Executive Summary
Despite our general interest in self-preservation, a growing volume of research is finding that human beings are hard-wired to help each other. Not only can helping others trigger a release of endorphins and create a “helper’s high”, but we have a tendency to want to help those who have helped us – a form of social reciprocity that can be very rewarding in the long run to those who help others.
In a new book entitled “Gratitude Marketing”, financial advisor and coach Michael Sciortino explores how advisors can leverage the principles of helping others, expressing gratitude, and the reciprocity rule, to market themselves and their businesses. Not from the perspective of doing good for selfish reasons, but simply because doing good – in a consistent, systematic way – happens to be remarkably good for business, too.
So whether it’s sending clients cards on their birthday, taking them (and their friends) out for birthday lunches, throwing clients (and their co-workers) a retirement party, or having client appreciation events and making charitable donations as a token of appreciation for those who refer, there are numerous ways to express to clients your appreciation for their business and referrals in a way that can support more of those behaviors in the future. Though notably, in the end expressing gratitude isn’t necessarily about the latest, greatest idea, but simply the consistent expression of thanks… which is why Sciortino notes that for some advisors, the best tactic is also simply to regularly write thank-you notes to express your gratitude to those who have helped you to grow your business!
Helper’s High And The Reciprocity Principle
Scientists have long wondered why it is that otherwise “self-interested” human beings engage in altruism and go out of their way to express gratitude and help others when it’s unclear whether anything will be received in return. Is it simply that there’s a part of us that wants to selflessly give to others? Or is it that deep down, we’re still hoping it will turn into something in return?
As it turns out, science is revealing to us that it’s a combination of both. Engaging in altruistic acts causes our bodies to release endorphins, which bring us pleasure (and/or help to relieve any pain). Endorphins are naturally released when our bodies go through strenuous exercise – long-distance runners are often familiar with the “runner’s high” – and recent research has revealed that there’s a similar “helper’s high” we experience when helping others, too.
But helping others isn’t just about the personal feelings of feeling good. There’s a social dynamic as well. Research in the science of influence and persuasion has found a “reciprocity principle” in our actions of giving as well. Simply put, we feel obliged to give back to people who have given to us. Even if we didn’t ask for or solicit help in the first place, when someone does something nice for us, we often feel a moral obligation to return the favor. Which means being helpful and expressing gratitude actually is good for business, too.
Making Clients Feel Appreciated And Understood
Notably, the concepts of giving and expressing gratitude aren’t new. Most are ideas our parents try to ingrain into us when we’re young. As a result, Gratitude Marketing doesn’t necessarily include a lot of “novel” and new ideas – but it does express them in a relevant context for financial advisors regarding how (and why) the concepts might be applied.
For instance, one suggestion Sciortino makes is to send out cards to recognize the significant days in the lives of our clients (birthdays, anniversaries, etc.). Ideally, you should have these key dates as a part of your client data from going through the financial planning process anyway, but if not you can simply put some simple forms to fill out in your front lobby area (where clients wait) that say “help us to remember your birthday/anniversary” and includes a place for them to fill in the information.
I suspect for many advisors, these feel like a rather simple thing, and almost a “gimmick”, that can’t possibly generate real business. But Sciortino has a great story to illustrate the point:
“My mom and I had birthdays one day apart. Every year, she would receive a birthday card from the agent from whom my dad had purchased a life insurance policy for her. For one reason or another, my insurance was with the same company but with a different agent. I never received a card. Do you think I still have my insurance with that company today?”
In other words, providing simple remembrances like this for clients is an important opportunity, not necessarily because it will compel someone to do more business with you directly (no client says “thanks for the birthday card, here’s the rest of my life savings for you to manage!”), but simply because it’s a way to differentiate from all the other advisors who don’t bother to do it! Or viewed another way, while a lot of us say “we differentiate on good service”, expressing to clients on their birthday that you’re thankful for their business and wishing them a happy day is a tangible expression of it. As Sciortino puts it, “it’s just human nature to remember those who remember you.”
