generating Techniques of Top Financial Advisors The Real World of Referrals If you are a typical financial advisor working in a metropolitan market (city or suburbs), you probably have between 500,000 and two million homes and businesses in your primary market area. But only a small fraction, perhaps less than 5%, fit your profile of an attractive prospect. One common approach to referral marketing, called nearby neighborhood, urges you to ask your top clients for a list of 20 people among their neighbors. For successful advisors, this approach has a low probability of success because only a few of 20 selected neighbors may be attractive prospects. Also, your client may not be in a position to influence their neighbors who are qualified. A better approach to referral marketing starts by looking broadly at your whole market. Identify the types of prospects or networks that you want to target and then identify specific prospects (individuals, households or businesses) whom you want to meet with the help of a referrer or center-of-influence (COI). Accept the fact that the best referrer may not always be your client. Target Prospect Lists and Profiles A Target Prospect List can guide your referralgenerating strategy for the rest of your career. For each target prospect identified, the list can include mutual friends, centers-of-influence, and networks. > A mutual friend is a person who is acquainted with the target prospect and also with the financial advisor and/or referrer. It helps if the mutual friend has influence with the target prospect. > A center-of-influence (COI) is an individual who is well respected, socially involved, active in the community, and willing to advance personal connections. > A network is an organization, affiliation, or common interest that people share, such as an industry organization, church, civic group, workplace, or hobby. Ideally, you should have at least target prospects on your list all the time, and you may want to rank them based on your assessment of: 1) potential to become clients; 2) your ability to approach them effectively through referral marketing; and/or 3) how much you know about them. You may want to keep your list in a computer file (such as an Excel spreadsheet) so you can add information and change rankings easily. A Target Prospect Profile summarizes the important information you know about each prospect. The goal is to keep adding more information to profiles especially those of your highest-ranked prospects. The most important information that you can obtain identifies how the target prospect is connected, to which mutual friends, COIs and networks. Targeted Prospects Lists and Profiles: A Basic Example Here is a basic example of how Target Profile Lists and Profiles can work for you: Having decided that architects are an attractive target market for your practice, you have identified on your list a prospect named Michael Brinson, the owner of a successful architectural firm. You also have a client, Sherry Smith, who works as a principal in another architectural firm. Since you know that Sherry is a satisfied client, you call her and the conversation goes like this: You: Sherry, I m trying to meet Michael Brinson to see if he might be interested in becoming a client. Can you help me? Sherry: I don t know Michael very well. You: Can you please tell me anything you know, that you feel comfortable sharing? 4

5 Sherry: He s married. Two kids. Highly regarded. Business is doing pretty well. You: How do you know this about him? Sherry: I talk to my friend Jim Bland, who is on the county zoning board. Jim and Michael are close. I think they play golf together. Their kids go to the same private school. What have you learned from this brief conversation? What should you do next? Perhaps this information helps you verify that Michael qualifies as a target prospect. If so, keep him on your list. Move him up your ranking, and add this new information to his profile. You ve also identified Jim as a mutual friend (or COI) who can help to meet Michael. Since Sherry knows Jim (but not Michael), your goal is to obtain her help (referral) to meet Jim. You will introduce yourself to Jim by phone and then try to meet him in person to let him know: 1) who you are; 2) what you do; and 3) the types of clients you want to cultivate, especially architects. What positives outcomes might you expect from this process? > It is possible that Jim will like you and become your client. > Jim could tell you that, in his opinion, Michael is not the most qualified prospect for you for reasons he may (or may not) reveal. Perhaps Jim could introduce you to other architects who are more qualified. In other words, he could help you refine your list and profiles. > Jim might tell you more about the networks he belongs to, such as his golf club or private school parents association. He might point you toward other mutual friends or COIs in those networks. They, in turn, could identify other target prospects, and this would help to expand your list. By asking Sherry to help you meet Michael, and probing for connections they have in common (Jim), you have made referral-giving easier and less risky for her. It s very natural and easy for her to cooperate or refuse. This approach also helps to remind her that you are looking for other architects whom she may know and be able to refer. Why This Approach Works The best way to ask satisfied clients for referrals is to guide them by telling them whom you want to reach. This can be done in several ways: 1. Mention the name of a specific individual, household or business that is on your Target Prospect List. 2. Show the client your whole list. Let him/her select people they can help you reach. 3. Describe a type of client on your list. For example: I m trying to meet up-and-coming architects who are owners or partners in growing firms. Don t ask for referrals this way: Can you refer me (to the target prospect)? This is a closed question that can easily be answered no, especially if the client feels pressured or doesn t see the benefit of referring. Your first question should be open, non-threatening and conversational, such as: What do you know about (target prospect)? Whatever information a referrer offers can help to refine your list and profile, and it can be followed by another easy question: How do you come to know this? This question will help to identify whether the referrer has a direct relationship with the prospects or knows the information through another source, perhaps a mutual friend or COI. The question naturally leads to asking the referrer for an introduction to the mutual friend or COI. 5

