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Financial Planning > UHNW Client Services > Family Office News

How a Fast-Growing RIA Gets Referrals

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It’s all about the client experience.

When Schwab Advisor Services reported the findings of its most recent benchmarking survey, it revealed that some of the fastest-growing RIAs owed their success to a talent for making clients happy and thereby getting solid referrals.

These best-in-class RIAs saw net organic growth rise five times faster in 2012 than all other firms. And regardless of size — whether they managed $250 million to $500 million, $500 million to $1 billion or more than $1 billion — these fast-growing firms generated an average of 36% more new clients from referrals than all other firms, said Jonathan Beatty, senior vice president of Schwab Advisor Services’ sales and relationship management, when the findings were released.

“These firms have black-belt status at relationship marketing,” Beatty said at the time. “The client experience floats all the way through the system.”

Sounds good. But what does the day-to-day client experience actually look like for one of those fast-growing RIAs in the Schwab survey?

According to Scott Swenor, CFO of boutique RIA Manchester Capital Management, a survey participant that Schwab identified as excelling in the client experience, referrals start with his firm’s clear understanding of its specific value proposition and ideal client profile. (In 2012, Swenor noted, Manchester had $2.5 billion in assets under management and 15% AUM growth.)

From there, Swenor said in a phone interview on Thursday, Manchester follows a written plan that extends across the firm’s four locations nationwide when it approaches people for referrals.

“Strategically, we set the concept of getting referrals through existing clients and centers of influence as a priority,” Swenor said. “We seek out a select number of law and accounting firms that can provide a mutually beneficial client experience if it fits in with our ideal client profile.”

“The client priority is ingrained into the firm’s culture, business model, employee rewards, strategic direction, policy and procedures,” Manchester Capital Management says in a comment on the firm’s culture.

At the same time, Swenor said, each of the firm’s four offices in Manchester, Vt.; Montecito, Calif.; New York City; and Charlottesville, Va., has the freedom to develop its own business development and marketing plan.

“These plans speak to referrals and how each office identifies referral sources,” Swenor said. “Each office knows their existing and potential future relationships.”

In the Vermont office, for instance, where Swenor is based, “we’re good at deep relationships with just a few centers of influence because so much of wealth management is relationship-based,” he said. “Rather than going shotgun to have as many as possible, we have fewer but deeper relationships. It speaks to long-term relationships and secondly, a two-way street of having conversations so that we refer to our clients and they refer to us. Not all of our clients are looking for a new lawyer or accountant, and not all of their clients are looking for a wealth manager, but there are opportunities over time.”

The Vermont office has identified its ideal client profile — and written up that profile as a one-page document that spells everything out — as a multigenerational family with $10 million or more in investable assets that feels comfortable delegating investment-making decisions and family office services to the firm.

In comparison, Swenor said, the New York office counts many trust and estate attorneys among its centers of influence. And professionals in the newest office, in Virginia, are now building relationships by sitting on philanthropic boards of three or four local organizations and holding charitable events. “It develops an interactive and engaged audience that allows us to showcase our thought leadership without it feeling like a paid commercial,” Swenor said.

The Basics: Swenor’s Tips for RIAs on How to Get Referrals

1) Understand your specific value proposition and ideal client profile. First, determine your firm’s strengths and weaknesses, then use that knowledge to shape your ideal client profile. “Don’t try to be everything to everybody,” Swenor said.

2) Pay attention to your centers of influence (COIs). Keeping tabs on the people and firms that your firm comes into contact with on a regular basis is an organic way to boost market access and credibility — and a potential source of referrals, according to Swenor. “There is a mutual benefit in finding the right firms, individuals and settings after you know what you want,” he said, pointing to the advantages of finding potential referral sources in firm-to-firm meetings with like-minded accounting and legal services groups.

3) Make referrals a strategic priority by putting a formal plan into place that’s known throughout the organization. “Each of our office leaders has completed a three-page business development and marketing plan with a consistent measurement of prospects, COI referrals, public relations, events and expanding relationships with existing clients,” Swenor said.

Read Schwab Reveals Secret of Fastest-Growing RIAs at ThinkAdvisor.


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