Executive Summary
Referrals can play a vital role in the growth of financial advisory firms since finding prospective clients via referral requires virtually no hard-dollar costs, and it takes only a fraction of the time needed for other marketing channels like social media, blogging, and seminars. However, finding reliable sources of referrals can sometimes be challenging for advisors: Centers of Influence (COIs) like accountants and attorneys may not be as attuned to the advisor's services as the advisor's clients themselves, yet asking current clients for introductions to people in their networks can be awkward since not all clients are equally receptive to being asked to provide referrals (and clients who aren't inclined to offer referrals can even have a negative reaction to the request, potentially damaging the advisor-client relationship!).
In this guest post, Todd Fithian, co-founder and managing partner of The Legacy Companies LLC, discusses a systematic approach that advisors can take to ask clients for referrals. By first identifying clients who are receptive to the idea and who would most likely be viable referral sources, advisors can focus their efforts on those clients rather than devoting resources to clients who wouldn't want to be approached for a referral in the first place. By designing simple surveys to determine clients' Net Promoter Scores, advisors can divide their clients into groups of those who may be more (and less) likely to want to 'promote' (i.e., refer others to) the advisor. This can help the advisor decide who to ask for a referral and who to avoid the subject with – although for the latter group, scheduling a separate meeting to discuss potential issues that underlie the clients' reluctance may provide valuable insights about both the advisor's processes in general and any relationship concerns the client may have more specifically.
After identifying potential clients who might serve as good "active promoters", advisors can take the next step by asking clients whether they'd be willing to refer people in their networks who might benefit from the advisor's services. One way to do this is to invite the client to a Dedicated Introduction Meeting (DIM) where the advisor and client can review the client's personal or professional networks and pinpoint contacts who might align with the advisor's firm and benefit from working with the advisor. To this end, it's essential to provide the client with guidance by clarifying the advisor's ideal client profile (since prospective clients who align best with the advisor's value proposition will more likely become clients themselves), which will also help clients narrow the list of introductions to contacts who would be a good fit with the advisor.
Ultimately, the key point is that asking for client referrals shouldn't feel like it pushes any boundaries with uncomfortable requests; instead, it should feel more like a natural progression of the authentic relationship built between the advisor and the client. By developing a process centered around respect for the client's willingness to open up their network to the advisor – as well as their trust that the advisor could serve those potential clients well – advisors can make the process feel more natural for clients while effectively bringing in their ideal target prospects!
Getting introduced to prospective clients plays a vital role in the growth of financial advisory firms. Historically, soliciting client referrals has posed challenges, often relying on outdated approaches and language. However, there are ways that advisors can secure introductions while providing the necessary framework, scripts, and tools to grow their network and generate high-quality opportunities. While asking for an introduction is important, having a strategic approach will make all the difference.
Clients As Centers Of Influence (COIs)
The concept of a Center of Influence (COI) is well-established in the financial services industry. It refers to an individual who, due to their role or position, is willing and capable of guiding prospects toward a business. Traditionally, COIs are thought of as professionals in areas such as tax, legal, mortgage lending, banking, property and casualty insurance, and real estate. However, this view is somewhat limited.
It's important to recognize that professionals, especially in the legal and tax fields, often have highly-specialized niches. This specialization can make it challenging for financial advisors to find suitable professionals for client introductions, as these professionals may not be as familiar with the broader range of services that financial advisors provide. By contrast, clients understand the value a financial advisor brings and can effectively communicate this to their networks. Which make them an excellent source of referrals.
Expanding the definition of COIs to include both professionals and clients opens up new avenues for referrals. Clients who have broad social networks and who are willing to promote the financial advisor's services can positively impact the advisor's business growth. While COIs in an advisor's professional network can still be good referral sources, including a more varied network of COIs that includes both industry professionals and clients can help advisors build a more diverse and effective network.
Generally, clients who are potential COIs can be considered in terms of how they can promote the advisor's business and tend to fall into one of the following 3 categories:
- Active Promoters. Most advisory firms have clients who regularly send promising prospects their way; these clients are known as Active Promoters. By meeting with their Active Promoters, advisors can educate them about their ideal client profile and how to introduce them to the firm most effectively. Crafting an elevator pitch to clearly describe whom they help and the problems they solve can be useful for advisors to introduce the conversation comfortably and naturally.
- In addition to Active Promoters, there are Promoters who have a positive perception of the firm but haven't actively made introductions. Various factors (e.g., the client's assumption that the advisor is too busy or not seeking new clients) can explain their hesitation. Sometimes, it's simply because the advisor has never asked them for an introduction.
- Non-Promoters. Every business also has Non-Promoters – individuals who are either not influencers or just not willing to take on the obligation of making any introductions. In some instances, clients may withhold introductions because they have shared personal and sensitive information with the advisor, or they fear that they may jeopardize the relationship with either the advisor or the person being referred if they do not hit it off with each other. These clients are still valuable to the firm but prefer not to be approached for introductions.