6 Referral-Generating Techniques of Top Financial Advisors Suppose you call the mutual friend or COI (Jim Bland in the example above) and he says: I m not interested in your services at this time. In that case, you can say: I understand, and it s not the main reason I m calling. I want to spend 20 minutes with you to get better acquainted and tell you who I am, what I do, and the types of clients I am looking for. My client, Sherry, believes you are a person who might be worth meeting. She thinks we might be able to help each other, in some way. Do you have 20 minutes for coffee, at your convenience? Why Target Prospect Lists and Profiles Are Valuable If you get lost while driving in a strange place and pull off the road to ask for directions, the first question most people will ask you is: Where do you want to go? The key to driving your referral marketing program is to be focused about where you want to go, so referrers can guide you. For example, your goal might be to meet: > The most influential people on the local arts council > Business owners within five years of retirement > Owners and senior managers of one large corporation > Doctors affiliated with a particular hospital If you start with one person in any such group on your Target Prospect List and develop a profile of that person, the chances are good that you ll soon learn about others in the same group. Your list will expand, and you ll see that several target prospects share the same mutual friends, COIs and networks. By focusing on them, you will leverage the power of referral marketing. 6

7 Referral Marketing Scripts > Targeting a specific prospect: I would like to get to know more about (prospect) and then, if it makes sense, obtain a personal introduction from the right person. What do you know about him/her? How did you come to know this? Are you a personal acquaintance? Do you have mutual friends? Do you travel in the same circles? Would you mind introducing me to someone who could help me get closer to (prospect)? > Targeting a specific prospect (alternative method): I would like to get to know [prospect] and offer my services. How well do you know him/her? What would be the best way to be introduced? Would you be a good introducer or do you know someone else who would work better? > Targeting a specific type of person or financial need: Whom do you know that is planning on retiring in the next 12 months? Whom do you know that just sold a business? What else can you tell me about that person? Who might be the best person to provide an introduction? > Describing your referral policy: Mr. or Ms. Client, I want you to know how I treat any referral that you give me. I will mention your name only if you give permission, and only in a way that makes you comfortable. I will introduce myself on the first call, and if no interest is shown, I will not continue at this time. My goal in this first call is always to make a personal connection, never to sell a product or service. I want this referral to reflect well on you because I appreciate the fact that you are helping me. > Identifying a network: I d like to meet (prospect), but I m not part of his/her crowd. You know more about that group that I. Who in that group would you approach for purposes of getting an introduction? Why do you think that person could be helpful or influential? > Calling a COI: (Referrer) suggested that I call you and introduce myself. (Referrer) felt it could be helpful if you know who I am, what I do, and the kind of clients I work with. I think that there might be some ways that we could help each other, if we knew each other better. Do you have a few minutes to get acquainted? > Following up a LinkedIn Invitation to Connect: I ve sent you an invitation to become a connection on LinkedIn. I believe that we each could mutually benefit from this connection, and from the exposure to each other s existing connections. I m also hoping that we can spend some time getting better acquainted offline, in person or by phone. > Getting a target prospect s attention: (Referrer) suggested that I call you, and I d like to tell you why. I was talking to (referrer) about the types of people I would like to meet. (Referrer) said: Call (prospect). He/she is exactly the kind of person you re looking you want to meet. 7

