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An Essential Way To Grow Your Business

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For much of the past decade, advisors have benefitted from market-driven growth. As the markets advance, assets under management increased. Now, as the bull market trounces onward in this, its 10th year, financial advisors are increasingly thinking about something that many have not thought of in some time: creating sustainable practice growth by securing new clients.

This is leading to an increase in digital marketing, but many advisors, particularly those with established practices, still consider client referrals as an essential way to grow their business. Yet, most advisors struggle with asking for referrals, which might explain why less than 12% of advisors even bother to ask. Considering that 70% of loyal high-net worth clients say they would likely refer people to their advisor if they were asked, not asking is a potentially costly decision. It also makes little sense.

Why Advisors Don’t Ask for Referrals

Most financial advisors say that their best clients from from referrals so why is it that many advisors are hesitant to ask? There are four key reasons.

  • I don’t want to make my clients uncomfortable.
  • I don’t want my clients to think I need the business.
  • It makes me feel awkward.
  • I don’t know how.

The only valid reason of the four is the last one, and it can be easily remedied. The others reasons arguably reflect an inner dialogue that everyone has with themselves about asking for help. Many advisors internally wonder if they are truly referable. If they don’t think they are referable, they feel awkward, and worry that they will make their clients uncomfortable, and thus they make excuses for themselves.

Making Yourself More Referable

Anyone who is interested in asking clients for referrals should think less about how they might ask for referrals and think more about how referable they actually are. Most advisors suffer from a “crisis of differentiation.” They worry that it is difficult to stand out in a crowded, competitive field. This then extends into the conversations that they imagine clients will have with friends and colleagues.  They wonder why a client would refer someone if they feel that they are no different than the average advisor.

How To Get More Referrals For Your Advisory Business?

When you ask clients to provide referrals, they want to be able to share a story that makes them more interesting to the people they approach. Referable advisors may provide the same services and benefits to their clients, but they consciously do things that make themselves more valuable.  They might work to raise their visibility through media appearances or publications. They advance their thought leadership through active blogging. They volunteer in their community. They continuously pursue advanced education. When you become more interesting to your clients, they become more interested in sharing your story with others.


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Make Yourself Irreplaceable

In a survey conducted by SEI Investments Company and the Financial Planning Association, 63% of high-net worth investors said they find high or very high value in an advisor who personalizes advice. While that may not be a new revelation, highly referable advisors take personalized advice to the next level by adding custom communications to their service offering. Referable advisors use content automation systems to engage each client on a personal level by tailoring content to their needs and interests. The system then tracks client engagement through emails, social media or the advisor’s website to hone the information to match client preferences. A higher level of engagement with clients helps you and your team anticipate when clients need to be informed in advance of difficult news or when something occurs that impacts their plan. The more you can engage your clients on a personal level, the more value they receive, which is key to earning referrals from them.

Make Yourself a Noted Expert

Many advisors have narrowed their focus, specializing on areas that require expertise that is not usually found. For example, some advisors focus on partners at major law firms, or cardiologists, or real estate developers. They learn everything that they can about those businesses, and they then do everything in their power to help those executives manage their money, and organize their financial lives. Anyone who takes the time and effort to help someone else in ways that are hard to replicate – dare we say that are not easily commoditized – makes it easier for clients to feel confident about making referrals.

Don’t Ask for Referrals, Ask for Introductions

Once you have made yourself more indispensable, and thus more referable, you change the basic nature of your relationship with clients and even the networks of your clients.  You become an expert in their affairs, and they know that you have helped them make better financial decisions. At this point, you become a financial educator, risk manager, and advisor. This strengthens relationships and helps make clients confident, and often enthusiastic, about referring you to their friends and associates.

However, according to an Oechsli Institute survey, 83% of wealthy clients say they feel uncomfortable when their advisor asks them for a referral. The same percentage of clients indicated they will provide a personal introduction when asked. It may sound like a subtle distinction, but it makes a big difference in the way your clients and prospective clients perceive you. The same survey revealed that 56% of wealthy clients found their financial advisor through a personal introduction.

To be sure, many advisors grew up in the business by asking clients, or friends, for the names and phone numbers of people that they could call. A better approach in the age of social media is to understand your current client’s sphere of influence. Are they on certain boards, and does their professional life ensure that they work with the kind of people you would value as clients, and who would value your services? An easy way to answer those questions is to review LinkedIn profiles. Some like to observe interactions at social events, or they pay attention to names that are mentioned in conversation.

The key, regardless of the format, is to have an understanding of the attributes that make an ideal client for you. At that point, asking for an introduction is natural. You can simply say to your client that you noticed that he is friendly with so-and-so and ask how they know each other and how you could meet him. If need be, take your client, and his friend out to lunch.  

If you handle this part of your practice with a systematic approach, you could easily have one new client meeting each week. By following a system, you make yourself even more referable. You become the type of advisors that everyone wishes that they knew. When that happens, suddenly organic growth becomes self-perpetuating and sustainable.