It’s a fact. Investors rely on referrals to find the financial advisor they want to work with. According to a survey that ByAllAccounts conducted recently, in conjunction with the Paladin Registry, almost 46% of the individuals who responded say they found their current advisor through a referral from a friend, respected associate, CPA or attorney (see chart below).
How Did You Find Your Current Advisor?
Surprisingly, even though a sizable percentage of investors have relied on a referral, over 50% of them state that they have never provided a referral to their own advisor. There are a variety of factors behind this statistic.
As the second chart below illustrates, over 27 % of clients simply feel uncomfortable making a referral. But over 25% of clients report that their advisor has not asked for a referral—an indicator to me that new business prospecting opportunities are being missed every day.
Why Have You Not Given Your Advisor a Referral?
Given that there is such a powerful disconnect between what advisors should be doing (ask for that referral!) and what they are doing (keeping silent), I thought I’d pass along four maxims that may prove useful to your client acquisition efforts:
Referral Maxim #1: If you don’t play, you can’t win.
That old saying holds a lot of truth. To not ask for a referral is to pass up potential business that’s staring you right in the face. That’s why you need to make it a point to put the question to your clients. Pick their brains to see who among their friends, colleagues and acquaintances might benefit from your professional services.
Referral Maxim #2: If you’re online, your referral efforts are more likely on target.
This goes hand-in-hand with asking point-blank for a referral. By making it easy for clients and prospects to refer friends on your website, you’ll go a long way toward improving your new business pipeline. With a referral option on your site, you allow clients to make a referral without the awkwardness that can sometimes accompany a referral in person or over the phone. That’s especially important when you consider the statistic above that 27% of respondents felt uncomfortable passing along a name.
Need an additional incentive to pump up your web presence? How about the fact that nearly 15% of survey respondents revealed that they found their current advisor through an Internet search? That doesn’t even include all the investors who augmented their search by researching an advisor’s website.