8 Referral-Generating Techniques of Top Financial Advisors Increasing Client Service, Satisfaction and Appreciation LIMRA International, the life insurance industry research organization, conducted a comprehensive survey* in which affluent clients were asked two questions about referrals: 1. Would you give referrals to your primary financial advisor if you were asked? 2. Have you been asked for a referral by this advisor in the past year? Here were the results: > 21% of the affluent clients surveyed said they had been asked for a referral. > Another 24% said they would not provide a referral to this advisor. > The majority of clients surveyed, 55%, said they would provide a referral if asked. But they were not asked. What does this tell you? In a nutshell, it says that the biggest barrier is in financial advisors minds. Specifically, many advisors are afraid to ask clients for referrals. But why are advisors afraid? When advisors are asked this question, they often mention three specific reasons: 1. They are afraid of being rejected with a no. 2. They are afraid that the client will think they look too hungry not as successful as they really are. 3. They are afraid that asking for referrals puts pressure on clients and detracts from strong client relationships. Why the Fears Are Groundless the Right Way to Ask The three fears listed above are groundless, and here is why: > Suppose that your practice is typical of the situation identified by LIMRA research. If you asked all of your clients for a referral tomorrow, 24% would refuse. However, you probably can identify most clients who fall in that 24%. In large part, they are not getting enough personal service to be satisfied with the relationship. Over time, you can work on increasing their service and satisfaction. In the meantime, you don t need to (and probably shouldn t) ask them for referrals. Part of the fear can be eliminated by being selective and asking the right clients. > As we ve suggested earlier in this program, you can avoid looking too hungry by identifying specific targeted prospects or asking for referrals to specific types of people. The referral question should begin with a nonthreatening open question: What do you know about (target prospect)? In other words, you can eliminate the fear of looking too hungry by asking for referrals to the right person. > The main reason some financial advisors fear that referrals will put pressure on clients is that these advisors don t understand the benefit clients receive in return. The benefit can be communicated in one word that financial advisors should use all the time: Appreciation. The great challenge of referral marketing is to make appreciation not just a word but a tangible benefit. When your clients clearly understand this benefit, they will not feel pressure, and referrals will always enhance relationships. When your appreciation is clearly communicated, you will be asking for referrals in the right way. 8 * Financial Advisors and Institutions Serving the Affluent, LIMRA International.

9 A Client Satisfaction Survey Do you have and use a Client Satisfaction Survey? If not, take a look at the format contained in the Appendix of this report. You may wish to modify it to suit your specific business model and services. It takes clients less than five minutes to complete, and it works best if you invite all clients to complete it at least once per year. Tell them you appreciate their honest feedback, so you can improve your service. The top part of the survey consists of 20 checkbox questions, each of which can be scored from 1 to 5 points. The highest satisfaction level possible is 100. Any client who scores 75 or more should be considered a good candidate to ask for referrals. Note that three specific questions in the Client Satisfaction Survey, #7, #15 and #18, relate specifically to referrals and can help to confirm the best referral candidates. Of the open-response questions at the bottom of the survey, the last one is designed to uncover information about the client s willingness to refer. Client Appreciation You can express appreciation to clients who help you with referrals through words, actions and rewards. Words can be verbal or in writing, and they should always be straight and honest. Here are some magic phases: > I greatly appreciate your help. It means a lot to me. > Thanks for your help in making a connection with (target prospect or COI). It made my day. > I appreciate your help in making my practice more successful. Thanks for taking the extra step. A personally written thank you card usually works better than a typed letter. Any mailed communication usually is preferable to an . (If you do use , be sure to personalize it in some way.) Your actions express appreciation through deeds, not words. For clients who operate small businesses or professional practices, actions can include patronizing their businesses or offering them cross-referrals to your friends and associates. Rewards can include small gifts or gift certificates (as allowed by compliance), event tickets, extra services such as access to investment research, and invitations to appreciation events. The Most Valuable Kind of Appreciation In regard to referrals, few financial advisors understand the art of client appreciation. They either think about it too little or too much. > Too Little: Appreciation isn t shown right after the referral and slips through the cracks. The advisors doesn t adopt consistent methods for acknowledging referrals or delivering rewards, so clients may not know if their referral has value. > Too Much: Advisors try to match appreciation to the outcome of the referral. For example, they may only reward a referral with a gift certificate if it results in an attractive new client relationship. If the referred person refuses an in-person meeting, the advisor may not even send the referrer a thank you note. Top referral marketers have developed consistent routines that show appreciation for every referral given, regardless of outcome. They recognize that the referring person usually has little control over many variables that affect outcomes. Also, they know that a primary goal of the appreciation program is to motivate repeat behavior i.e., more referrals from the same source. These referral marketers know that there are unqualified prospects and unqualified clients. But there is no such thing as an unqualified referral, because every referral can lead to another. Also, they know that the most important referral any person can offer is not the last one but the next one. 9

