The text that turned into a $2 million referral

Savvy golf fan that he is, Rich Schuette, CFP, knew that bringing his cellphone into a golf event like the Masters would be a big no-no, grounds for an immediate and potentially very public ejection from the hallowed grounds of the Augusta National Golf Club. So, only after returning to his car following a day of spectating during the Masters tournament this past April did Schuette get to his phone to see the text message.

This was the kind of message Schuette, founder of Avalan Wealth Management in Santa Barbara, California, welcomes wherever he happens to be. It came from an accountant friend of his who wanted to broker an introduction to someone who happened to be in the market for a new financial advisor.

After returning from Augusta to California, Schuette promptly converted the lead his CPA contact had provided into a new client for his five-year-old firm, which manages close to $100 million in assets. “That text turned into a $2 million referral,” he recalls.

For Schuette, referrals have been so effective at generating new business that he doesn’t bother with seminars, media advertising, direct mail, cold calls and other forms of prospecting. “I can’t remember any business coming through my door that wasn’t introduced to me,” he says. “My practice was built 100 percent on referrals.”

One of the beauties of referrals, he says, is that the people who provide them—for most advisors, either clients or professional centers of influence—“are working on your behalf, whether you’re working or you’re sitting at Augusta like I was that day.”

“If you have happy clients and centers of influence that feel comfortable referring to you, they’re on the lookout, in essence. They’re your extra eyes and ears, an extension of you and your firm,” echoes Joe Heider, ChFC, CLU, founder of Cirrus Wealth Management in Cleveland, a firm with some $300 million in assets under advisement that, like Schuette’s, relies on referrals for “virtually all” of its new business.

“Across the board, most successful advisors get their best business from referrals,” observes Maribeth Kuzmeski, who heads Red Zone Marketing, a financial advisor-focused marketing and management consulting firm in Grayslake, Illinois “They’re the lifeblood of most financial services practices.”

The challenge for many advisors is keeping that lifeblood pumping at healthy levels. Referrals typically don’t happen by accident. Rather, they’re the product of a methodical, thoughtful and focused strategy, Kuzmeski asserts. “You have to get a lot of things right.”

There’s a right and a wrong way to go about generating referrals. The mindset, approaches and habits to which referral-focused advisors like Schuette and Heider subscribe can be adapted to work, whatever your specialty, your market and your target clientele.

Influential friends

The most effective and readily convertible referral leads are those that “come from somebody who has credibility and authority, somebody who others will listen to and, usually, somebody who is successful,” says Kuzmeski.

The people who typically fit that profile are a prospect’s peers and the professionals whom they rely upon for advice.

“It’s best to focus where you’re going to get the best opportunity to close the deal that’s put in front of you,” Schuette says. Which is why he’s “hyper-focused” on garnering referrals from professional centers of influence: estate planning attorneys, CPAs, mortgage brokers, and insurance agents in the property & casualty and life segments. “We spend much of our prospecting energy on developing those relationships,” he explains. “That means a lot of golfing, a lot of lunches, a lot of continuing education, and a lot of putting people in our network together.”

Oftentimes, at least in high-net-worth spheres, these centers of influence are professionals with whom an advisor works as part of a client’s team. In that context, says Heider, “they can see your skills and how you perform, they can understand your philosophy, your service plan and how your deliver it, so when the time comes, they’re comfortable enough with you to hand out that referral.”

Building the kinds of professional relationships that lead to referrals involves extra time and effort, Schuette says. “It’s a matter of making a point to get to know these people on a deeper level. That requires a lot of touches and a lot of communication.”

Maintaining that referable rapport once it is established is a matter of making sure leads flow in both directions, adds Heider. “It’s important to remember that they’re looking for referrals from you as well.”