Asking for referrals isn’t easy.
Alll the data show that as professionals, we are sitting on gold mines of referral value (!), just ready for us to unlock it to build a super practice.
Clients should be lining up, checks in hand, begging — pleading! — for us to manage their portfolios.
The truth about referrals in the financial business
The truth is that very few of us are able to fully leverage referrals.
Why is that? Have you ever asked yourself that?
If it’s so easy – all you have to do is ask! — why aren’t we all managing $40B like Ken Fisher?
Well, the first thing is that it’s not. that. easy.
It just isn’t. I don’t know about you but my clients don’t suddenly call tons of hot prospect friends when I pop the question.
It takes guts to work up the question. Beyond that, who wants to sound like a sleazy salesman?
Second, I’m convinced that just asking the question is certainly NOT enough. Maybe it used to be but there are plenty of reasons your clients aren’t manning the phones — right now! — dialing for dollars, hitting up all their friends to bring you business.
The real reasons clients aren’t referring you business
- referrals cost A BOATLOAD of social capital — by referring someone to a professional, you spend some of your social capital. If your contact isn’t happy for any reason, that looks bad on you. Rightly or wrongly (caveat emptor, right?), your contact will blame you for making a poor referral.
That’s it, one reason. There has to be a damn good reason for your client to open his rolodex, risking his street cred with his friends and contacts. There’s too much at stake for you to screw up.
In other words, it’s risky — and getting riskier with social media — to make important referrals to a financial advisor.
You’re still TOO FAR OUTSIDE YOUR CLIENTS’ SOCIAL CIRCLES TO GET REFERRALS.
In fact, the more I think about it: asking the common referral question — hey, who can you refer to me? — is the wrong question.
One financial advisor found that he was able to grow his practice 5X by tweaking the question.
He went from…
OLD SCHOOL REFERRAL QUESTION: Hey, you know my business requires referrals from happy clients. Who do you know who you could refer to me right now?
NEW-FANGLED MONEY REFERRAL Process (2 parts):
- Hey,what are your hobbies? Interests?
- With this question, find some overlap with your own interests. If they like PLAYING SQUASH, tell them you do too. Hey, can I get in to your weekly game?
Of course, this isn’t a direct plug for your client to open his Outlook and begin scheduling meetings for you with his wealthy friends.
And that’s the point — it’s an indirect referral process.
Let’s carry this SQUASH PLAYING example through
- So, you go to the game
- Hopefully, you can play squash well-enough to not embarrass yourself
- Get invited back and begin to integrate into the social circle
Once you’re in the social circle (how many times has this happened to you?), the referrals will happen naturally. One of the regular players will come over (make sure he’s not sweating in your ice tea) and tell you about a money problem he has or a friend who’s looking for ‘someone good’.
By the way, research has shown that these crucial social bonding questions come in 4 flavors:
Why does this work? Well, if making a referral means spending social capital, this puts everything on sale. Suddenly, by integrating into your clients’ social circles (online and off), making that referral is less risky. They have to spend less social cred to get you in.
Referrals aren’t about just asking for networking opportunities or some hoogie-woogie esoteric mindset. Getting referrals is about creating an ongoing process to ensure that those opportunities present themselves to you.
Ultimately, it makes for good business — you’ve always got to listen to your clients and determine what gets them juiced. If you can help them get juiced, they’ll help you, too.
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