10 Referral-Generating Techniques of Top Financial Advisors The most effective ways to show appreciation for referrals can have a hook built in that make the next referral that much easier. Here are a few examples: > Send referrers a complimentary copy of a book or booklet about a financial topic in which they have interest. Include a note that says: I hope you enjoy this book. If so, I will be happy to send a copy to any person whom you suggest. > Offer to take referrers to lunch at a reasonably priced restaurant of their choice and encourage them to bring along an interesting friend or associate. This is a bit risky because you may have to foot the bill for a person who isn t qualified. But perhaps that person will be a mutual friend or COI who can connect you to a qualified prospect. > Find out the referrer s favorite charity and make a small donation (perhaps $25 to $50) in the referrer s name. Offer to donate a like amount for a referral to any other volunteer or member of the same charity. (Charities can be great referral networks.) > Sponsor client appreciation events that are reserved exclusively for top clients and recent referrers. Encourage each attendee to bring an associate or friend. > If you sponsor seminars for clients and/or prospects, try to schedule sequential meetings about two to three weeks apart. Meet as many people as you can at the conclusion of the first meeting and give each person two admission tickets to the next meeting. Explain that you would like them to pass the tickets on to other qualified people. > In several occupations, you can find valuable COIs who are in a position to identify attractive prospects for you, even though these referrers may make modest salaries. The occupations include ministers, health caretakers, career and outplacement counselors, and bank tellers. In exchange for a referral, offer to give these people an hour or two of free financial counseling, perhaps to review their 401(k)s or 403(b)s. 10

11 How to Build Asking Confidence How do you overcome any hesitations you may feel about asking for referrals in the right way and at the right time. What is the right way? The answer is simple: It is any way that makes the request feel natural within your client relationships. Here are a few suggestions for finding that way: > Don t try to justify to clients (or other referrers) why referrals are important to you. Referrals are important to almost all professionals and small businesses. To people who know you well, it is obvious that you welcome referrals. > Don t ask for referrals in the middle of client counseling or problem-solving sessions. The time belongs to the client. > Don t ask for referrals in predictable or repetitive ways, such as at the end of each quarterly client review. > Do ask for referrals when clients are discussing their satisfaction with your services. (The Client Satisfaction Survey can help to trigger these discussions.) > Do ask for referrals during casual conversations, when discussing personal, family or lifestyle issues. > Do ask for referrals with brief, open questions that seem casual and non-threatening, such as What do you know about? or What s happening with? With a little practice, you can ask a question that opens the door to a referral without explicitly saying that referrals are your goal. Some people will sense where you are going and others won t, but it doesn t really matter. In either case, the pressure is lower, and the exit signs for the conversation are clearly marked and easy to reach. Here s an example: Advisor: What do you know about Tim and Paula Hudson? I heard they are selling their business. Client: I heard that, too. I don t know them very well. I see them at church. Advisor: I didn t know they go to your church. That s interesting. The advisor has given the client the choice of talking more about the Hudsons or dropping it. In the next few seconds, perhaps a mutual friend (or a COI in the church) can be identified. If not, the advisor has learned a little about the client s circle of friends, and nobody feels pressure. In general, the more you know about clients families, activities, lifestyles and social circles, the more likely you are to get referrals. By asking gentle, natural questions, you can find out how much people want you to know about these areas, or how much they want to maintain their privacy. It s possible to build strong relationships and get referrals from even the most private people, but only if you ask for referrals in lowpressure ways. The Value of Spontaneous Asking Imagine that you are meeting one of your best clients for a scheduled review. This client is a friend of many important people in town and also acts as a COI in several networks. But he/she has never given you referrals, in part because you ve never asked. In this conference, you are determined to ask for a referral. As the review starts, you are still grappling over the best way to ask. As the end of the meeting nears, pressure builds. You re not even listening to the client anymore. You re debating with yourself: Is this the right time? What s the right way? Why put so much pressure on yourself? Here s another approach: The client walks in the door and you spend your usual five minutes chatting about family, work, golf, etc. You ask the client: By the way what do you know Bailey Murphy? The client says: I know him. Why do you ask? You say: He s exactly the kind of person I want to work with. 11