How To Find Active Promoters
When it comes to identifying clients who are Active Promoters, there are 2 main approaches: 1) advisors can survey clients using a Net Promoter Score (NPS) system (as discussed below), or 2) they can design a deliberate strategy to implement during the client engagement process. Regardless of the approach, maintaining a consistent strategy is essential for generating meaningful introductions and business growth.
Surveying Clients By Determining Net Promoter Score (NPS)
The Net Promoter Score (NPS) is a metric used to measure customer loyalty and satisfaction based on the likelihood of customers recommending a company's products or services to others. It is a widely adopted customer-experience metric that provides insights into customer loyalty and overall satisfaction.
NPS is typically determined by asking customers a single question: "On a scale of 0–10, how likely are you to recommend our product/service to a friend or colleague?" Based on their responses, customers are categorized into 3 groups: Promoters, Passives, and Detractors.
One of the easiest and quickest ways to determine the NPS for a large group of clients is to send a survey by email. For example, the language provided below can be a simple way to survey clients by email. This language can also be used with the client in a face-to-face meeting, on a video conference call, or in a letter.
Email Subject: How are we doing?
Hi [first name],
I value your opinion as much as I value your time, so I just want to ask one question about how we're doing.
Based on your experience with us – on a scale of 1–10, where 10 is awesome – how likely is it that you'd introduce me to a friend or colleague?
You can just reply back with a number, and thanks as always.
[Your name]
Once you have some survey responses, here is how the scores can be interpreted and handled:
- Scores of 1–6: Detractors. These respondents are non-promoters and either don't want to make introductions or may not want to continue the relationship with the advisor. Further communication is necessary to determine the underlying reason. If they just aren't promoters but want to remain with the advisor, continuing to ask for introductions will likely have a negative impact on the relationship and should, therefore, be avoided. If the client expresses that they no longer want to continue the relationship or their needs have evolved beyond the financial advisor's area of expertise, the advisor can consider referring the client to another professional who would be better able to address their requirements. This demonstrates that the advisor has the client's best interest in mind. Schedule a meeting to discuss concerns, changes in the client's needs, or any misalignments between their expectations and your services.
- Scores of 7–8: Passives. These respondents are potential promoters. They are satisfied but not enthusiastic. While they may not actively promote the advisor, they are unlikely to switch to a different advisor. They may have hesitated to decline outright, possibly out of concern for damaging the relationship, but they also did not express a clear affirmative response. Advisors can consider approaching this group after contacting respondents who scored 9 or 10 to get specific reasons behind their rating. This feedback may identify opportunities for advisors to enhance the client experience.
- Scores of 9–10: Promoters. Some individuals in this group may already be actively promoting the advisor, while others may be newly inclined to do so. Regardless, the immediate starting point for the advisor is to respond to the people in this group and express appreciation for the feedback, as well as an interest in sitting down for a meeting (either in person or via video conference) to discuss further collaboration and opportunities.
Assessing Promoters As Part Of The Client Engagement Process
When it comes to assessing promoters during the client engagement process, there is only one time when it's appropriate to ask for introductions during client meetings: when the client has explicitly recognized the value of the services provided to them.
For instance, a good time to discuss introductions would be immediately after a client expresses their appreciation by saying something along the lines of one of the following remarks:
Client: Thanks, [advisor name]! We feel so secure entering our retirement years, and we couldn't have done it without you and your team.
Client: [Advisor name], we just can't thank you enough. Our business was our biggest asset, and not only did you show us how to create wealth outside of it, but you've also built a great team to help us successfully exit and pursue our next chapter.
When scenarios like this unfold during a review meeting or when the advisor is delivering financial, retirement, or estate planning advice, advisors have a valuable opportunity to find out whether the client is an Active Promoter or not (as even Non-Promoters can express value).
Advisors can take a moment to respond and check in with the client by initially expressing gratitude and thanking them for their recognition of value, and then exploring their status as a promoter.
An advisor might say something like the following to start the conversation:
Advisor: Ryan and Michaela, I can't thank you enough for your comments! We work hard to serve the needs of our clients, so it's great to hear this. Finding great clients like you is one of the greatest challenges in our business.
Today's meeting is about you and your planning and I want to keep it that way, but I'd love to find a day/time to see if there is anyone in your personal or professional circles that you think would benefit from meeting with me as well. Would you be open to that?
If, for some reason, the client says no to this request, the advisor can acknowledge the client's decision while expressing openness to future opportunities. It reinforces that the advisor is there to prioritize the client's needs and that they respect the client's boundaries.
Here is a sample response:
Advisor: Of course, I completely understand. The focus on our meeting – and your financial planning – is highly valued. If at any point you feel comfortable revisiting this and come across someone who might benefit from my services, I'd be more than happy to discuss it. In the meantime, let's continue with our planning discussion today.
