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These Beliefs Hold Advisors Back From Getting Referrals: Julie Littlechild

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Are the following two statements about financial advisors true or false? 

Younger clients make referrals more often than older ones. 

Satisfied clients refer prospects proactively.

The first one is true; the second, false, according to Julie Littlechild, founder and CEO of Absolute Engagement and an expert in boosting client engagement and referral growth, in an interview with ThinkAdvisor.

FAs need to help existing clients understand whom to refer and when, says Littlechild, who conducts research to determine just what’s on clients’ minds.

“Building strategies around what clients tell you is important,” she stresses in the interview.

The coronavirus pandemic has resulted in a greater need for FAs to dig deeper to discover what clients are thinking and feeling, argues Littlechild, whose Toronto-based firm helps advisors in the U.S., Canada, the U.K. and Australia.

She regularly scopes out demographic trends of which FAs should be aware. Such as: Younger clients — around age 35 — refer more often than older ones who are about age 60.

Also, younger clients want more frequent contact from their advisors compared with the previous generation.

What to say in communications to clients — forwarding content to them, for example — is critical in reaching and retaining clients. Tailoring those communications specifically to clients’ needs has become increasingly significant, she says.

“We’re seeing a huge trend toward more personalized communications,” notes Littlechild, co-host of the podcast “Becoming Referable.”

A member of an advisory board of the Investments & Wealth Institute, she began in the industry more than 25 years ago researching the qualities that made certain FAs more successful than others.

ThinkAdvisor recently held a phone interview with Littlechild, author of “The Pursuit of Absolute Engagement” (2016), who was speaking from Toronto.

Untapped referrals is certainly an issue that FAs should investigate, she says, inasmuch as her research shows that “huge numbers” of referrals, do not, alas, turn into introductions.

Here are excerpts from our interview:

THINKADVISOR: Because of the pandemic, is it harder for advisors to get referrals now?

JULIE LITTLECHILD: It’s actually easier. But the challenges about referrals are the same as they’ve always been. Those advisors who are making referrals an intentional part of their strategy are growing quite well, I think.

What has your research turned up with regard to referrals and client demographics?

Overall, when we ask [clients in studies] “Have you referred?”, [affirmative answers] tend to go down with age. People who have grown up in digital communities seem to share a bit more than older clients.

What are the top issues that prevent FAs from getting referrals, according to your research?

Buying into myths gets in the way. For example, they believe that clients will refer if they’re satisfied. It’s true that they have to be satisfied to refer, but that doesn’t mean they’ll refer.

So it’s a mistake to assume that if you do great work for your clients, referrals will follow and that you don’t necessarily need to be proactive.

What else holds advisors back from getting referrals?

Clients tend to say they don’t refer because they don’t know who to refer. So [advisors are] not helping clients understand who to refer or when to refer or what problems they solve.

Also, a lot of advisors I talk to are worried that they’re almost breaking some kind of social contract if they ask for referrals — as if they’re looking through their clients, beyond them, at the sale. 

That is, they’ll start focusing a little more on how asking for referrals feels to them rather than what that can do for clients. 

The data is pretty clear: People refer to help a friend or family member. Once advisors get comfortable with that notion, then asking starts to become a lot more comfortable for them.

What’s been the most significant change in the industry in the last 25 years from your perspective?

The biggest shift has been the extent to which we focus on driving deep engagement with clients.       

How does that manifest?

We’re seeing a huge trend toward more personalized communications.

Has the pandemic anything to do with that?

Yes. And because we’re thinking of health and wellness at a different level now, it’s fair to say the conversations advisors need to be having are different.

They need to understand at a deeper level what’s on the minds of clients. That’s always been the case, but it [seems] to have become heightened in the last year.

Understanding and responding to clients’ needs show the advisor’s commitment. 

How, specifically, does an FA personalize a communication?

By tailoring them based on the client’s interests and, increasingly, their age. 

It’s more compelling if advisors gather insights on client interests and concerns, and then provide communications that reflect both. 

For instance, a client [of ours] conducted a survey asking clients what they were interested in learning about.

The No. 1 topic was health and wellness; so they identified three articles that added value on that topic and shared them with the clients.

Are there differences among generations in how clients want to communicate?

The data shows how different the needs and expectations are between a 60-year-old and a 35-year old. Younger clients tend to want more frequent contact — virtual contact — and access to on-demand communication.

What do you think the reasons are for those differences?

You could argue that there isn’t much changing in older clients’ lives. 

But I also wonder if it’s just a generational thing — that [younger people] feel, “I want to have more contacts; but they don’t have to be as long, and they can be virtual.” 

It’s the idea of more ongoing connection that the next generation seems to want.

With regard to retaining clients, do advisors need to do anything differently today vs. pre-pandemic?

From the data, we’re seeing that a lot of clients want to continue to meet virtually.

And many advisors now want to work from home and have online meetings at least part of the time, right?

For sure. But the risk I’ve seen with some advisors is the temptation to believe that what they want is what their clients want: “I’m anxious to get back to the office because I love [working there].”

But they can’t assume that their clients are feeling the same. 

Building strategies around what clients tell you is important. So advisors need to make sure they’re asking the right questions.

Has the pandemic influenced clients to change advisors?

When we did our investor research March 10-11, 2020, we saw [in the U.S. sample] that just as things were starting to really happen [stay-at-home orders, etc.], there was a shift in loyalty and that investors were questioning their [FA] relationship. [Thirty-six percent] said they were thinking of changing advisors.

Then our new research March 16-24 showed that percentage of clients who were considering changing increased to 44%. Overall, there was an increase in investors who were thinking of changing from 21% in 2019 to 31% in 2020.

Why were they considering getting a new FA?

We dug into the data and found the biggest issues were related to clients’ self-confidence about their financial future: Do I feel financially secure? Do I feel in control of meeting my financial goals? 

If you were higher on self-confidence, you were more likely to say you were satisfied. If you were lower, you were more likely to say you were thinking of changing. 

So there was a connection between how clients were feeling [emotionally] but not necessarily related to the service they were receiving.

Have you conducted any further studies about that?

We just came out of the field with some new research and haven’t published the results yet. But the loyalty number is about the same after it went up [again]. It stayed steady.