12 Referral-Generating Techniques of Top Financial Advisors Now, the client is free to talk about Bailey if he wants. Or the client can exit and return to family, work and golf. In either case, you ve put two important ideas on the table in a low-pressure way: 1. I d like your help in making my business grow. 2. Please help me meet people like Bailey Murphy, if you can and if you want. Don t build up to a referral by explaining the reason you re asking for one. That just takes up valuable time and increases pressure. Do be alert to spontaneous opportunities to ask referral questions. The best opportunities occur when conversation is casual and warm and each person is showing interest in the other. Try to make it easy for the client to talk freely or exit. When a person is given two or three openings to talk about referrals and exits every time, make a mental note that this probably isn t a good referral-giving candidate. Another way to build referral-asking confidence is to self-evaluate five opportunities to ask for referrals during calls (phone or in-person) with clients. After the five calls, identify the strengths and weaknesses you ve experienced. (Use the Referral-Asking Checklist in the Appendix.) 12

13 Meeting COIs and Participating in Networks When you target specific prospects and then search for human chains that connect them, you will soon become acquainted with centersof-influence (COIs) and networks. As important as a target prospect may be to you, COIs and networks may be even bigger and better over time. How to Work Within a Network In working within a network, your goals may be as follows: 1. Identify COIs who are well known and respected in the network. 2. Learn more about the publications, trade organizations and lingo of the network ( talk the talk ). 3. Identify specific target prospects in the network. Revise your Target Prospect List and Profiles, if necessary. 4. Determine the best ways to gain introductions to specific target prospects. With a consistent referral strategy combined with a bit of luck, you can identify the special keys that unlock a whole network. For example, most computer systems designers working in your market might attend a regional trade show, where you can register and mingle. Or, you might meet the executive director of a trade association, a COI who is willing to introduce you to its members. Note: On LinkedIn, the leading social media site for business connections, a network is defined as a group of users that each member can contact through connections up to three degrees away. Your first degree connections are people whom you know personally. A second degree connection is a person to whom you have been introduced by firstdegree connections. A thirddegree connections is introduced by a seconddegree connection. You can contact anyone within the entire circle (first, second or third degree connections) through the network. What Is a COI? This report has previously identified a COI as an individual who is well respected, socially involved, active in the community and willing to advance personal connections. That usually means that a COI sits in the middle of one or more networks, helping to hold the human fabric of the network together. COI s believe that when they help others achieve their goals, they will become more successful themselves. Successful COI s rarely try to measure the goodwill they give ounce for ounce versus benefits they receive. They look at life as an infinite circle of potential connections. By helping one person, they open their minds to receiving more business, kindness or inspiration from others. A COI may not be willing to help just anybody. In fact, some COIs feel it is their duty to keep out of their networks people who have purely commercial motives that is, those who would exploit the network without giving anything back. When you recognize these characteristics of COIs, it s easier to become a COI yourself. How can you identify the best COIs in a network? Ask several participants if they can suggest an individual who helps people gain introductions and make connections. If this question sounds a little old world, remember that old-world societies honored etiquette. Until you know the etiquette of a given network, it s a good idea to be humble and polite. How can you impress a COI? Show that you have done your homework and know something about the network ( talk the talk ). Offer to help the network or contribute to its activities. For example, you might offer to give a talk on Retirement Planning Options for Computer Design Professionals at an industry group s next meeting. Or, you could sponsor an ad in the group s quarterly newsletter. Usually, effective COIs are savvy about why financial professionals want to get involved in their networks. So, you don t always have to make a point of asking COIs for referrals. Again, a brief, non-pressured open question ( What do you know about? What s happening with? ) can go a long way. 13

