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How Advisors Can Get Referrals From Millionaire Clients

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It’s no secret that referrals are the single most popular way that financial advisors attract new clients, but according to Fidelity’s 2016 Millionaire Outlook Study, out today, only 55% of advisor clients surveyed are likely to recommend their advisor to others. Moreover, 20% were likely to discourage others from working with their advisor or to drop that advisor altogether.

“The first thing advisors need to recognize,” says Bob Oros, head of the RIA segment at Fidelity Clearing and Custody Solutions, “is that consumers have a lot of power in the world we’re in now. Anyone who has a negative opinion of you can actually share that with hundreds if not thousands of individuals…. If you create a negative experience it can get propagated very quickly.”

The challenge for advisors, then, is to minimize the negative experiences of clients while maximizing the positive ones, which sounds like a no-brainer but can be challenging.

In the nomenclature of the Fidelity study, which surveyed clients with $1 million or more in investable assets, excluding retirement assets and real estate, advisors need more clients who are “promoters” of their services and fewer clients who are “detractors” or “passives.” The latter hold neither positive nor negative opinions about their advisor.

Promoters are important clients to have, for many reasons, according to the Fidelity Study:

  • 69% of promoters gave at least one referral to their advisor last year
  • 62% would follow their advisor if the advisor switched to another firm (only 17% of detractors would do the same)
  • 75% of promoters would want their advisor to handle a windfall (only 46% of detractor would)
  • 71% of promoters’ assets are managed by a primary advisor (for detractors the equivalent number is 48%)
  • 25% of promoters feel they are ahead of achieving their financial goals (only 7% of detractors feel that way)

The Fidelity study has several recommendations for advisors to turn more clients into “promoters” who will be loyal and most likely to refer new clients:

  • Create and maintain goal-based financial plans. “Financial planning and helping clients navigate their whole financial lives are growing in importance as investment management becomes more commoditized. Yet 44% of millionaires surveyed who work with an advisor don’t have (or don’t know if they have) a formal financial plan,” and 29% reported that their plan was last updated over a year ago, according to the study. The Fidelity study stressed that advisors need to recognize that clients are planning not  just for retirement but also for other goals such as buying a home and funding a child’s education. 
  • Offer services beyond investment management, such as estate planning and gifting, tax planning and preparation and assistance with employer-sponsored retirement plans. Providing such additional services can help turn detractors into promoters, according to the study.
  • Maintain regular contact with clients about the status of their financial plans and goals. “A plan is a living breathing thing that gets reviewed on a regular basis and is fed with new input,” says Oros. “This a shift in the model for some advisors.” The study notes that “regular contact can help keep the [advisory] firm top of mind, and enable advisors to share new information about how they are helping clients with different types of problems.” Oros noted that this regular contact should be based on the client’s terms, not on the advisor’s. That may mean meeting after hours or via FaceTime – whatever serves the client best.
  • Ask for feedback. “Requesting feedback, either formally or informally, is strongly associated with an investor’s likelihood to recommend,” according to the study. Seventy-nine percent of promoters were asked for feedback compared with less than 50% of detractors, says Oros.
  • Develop in-depth relationships with clients and their families. Although the advisor/client relationship is business-based, a somewhat personal relationship with an emotional connection has more staying power not only for the immediate client but also for his or her spouse and for the next generation, according to the study. It notes that among promoters, 85% said their spouse was included in financial conversations as were 46% of their children. For detractors the numbers were much lower – 60% and 28%, according to the study.


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