An alternative and even more direct approach to the same strategy is to do a “birthday lunch” for a client, where you invite the client and up to three of their friends out to lunch to celebrate their birthday. Few will decline an opportunity to have a nice birthday lunch, it’s a positive way to celebrate and express gratitude to a client… and it’s a way to meet three new people who might become prospects as well.
One advisor I know takes this even further, and when his clients retire, he throws them a giant “retirement party” in the banquet room of a nearby upscale restaurant. And the invitation is not just for the client, but up to 20 of his/her co-workers as well, to celebrate the retirement transition. As you might imagine, there’s a powerful opportunity for prospecting and referrals when co-workers look at a peer who has been financially successful enough to retire, and attend a party being thrown by the advisor who helped to make that happen… all done in the name of a positive celebration of client gratitude and appreciation. And notably, the reciprocity rule suggests that the mere fact the advisor bought the co-workers lunch should make them more willing to at least engage in an initial prospect meeting!
Are You Thankful For New Clients (And To Those Who Refer Them)?
For most advisory firms, getting new clients through referrals is the lifeblood of growth. Yet ironically, despite their dependency on referrals, most firms do remarkably little to actually thank their referrers for those referrals!
To some extent, this is because of the compliance constraints. Offering financial remuneration for referrals can trigger a requirement for the referrer to become a disclosed solicitor of the RIA under Rule 206(4)-3 of the Investment Advisers Act, which includes disclosure requirements in the advisor’s Form ADV and potentially a requirement for the referrer to become an Investment Adviser Representative of the firm (which in turn would necessitate taking the Series 65). While it might be feasible to establish some formal solicitor agreements with CPAs or other prominent centers of influence, it’s certainly not practical as a means to handle the typical client who refers a prospect.
Nonetheless, there are at least some workarounds. One option is simply to conduct a broad-based “client appreciation event”, which is not limited to “just” those who provided a referral. Though you can certainly provide verbal thanks at the event for all those who have referred (which will be experienced as a statement of gratitude by those in the audience who did refer… and perhaps a helpful reminder nudge to all those who haven’t!).
Another more controversial suggestion at least some advisors adopt (but given that it’s a grey area, please consult your own compliance department or consultant!) is to provide “small but thoughtful” gifts to those who provide referrals. If the financial value of the gift is nominal, and it is only announced and provided after the fact (such that clients who referred didn’t have an expectation of compensation up front), and it isn’t in cash (which is the primary focus of Rule 206(4)-3), it will likely fly under the radar screen of regulatory scrutiny.
Yet another option is to make a charitable donation on behalf of someone who refers, ideally to their known charity of choice, or perhaps to a third-party platform like DonorsChoose (which can be done consistently for any referral but still provides the referrer some flexibility to decide where/how the donation will be used). Since the ‘reward’ for referring isn’t compensation directly to the referrer, it is less likely to be scrutinized under Rule 206(4)-3.
An even safer alternative, suggested in Sciortino’s book, would be to make a seasonal donation from the firm to a single charity on behalf of all clients, and then inform the clients that the donation was made “in appreciation of the firm’s clients and their referrals and a(nother) successful year for the firm” – a means of both providing appreciated to clients, gratitude for their referrals, and an indication that clients should feel positive about the ongoing success of the firm.
And of course, the easiest option (and safest from the compliance perspective) is simply to write a good ‘ole “Thank You” note to the referrer – the most directly possible expression of real gratitude, likely more powerful than a modest financial reward anyway, and likely a differentiator in a world where so few ever actually send thank-you notes at all anymore. (In point of fact, I built my own speaking business early on by sending thank-you notes to every event organizer I worked with, in a world where it’s usually the event organizers who send the speakers a thank-you note!)
So what do you think? Do you have a way to systematically thank your clients for their business? What about those who refer business to you? Please share some of your own ideas of what's working for you (or not!) in the comments below!