14 Referral-Generating Techniques of Top Financial Advisors Increasing the Quality of Your Referrals Many financial advisors believe that the more referrals they get, the more successful they will be with referral marketing. Put this in the same category as the other myths discussed earlier. Referral success is driven by quality far more than quantity. It may help to understand that there are three ways to evaluate referral quality: 1. The quality of people to whom you are referred. 2. The quality of the referral message in influencing the prospect. 3. The quality of your first meeting(s) with the referred prospect. For example, suppose a client calls you and say: We had a cookout with our neighbors last week. You don t know them. But when they asked whom we use for financial advice, I gave them your name. They may call you to discuss a situation they are facing. What is the first thing you should say in response? Of course, the answer is: I greatly appreciate it. It means a lot to me. But then what? If you had three questions to ask the referral source, what would they be? Many advisors would like to know: 1) how much money the prospects earn; 2) the approximate value of assets they own; and 3) what financial products or services they need. These are nice to know, but they aren t easy to find out. In any case, they aren t the most important things to ask referrers for purposes of evaluating the quality of referrals. If you ve paid close attention, you know what those questions are. They are among the most natural follow-up questions you can ask, very low in pressure: 1. How well do you (the referrer) know them? 2. Whom do they know? Are they well connected? To whom or what (mutual friends, COIs, networks)? 3. Are they well respected and influential in any network? (Are they COIs?) Notice that these questions don t sound nosy or pry into what type of situation the neighbors may be facing. If you are carefully targeting the prospects you want to reach, your first assumption about any unknown referral should be that this entity is more likely to help connect you to a target prospect than to be a target prospects. It generally works well to begin qualifying any referral by focusing on social relationships and connections between people. It s a great way to acknowledge that the referral is important without getting into complex details or confidential personal information. After all, our social relationships and connections are pretty public! How to Increase Referral Quality In the perfect referral, the referrer introduces you to a room full of target prospects and has great influence with each one. For each prospect, the referrer provides a powerful testimonial stating that you are the greatest financial advisor on earth. Of course, this usually isn t reality. But what can you do to increase the quality of referrals? Clearly, a low-quality referral is one in which the referrer says: I know Joe (the referred person) a little and he might talk to you. But if you call him, don t use my name. It s better to be given permission to mention the referrer s name. It s better yet if the referrer will call, write or to introduce you. But how can you make this happen? 14

15 Ask the referrer two questions: > How do you and the person you are referring normally communicate? (In person at work, in person outside work, by , by letter or phone.) > When do you expect to communicate with this person again? Referrers often will see where you are going and volunteer to help you make the connection. If not, explain: The reason I ask is that I would greatly appreciate it if you could introduce me in your own way and words. Nothing I could say about myself would mean as much as what you say from experience and your heart. The best introduction a client can give about a financial advisor usually doesn t focus on technical skills or product knowledge. It focuses on human qualities like honesty, integrity, caring, listening and communicating. No business card or marketing brochure can be more powerful in this regard than a simple letter, verbal message or from the referrer, explaining why a relationship with you has been rewarding. It is the client s words to the referral that matter most, and you will earn these words with superior client service, high levels of satisfaction, and the appreciation shown for each referral. You can t greatly influence these words in the moment and shouldn t try. 15

16 Referral-Generating Techniques of Top Financial Advisors Social Referrals One high-quality referral is a purely social opportunity to mix and mingle with target prospects, COIs, or other interesting people. For example, a client might arrange a golf outing involving you and some friends who are potential prospects. Or, you could be invited to a dinner or club function arranged by clients, when one purpose clearly is to expose you to business opportunities. All business etiquette manuals say that these occasions are not the time to talk heavy shop. But that doesn t mean you can t try to sell yourself in these showcases. In any first meeting with a referred prospect, you have just two primary objectives: 1) convince the prospect that you are a true professional; and 2) continue to qualify the prospect. You can accomplish both in a social setting by staying within a few guidelines: > Show interest in the prospect and ask questions. Try to learn about the prospect s (or COI s) family, work, lifestyle, hobbies and personal connections. Try to identify mutual friends and common interests. > Try to find out what qualities the referrer communicated about you in speaking from his/her experience and heart. Reinforce those qualities in your behavior. If a client has referred you by emphasizing that you are a fierce competitor and you are invited to play a round of golf, be a fierce competitor on the golf course. > It s okay to offer financial or investment ideas in a social referral setting if they are specifically requested. But don t belabor them or try to sell them. Indicate that the ideas are worth exploring further in a proper business setting. > Anticipate what you want to tell people about yourself (or your business) if invited, and plan the key points you want to mention. Just don t make it sound scripted, like words in a marketing brochure. > Invite conversations about social and business acquaintances, networks and connections. This is valuable information to learn about any referral. Just draw the line in discussing details of your own clients, including their family or social lives. 16

