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Practice Management > Building Your Business

Fidelity Introduces Referral Program for RIAs Using 'Centers of Influence' Philosophy

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Fidelity Investments has introduced a practice management program for RIAs designed to help them develop their referral networks through “centers of influence” including friends, existing clients, accountants, and attorneys, the Boston-based custody and clearing giant announced Thursday, June 24.

The three-part, no-cost Fidelity Practice Management Program includes regional workshops using a detailed guidebook, best practices and insights from RIAs, and one-on-one consultations with Fidelity’s relationship managers. According to Fidelity research, 51% of advisors’ new business comes from referrals, yet only 20% of advisors consistently ask clients and business partners for introductions.

“With more and more advisors joining the RIA market and competing for clients, referrals are critical to helping advisors grow their practices. These new resources can help them cultivate existing influencers, establish new referral sources, and generate qualified business leads,” said Michael Kim, senior vice president at Fidelity Institutional Wealth Services and newly appointed head of the Fidelity Practice Management Program, in a release.

The new program is heavily focused on an increasingly popular philosophy in RIA circles that focuses on “centers of influence” used to build an advisory business. These COIs radiate outward from trusted relationships to broaden an RIA’s client base.

The Fidelity Practice Management Program’s guidebook identifies these key insights from successful advisors on developing referral networks:

1. Make it a strategic initiative. An effective COI and strategic alliance network should become an integral part of an advisor’s long-term planning and review process.

2. Choose quality over quantity. Advisors should not spread themselves too thinly, but instead nurture a handful of trusted relationships that represent the core areas of expertise for their clients.

3. Be selective. Advisors should take the time to prepare and vet a list of potential partners and then conduct exploratory meetings to develop a relationship with the prospective COI and share information. Potential alliances could be with other professionals already working with existing clients, including accountants and lawyers.

4. Craft a compelling story. Create a credible framework that clearly shows potential COI and strategic alliance partners how both parties can benefit from working together.

5. Connect with the community. Be highly visible in the community to build a positive reputation and network of contacts.

6. Stay top of mind. Develop a plan of action to keep in touch with COI and strategic alliance partners each month.

COIs can include advisors’ existing clients, friends or other company executives who provide informal referral services, Fidelity Institutional Wealth Services’ Kim said in a phone interview. A strategic alliance is a more defined relationship with another professional firm, such as an attorney or accountant, with more formalized plans to help one another develop new business, he added.

“It’s a very human dynamic,” Kim said. “In the advisory business where you’re dealing with someone’s finances, investors want to know that they’re putting their nest egg with an advisor recommended by family, friends, or acquaintances they trust and can feel comfortable going with their recommendation.”

John Morris, managing partner with Crestwood Advisors in Boston, said he found the workshop to be “enormously centering” when he took the COI workshop two or three months ago

“While the takeaways were simple in nature, it always helps to reframe around how to bring out opportunities with centers of influence that one might take for granted,” Morris said. “After the workshop, we spent time as a company focusing on these concepts to improve our dialogue and center our message. We’re sure to tell our CIOs: ‘Don’t keep us a secret. We work strictly on a referral-only basis. We deal with affluent families.’ Those are the messages that we can be more direct about with our centers of influence.”

In a survey conducted online and by phone in December 2009 by Advisor Impact and KELYN Group, Fidelity learned that over 60% of RIAs asked only occasionally for referrals and that 20% never asked for a referral.

“They take a passive approach in cultivating those referral streams. That was an ‘ah ha’ moment for us,” Kim said.

At the same time, he added, RIAs are becoming more interested in developing their client bases as the economy slowly recovers.

“During the market turmoil over the last 18 months, advisors were focused on retaining clients. The name of the game was a retention strategy,” Kim said. “Now advisors are focusing on growing their business. This program is an opportunity to help advisors cultivate relationships.”

Read a story about Fidelity’s survey of advisors from the archives of


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