Updated Friday, July 25, 2014 as of 11:11 AM ET
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Sounding Off: How Does One Get Referrals? Don’t Ask
Sunday, February 3, 2013
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What's the best way to generate referrals: asking for them or earning them?

Thomas Fross of Platinum Advisor Strategies said, “If you want to make a client uncomfortable, you should ask them for a referral,” Thursday at the Platinum Top Producers Boot Camp. 

Ron Carson, the Prosperous Advisor, disagreed and offered a rebuttal, now Fross rebuts that rebuttal:

I read Ron Carson’s rebuttal to our position on generating referrals with great enthusiasm. Ron is an individual I highly respect, and whom I believe deserves a lot of credit for the good he has done in our industry. While the majority of the things he said are spot on, there is one area where we vehemently disagree. In addition, while Matt Ackermann did a wonderful job capturing the highlights from my presentation, there are some points that need to be expounded upon.

Mr. Carson and I both agree on the fact that it is vital to lay the foundation for getting referrals in advance by forging strong relationships with your clients, delivering world-class service, hosting client advisory boards, and the like. What we disagree on is where you go from there.

In his rebuttal, Mr. Carson states that "clients are motivated to share referrals with you for two primary reasons: 1. Reciprocity, and 2. because they want to help someone else." We, on the other hand, believe they are motivated to give referrals because: 1. They want to help someone else, and 2. Reciprocity. While the motivations are the same, I believe Mr. Carson has them in the wrong order. What this means is that the way in which you go about having a “referral conversation” with your clients should be focused, not on the fact that they should help you by providing referrals, but that they should help their friends by referring them to you. This may seem like mere semantics, but it makes a big difference. We actually tested Mr. Carson’s method some years ago, but it didn’t work as well as what we’re doing now. I will share our exact strategy with you in a moment.

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Another problem we have with asking for referrals is that it can easily make you appear desperate. How can you say “we’re very selective and only accept a limited number of clients” on one hand, and then turn around and say, “please send us more people to work with” on the other? The two messages are contradictory. For this reason and many others, we follow a different formula from Mr. Carson. This formula has worked so well that we have quadrupled the number of referrals we receive by using it, and many financial advisors who follow our method have experienced similar success.

1. Lay the Groundwork

Before we tell a client we will accept their referrals, we focus our energies on turning them into a personal friend and a raving fan of our business first. We do this by having new clients to our home for a meal soon after they join our firm, by surprising and delighting them with acts of kindness, and by creating a pleasurable experience when they visit our office; among other things.

2. Have the Referral Conversation

Contrary to what Mr. Carson inferred in his rebuttal, we do seek referrals; we just don’t ask for them. Instead, we inform our clients that we are willing to accept their referrals. Typically we will say something like: “As you know, I am very selective about the clients with whom I choose to work, and I only accept a limited number of new clients each year. So while I am not a miracle worker and can’t help everyone, I do leave a few spots open in my schedule for the friends, family members, and colleagues of existing clients. So if you know anyone who could benefit from the services I provide, please let me know and I will gladly see if I can help them. I also want you to feel comfortable bringing friends along to any of my social or educational events.”

3. Facilitate an Introductions

(1) Comment
My response to both referral systems reminds me of the question: What's the best exercise program? The answer : the one you'll do.

My experience is that the biggest problem advisors have-in obtaining high-quality referrals on a continuing bass-is the lack of any organized prospecting system.Figures I've seen say only about 11% of financial advisors prospect regularly - regardless of the method used.

So my hat is off to Messrs Fross and Carson, because they abide by the basic rule of prospecting: Devise a system and use it regularly. Do this, and you'll find your prospecting efforts will yield better results almost instantly.Your only challenge is to prospect regularly- some might even say religiously.

NickRay, CLU ChFC RHU MBC Business Coach

Posted by Nick R | Monday, February 04 2013 at 4:14PM ET
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