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An invitation to referrals

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Ask any financial advisor what the easiest source of new business is and the answer is likely to be referrals. But how do you get them consistently?

Unfortunately, many advisors go about it the wrong way and unwittingly hurt themselves. No matter how satisfied your clients are, you will not be flooded with referrals by happenstance. You must have a systematic method of getting referrals. But the methods many advisors use often convey the wrong message.

One of the most popular methods of asking for referrals is to…well…simply ask. This often occurs in the first meeting — the idea being that you plant the seed in the client’s mind that you will be asking for referrals throughout your relationship. As harmless as this seems, the message conveyed is problematic.

Earn it

The first problem with this approach is that you haven’t earned the right to ask for referrals yet. The new clients don’t even know whether they are making the right decision in hiring you much less referring their friends.

The second problem with this approach is that you lose your posture and come across as groveling for business. If you want clients and prospects to view you as a professional and not as a salesperson, you must posture yourself as a professional. When was the last time your doctor or attorney asked you for referrals?

However, there are ways to systematically get referrals and keep your posture. One of the methods that I use frequently, which has produced exponential results, is the private client dinner seminar (PCDS). Although inviting your clients and their guests to a dinner seminar is hardly new, there are many “little things” that will be the difference maker between failure and success. I consistently average four or five clients per seminar and seven to eight guests per seminar. This translates into approximately 25 people and I convert approximately one-third of the guests that attend…all without sending a single mailer.

Here are the five “little” things that make my dinner seminars a big success:

  1. First, I only invite clients who have been with me for more than a year. I explain that I often host client appreciation dinners at a high-end steakhouse such as Ruth’s Chris so that I can educate them about the economy. I ask if they are interested in attending and they usually are.
  2. I share my concerns about all of the debt that the government is getting into along with the possibility of a major stock market correction. I explain that I’m happy that their portfolio is safe. In return, I get them to verbalize that they have peace of mind as a result of what I’ve helped them to accomplish.
  3. I then ask if they may have friends who don’t have the same peace of mind. They admit that they probably do. I then ask the closing question for this first phase: If they knew that one of their friends was troubled about their finances, would they tell them about me? They always say yes. The last part of this first phase is to get them to agree that, because they don’t talk money with their friends, they really have no way of knowing which of their friends are concerned.
  4. Next, I use the Mother Teresa approach. I ask them who they care enough about to invite to a seminar so that, when the stock market crashes again, their friends will not be in danger. I wouldn’t want them to feel bad if one of their friends lost a lot of money because they weren’t given the opportunity to meet me.
  5. I suggest that we take a few minutes to brainstorm and come up with a list of friends who they care enough about to invite. This next step is key: I tell them that I’m not going to contact these people — I am only developing a list so I can coordinate a future event. I don’t even want their address or phone number — just the names. This is why the approach is non-threatening.

They nearly always give me two or three names right out of the gate. With every name, I ask a few questions about that person. What is their age? How do they know them?

I then probe a little deeper with the traditional referral-based questions. On several occasions, I have received enough referrals from one client to hold a private client dinner seminar solely for them and their guests. Imagine the dynamics in the room when everyone knows each other.

I keep track of these names along with the individuals who have referred them. A nice benefit is that these names never go stale since no one has ever contacted them.

Common interests

When it’s time for a seminar, I pull out my list and handpick the clients who have a common interest. They may go to the same church or have retired from the same career. The best dynamic is to invite clients and their friends whom they have previously referred to me. The dynamic is unbeatable when all of my clients in the room know each other, which happens quite frequently. My goal is to identify six clients who I can invite to a seminar although my goal is to have four or five in attendance.

I begin coordinating the event. I contact these clients to find a common date, which I usually set four to six weeks out. Once I have a commitment for the date, I move to the next step.

I ask them how they want me to invite their friends and remind them of the names they’ve given me in the past: Do they want me to mail in invitation directly to the invitees or would they prefer I mail several invitations to them so they can hand them to their friends? Most choose the latter.

The last step is to show up and speak. Unlike a public seminar where I don’t eat with the attendees, I do eat with the attendees at this seminar and I often bring my wife. Everyone has an absolute blast and if there are six guests in attendance, I will likely close at least two of them.

If you master these steps, you’ll find that your profit margin from seminars increases dramatically. No one feels pressured and your clients are rooting for you. Your clients will love them and you’ll have a blast too!

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