Financial advisors rely heavily on referrals from clients, friends or family members to build their client base. A research report released Wednesday by Cerulli Associates finds that these referrals account for 54.2% of new clients for advisors.
At the same time, the findings point to the importance of networking. Referrals from "centers of influence," such as attorneys, CPAs and other professionals, make up 13.9% of new clients, the second-most common source.
Practice management professionals, Cerulli noted, consider these strategies as the most effective ones for building strategic alliances:
- Joint meetings with clients or prospects
- Connecting with other professionals over mutual personal interests, such as art, wine or sports
- Referring clients to the other professional to naturally start a partnership
"Partnering with other professionals to exchange client referrals is a powerful strategy — nearly two-thirds of practice management professionals find working with COIs or forming strategic alliances to be highly effective marketing strategies for advisors," Andrew Blake, associate director of wealth management at Cerulli, said in a statement.
"This strategy not only generates new introductions but also offers clients a broader range of services, as the advisor benefits from close connections with those providing different expertise."
Networking will continue to play a vital role in enabling advisors to achieve organic growth, according to Cerulli, especially when practice resources limit the ability to offer certain services in-house.
Partnering with other professionals, Blake said, creates a mutually beneficial relationship that leads to more high-quality referrals, fosters trust with clients through expert recommendations and broadens the advisor's professional network.
"This collaboration is essential for expanding practice capabilities and driving sustainable growth," he said.
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