17 Social Networking Referrals In recent years, leading social networking sites such as Facebook, Twitter and LinkedIn have added a new dimension to referral marketing. While Facebook and Twitter are very popular for making social connections (especially among young people), LinkedIn is by far the most widely used site for business referral marketing purposes. It s important for financial advisors to understand that any business-related social media activity is heavily regulated and must follow regulatory guidelines. Here are a few ideas leading advisors are using to promote social media referrals on LinkedIn. > Develop a consistent theme or message that your social media activities can reinforce. It should not be overtly commercial or self-serving. For example, one financial advisor emphasizes the need for promoting locally owned businesses. Another has developed messaging to reinforce the benefits of giving time and money to charity. You can tie the same theme or message into your business Website and speaking engagements. > On LinkedIn, groups allow professionals to advance their careers by sharing expertise, experience and knowledge. You may wish to join (or help to form) a local group for interdisciplinary financial planning practitioners, including attorneys, CPAs, CFPs, etc. You also may wish to search for online versions of organizations in which you are involved offline such as a LinkedIn Alumni group for your school. > Work on building your LinkedIn contacts methodically, with emphasis on influential or socially involved people. Once your contact list has grown to several hundred names, send brief compliance-approved articles to the full list and ask for feedback on ideas contacts find interesting. This activity can help to open conversations that will lead to business or referrals. > Advisors can set up LinkedIn filters that generate alerts whenever contacts change their status in designated ways. This can be useful to identify money-in-motion opportunities, in which financial advice or service may be needed. For example, one advisor who specializes in the health care market has set up filters to alert him whenever a physician contact adds (or changes) an area of specialization in his/her LinkedIn Profile. An advisor in the retirement market uses a filter to trigger alerts whenever contacts change their status from working to retired. A tool called a listening dashboard helps to monitor filters and changes in status. > On LinkedIn, a recommendation is a comment sent to contacts to recommend a colleague or business partner who provides a professional service. Since you can recommend someone who is not yet a LinkedIn member, this can be a good way to invite people to join LinkedIn and become your contact. It s a good idea to give business associates a courtesy phone call or , letting them know you want to recommend them, before sending recommendation over LinkedIn. Don t overdo recommendations. Be selective and keep them on a professional level. > In general, use LinkedIn to make contacts, learn about business and personal interests, and trade ideas. Be very selective and careful in using it for direct business solicitations. Maintain the decorum of the social network, and take most of your heavy marketing activities offline, after making the contacts online. 17

18 Referral-Generating Techniques of Top Financial Advisors One Final Thought Some financial advisors who once relied on telemarketing ( cold calling ) were set back by the Do Not Call regulations. To keep their practices growing, they have had to learn new prospecting techniques. Likewise, some advisors who have relied on seminar marketing have seen their attendance and returns diminish as financial seminars have become more common and competitive. They also have had to change. Referral marketing isn t vulnerable to changing trends, regulations or competition. It s the most pure, natural and time-tested of businessbuilding strategies. For thousands of years, personal connections have worked to advance new business relationships. The same will be true decades from now. A strong referral-generating program will last the rest of your career. Just keep doing the work and making the commitments described in this report. Make them part of your everyday routines. It s the best way to assure yourself a steady flow of new client relationships with the most attractive prospects in your market. Good luck maintaining the momentum of your referral program! 18

