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Financial advisor consultant Angie Herbers

Practice Management > Building Your Business

4 Ways to Boost Your Firm’s Client Referrals

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What You Need to Know

  • What sets the best firms apart from those with subpar growth is that they aren't looking at their data as a snapshot in time.
  • Make every advisor in the firm aware of disappointing client-referral trendlines.
  • Lean into your firm’s referral-heavy months by increasing the amount of relevant, helpful content you deliver to clients.

As leaders of financial advisory firms look for ways to boost their firms’ organic growth, many of them turn to data as a starting point. This is a wise move, since data can serve as a powerful growth tool. But there’s one big caveat: Firms should use their own data as a guide, not industry benchmarking studies.

While it’s tempting to rely on a broader set of data, a narrower dataset is more powerful when it comes to organic growth. One of the principal reasons growth-minded firms should limit their use of industrywide benchmarking studies is that this research tends to lack data from many of the fastest-growing firms in the business.

From my own knowledge of the industry, I can unequivocally state: Firms that have unlocked the winning formula for strong organic growth aren’t participating in these studies and with good reason.

An advisory firm’s data is one of its most valuable organic growth tools. Protecting that information and using it for the firm’s exclusive benefit give it a serious competitive advantage.

So, if the best firms out there aren’t participating in benchmarking studies, it’s likely that the top firms in the benchmarking studies are only the top ones in this specific research. This begs the question, what are the top firms across the industry actually doing to boost organic growth?

1. Look at Your Data in a Better Way

Very early in my career, I learned how the best firms look at their data. First, they rarely ever share their data. If they do, such as with their consultant, they have it locked up under strict confidentiality agreements. 

Second, these growth-oriented firms don’t focus on the exact number of leads, the exact number of clients who were retained or the exact number of client referrals being received. What’s most important to them is their trendlines.

Is the trendline increasing, decreasing or staying flat? The best firms aren’t looking at their data as a snapshot in time; they’re looking at where their data trendline is heading. Unfortunately, most industry studies are backward-looking and focus on what’s happened over the past year or earlier, rather than looking forward. 

For example, the client referral rate is the number-one revenue indicator for organic growth at advisory firms. When you look at client referral trajectories, you’re going to see either growth, decline or stagnation. Depending on the trends, different options are available to improve growth. 

2. Review What Can Help You Improve the Referral Trendline

What should you do if your firm’s client referrals are flat or trending down, and you want to quickly get referrals trending up? The best solution (based on our two decades of experience) is to make every advisor in the firm aware of the disappointing client-referral trendline. 

This will help each individual advisor (or advisory team) understand that while certain advisors may be getting a lot of client referrals, the business overall has been getting too few client referrals.

Making all the firm’s advisors aware of this trend will prompt them, consciously or unconsciously, to move the trendline. We have seen this happen time and again in large and small firms, because advisors want their firms to succeed. 

Those firms that aren’t watching their trendlines often seek to boost client referrals by changing their advisor compensation program. Financial sweeteners, they hope, will incentivize advisors to ask for more referrals or go out and drum up more.

Compensation changes (I assure you) aren’t necessary. Our experience has shown that simply making people aware of the trend and encouraging them to help is sufficient to start moving trendlines up.

3. Consider Service and Content Changes to Further Increase Your Referrals

What if the client-referral trendline has been trending up, but you want it to move up faster? In that case, adding an additional service may be the answer. 

Building or bolting on a service like tax planning or deeper retirement planning can increase client satisfaction and help make those you serve become vocal advocates for your firm. We’ve regularly seen the addition of value-added services increase firms’ client referral rates. 

But most firms that seek help with organic growth aren’t trending downward in client referrals or wondering how to make a positive trend even more positive. Nine times out of 10, the firms’ client referral ratios are flat. They have about the same number of client referrals as last year and the prior year. 

This is the worst trendline to have. If a firm is adding clients, its client referrals should rise in proportion to its growing client base. If not, a “flat” trend is really a negative one. 

When a firm’s client referrals are flat, client retention is often strong, but its clients aren’t promoting the business which raises the question of how you can get them to talk with prospects about your services. Many firm leaders believe that the answer is to put advisors through sales training. 

While that move can be effective, it won’t move the trendline quickly. Why? Because such a strategy depends on people who really don’t want to ask for referrals doing so again and again. Over time, if they stop asking for client referrals, the trend will be flat again.

A more effective approach is to go back to your data.

You might notice that you had many more referrals in December than in any other month of the year; in fact, that’s often the case. February and March also tend to be good referral months, as is August. I know this because I’ve looked at a lot of advisory firm trendlines over the past 20 years.

To boost growth, you should lean into your firm’s referral-heavy months by increasing the amount of relevant, helpful content you deliver to clients.

The fastest-growing firms push out content planning for the next year at the end of each calendar year. As tax season approaches, they beef up their content tied to tax planning. And, as the summer ends, they intentionally push out retirement-planning content.

4. Embrace Your Data as It Is Right Now

Once again, the path to boosting organic growth starts with your own data. 

Also, don’t get distracted by thinking you need to hunt around for the best trend-tracking software. The simplest and best way to track trendlines is to use Excel or Google Sheets. Many firms have been held back from tackling the issue of knowing what’s trending by searching for a software solution.

In addition, many firms are eager to compare their data with that of other firms in the industry.

Trust me when I say that working off benchmarking studies only serves to make your firm similar to all the others. The best firms understand that their business is unique, and thus their own business data is their most valuable tool for driving growth. 


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