Over the years, we’ve seen many widely varied ways of successfully attracting clients to independent advisory firms, from radio shows to seminars to playing golf to niches as specific as dentists who like to fly fish. Yet despite most marketing gurus’ advice to the contrary, referrals continue to be the single most powerful way to attract clients and build an advisory firm.
However, all referrals are not equal, as many savvy advisors have come to realize. While a well-connected client can make more than a few fruitful introductions, even the most proactive clients will typically have a limited stable of appropriate friends and family.
There is another—often better—kind of client referral. Some of the most marketing-savvy advisors I’ve run into greatly enhance their referral networks by working with professional “centers of influence”: mostly lawyers, accountants and high-end insurance agents.
Referrals from these professionals offer many advantages over those from existing clients, both in the number and quality of the clients they refer. For one thing, their clientele is usually a close match with the target clients of most independent advisors: affluent and high-net-worth professionals, executives and business owners. What’s more, those clients obviously are comfortable working with professionals and, for the most part, have shown that they are willing to take advice and guidance. Perhaps most important, these professionals are usually connected with other similar professionals: in their own firms, through professional associations and contacts, and through their own professional networks. Consequently, an effective professional referral network is among the most powerful ways to build an advisory business. For instance, I know one prominent advisor who launched his now successful firm largely by offering free financial plans for professionals in his area.
The drawback is that other professionals are often hard to form relationships with. In part, that’s because they typically bring in a financial advisor to work with one of their current clients, so not only do they have their professional reputation at stake, they also have an existing client relationship on the line. Most often, they will want to coordinate with the advisor on the client’s needs, so a good working relationship is an issue as well. Consequently, professionals tend to be very careful—read “slow”—about forming referral relationships with advisors.
To get concrete answers about how other professionals actually form referral relationships with advisors and what they are looking for in those relationships, investment manager Loring Ward in San Jose, Calif., asked Mike Maslansky, CEO of communications consulting firm Maslansky + Partners, to conduct one of his interactive panels at its Advanced Symposium in Austin, Texas in October. The Maslansky panel consisted of 12 accountants and estate planning attorneys who work with affluent and high-net-worth clients and have referred other professionals to their clients in the past. These panelists listened to a number of advisors’ pitches for forming a referral relationship, and each panelist had one of Maslansky’s patented feedback meters so they could indicate the degree of their positive or negative reactions to what they heard as they were hearing it.
It’s an amazingly revealing technology that let the advisors in attendance see how the panelists responded to the way advisors described their firms, their work and the kind of relationship they were looking for. As Maslansky explained: “We all may think that we are rational, but when it comes to communication, we’re highly emotional beings. We react first in our gut and then in our head. These dials allow us to get into the hearts of our participants.” For independent advisors who work with other professionals—or who want to—the panel provided invaluable insights into how professionals see them and what they want to hear.