19 Appendix 25 Proven Ideas for Increasing Your Referrals 1. The Best Time to Ask for a Referral: The best time to ask for a referral is after a client has indicated: 1) appreciation for the relationship; 2) extra service you have provided; 3) gratitude for your help in reaching goals or staying on track. When you give clients service above and beyond what their expectations, follow up with a request for a referral. 2. Using Your Business Card Creatively: Don t expect clients to hand out your business card to referrals. Instead, ask your client for his/her business card. In front of the client, take one of your cards and clip it to the client s card. Say: With your permission, I d like to send both cards together, as a way or introducing myself to someone you know. Write the referred person s name on the back of your card (as a reminder). Encourage clients to write a brief introduction on the back of theirs. 3. Narrow Down the Referral Request: The more specific you are in asking for referrals, the easier you make it for clients. For example, this is too general: Whom do you know with the potential to become my client? These questions are more specific: Whom do you know that is planning on retiring in the near future? Whom do you know that just sold a home or business? 4. Client Recognition Events Tell top clients that you want to recognize them on their birthdays, anniversaries or other special occasions by arranging a lunch or dinner for them and a few good friends. Set the date and take charge of arrangements. Let clients know that it s important to you to meet their friends who may be qualified to become clients. 5. Speaking Engagements: Develop a topic on which you feel comfortable speaking. Contact civic groups in your market and offer to speak at their luncheons or meetings. Ask clients to refer you to groups in which they participate. Offer a free handout near the end of your talk to anyone who provides a business card. Ask each person why he/she is interested in the handout and write reasons given on the back of each business card. 6. Client Newsletter: If you distribute a client newsletter, ask your clients if they have ever forwarded an article to someone else. Offer to send a free trial subscription to that person. On each trial issue, attach a personal note indicating I think you will find this interesting. After the trial issue is received, call and introduce yourself. 7. Open House: An open house is an event to which you invite clients and encourage each to bring friends and associates. Consider asking clients to invite their other professional advisors, such as accountants and attorneys. It s a good idea to combine social mixing with financial information or education. Be sure to register each attendee and follow up after the event with thank you notes to all. 8. Children s Activities: If your clients children play sports or participate in the arts (dance, music), ask for an event schedule and arrange with the client to attend an event together. Most parents will be happy that you are showing interest. Parents with children who play on the same team, or in the same band or orchestra, often become friends. Be sure to obtain a program, if one is available, and mix with as many parents as possible. (The program will help you match participants with parents.) 9. Promote Cross Referrals: When you meet with business owners, professionals or selfemployed clients, ask how important it is to their success to keep finding new clients, and what types of new clients they want to attract. Indicate that this knowledge will help you refer qualified candidates to them and that you would be happy for any crossreferrals. This idea works best when you initiate the first referral. 19

20 Referral-Generating Techniques of Top Financial Advisors 10. Target a Company: Select a company where one of your best clients works. Ask the client to: 1) help you learn more about the company s benefits; and 2) identify other employees who participate in these benefits or need guidance about them for example, executives who participate in company stock options or deferred compensation programs, or employees who are candidates for early retirement. Call these people with the client s permission. Emphasize your familiarity with the company s benefits and your desire to help with information and education. 11. Create a Charitable Thank You Policy: Send your top clients a personal note asking them to identify favorite charities. Explain that you need this information because you are adopting a policy of making cash donations in clients names each time a qualified referral is made. Explain the criteria you have set for a qualified referral, and offer the client an option of having the donations made anonymously. After each qualified referral, call the client to offer thanks and confirm the designated charity. 12. Target Prospect Files: Develop a list of target prospects in your community or market, the people whom you would most like to reach. Whenever a newspaper article appears mentioning a person on this list, have your assistant clip and file it. Periodically, ask your assistant to Google search every name on the list. The goal is to develop a profile of each prospect that identifies their affinity groups, networks and contacts. This will help you determine the best way to gain introductions to them. 13. Assumed Referrals: Call a client or other potential referrer and say: I m planning to contact [target prospect] to introduce myself. You know this person, so I m just checking to seek if you have any ideas about how to make it work. Would it be okay to mention your name? How would you feel about picking up the phone and mentioning me to [targeted prospect] before I make this call? 14. A New Way to Use Cold Call Lists: Suppose you acquire a list of charitable donors or condo association members. Go through the list and select anyone on it whom you know, such as a client. Then, ask for this person s help in walking through the list. This can be an effective way of turning a cold call (to a list) into a warm referral. 15. Identify Work Connections: Research shows that about one in every five clients met their primary financial advisor through a work connection. Ask your clients to identify three people at work whom they most admire, and also three people whose jobs they would like to have. Then ask for introductions to these people whenever the time feels right. 16. Healers and Caretakers: Think about people who heal or care for other people in continuing personal relationships. They include clergy, psychologists, counselors, social workers, chiropractors, nurses, barbers, hair stylists, manicurists, pedicurists, nutritionists and personal coaches. Although they may not qualify as clients, they can be excellent sources of referrals because they listen and care. Take the time to meet and care about them. 17. Second Opinions: When you propose ideas and clients insist on a second opinion from another professional (e.g., CPA or attorney), consider it a referral opportunity. Tell the client that second opinions can be valuable, and you would like to introduce yourself and offer assistance to the other professional. Call the other professional and be as helpful as possible. Thank the other professional for taking the time to meet, and suggest that you work together to develop cross-referrals. 20

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