How To Help Active Promoters Promote: Dedicated Introduction Meetings (DIMs)
Once the advisor has identified their Active Promoters through methods such as a survey, the client service process, or their personal interactions with long-standing clients, the next step is to schedule a Dedicated Introduction Meeting (DIM). The primary objective of the DIM is to give the Active Promoter and advisor an opportunity to review and pinpoint potential prospects within the Active Promoter's personal or professional network who align with the advisor's ideal client profile and could benefit from establishing a relationship with them.
The power of a DIM lies in the expectation set for both the advisor and the client to compile a list of potential relationships for consideration. Advisors can encourage their clients to think beyond platforms like LinkedIn and explore clubs, associations, or boards where they may hold active memberships when putting together their list.
How To Prepare The Client For A Dedicated Introduction Meeting (DIM)
When scheduling a suitable date and time for the Dedicated Introduction Meeting (DIM), advisors can help the Active Promoter client prepare for the meeting by establishing clear expectations. Given that the primary purpose of the meeting is to identify introductions that can be made with new prospects, the advisor has, in effect, been granted permission to request that the Promotor compile a list of individuals from their network, including friends, family, and colleagues, whom they believe would be well-suited to and benefit from the advisor's services.
Having permission to engage in this introduction process with the client is critical to protecting the relationship because doing so without permission can be uncomfortable for the client, who may feel that their personal boundaries are being invaded.
It's also important during this preparation that the client possesses a clear understanding of the advisor's ideal client profile. This may pose some challenges if the advisor serves a very specific niche that does not directly align with the client's contacts. To make sure the client clearly understands the advisor's ideal target client, advisors can share the following information:
- The Commitment: We've made a commitment to build our business only around clients specifically like you.
- The Niche: And that means [who you help goes here]. (Example: People who created their own family business).
- The Problem: They are people who [the problem you solve goes here]. (Example: Want to protect and grow what they've built.)
- The Connection: Much like the work we have done together.
This ensures that the client can effectively identify potential introductions to prospects who align with the advisor's client criteria.
The email to schedule the DIM can include this information and might read like this:
Hi Ryan and Michaela,
We are looking forward to getting together on [date] to identify some relationships in your personal and professional circles that you feel would be a good fit for our firm and who would benefit from the work we've done together.
As part of preparing for our meeting, I have asked my team to begin putting together a list of names from connections you have on LinkedIn that we think may be a good fit. If there are other clubs or associations that you are involved in, please let us know. It would be great if you could spend some time ahead of our meeting to think through the relationships that you believe are a good fit for us, too.
We've really made a commitment to only build relationships around clients specifically like you, and that means people who have created their own business, typically with family involved. They are people like you who want to protect and grow what they've built and would value work very similar to what we have done together.
We look forward to seeing you on [date], and if you have any questions, please let us know.
Warm Regards,
[Advisor name]
How To Run The Dedicated Introduction Meeting (DIM)
During the Dedicated Introduction Meeting (DIM) with the Active Promoter, the advisor's principal goal is to review the potential prospect lists – curated separately by both the client and the advisor – to identify individuals for the client to facilitate introductions in the most convenient manner. It's especially important for the advisor to create a sense of safety for the client to ensure they can make introductions with confidence, knowing that the advisor will treat their connection professionally and respectfully.
Establishing a safe meeting space for the client involves building trust through consistent value delivery, clear communication, and addressing concerns. Offering support, respecting privacy, and aiming for continuous improvement will further enhance the client's confidence as an Active Promoter. When promoters feel secure in their recommendations, they are more likely to become an ongoing champion.
Below is a sample script for the DIM where the advisor spends time explaining how the client can make introductions and emphasizing the importance and value of personal connections, even if a prospect doesn't perfectly fit the criteria.
Advisor: Hi Ryan and Michaela, it's so great to see you both. We appreciate your willingness to help us identify some relationships you have with people who would benefit from the work we've done together and be a good fit for our firm.
As we discussed, I asked my team to put together a list of potential relationships for us to look at and determine if any are a good fit. Have the 2 of you had an opportunity to give it some thought as well?
We've really made a commitment to only build relationships with clients specifically like you, and that means people who have created their own business, typically with family members involved. They are people like you who want to protect and grow what they've built, much like the work we have done together.
First, because of our connection, I will meet with anyone you introduce to me, even if they aren't necessarily what I mentioned a minute ago. Our first meeting would be to simply get to know each other. If they are a good fit, great; if not, I'll have met someone important to you and that's a great thing for me to do. If we're both still comfortable, then we'd meet again and start to explore, much like what we did together. Does that make sense?
With that in mind, let's look at the lists of people we both have and identify who would be a good fit.
[Advisor and client take time to discuss and review prospect lists]
Advisor: Fantastic; we've identified 10 relationships that would be a good fit for an introduction.
I've found the following ways to make the connection have worked well with my other clients: [Email, phone, virtual, over lunch, face-to-face meetings]. Which would work best for you?
How Clients Can Make The Introduction
The introduction process can pose challenges for some promoters. For example, some may be unsure how to approach the topic of introducing an advisor to someone in their network. Others may fear being too pushy or intrusive, which can hinder their willingness to initiate such conversations. Furthermore, the uncertainty of how the introduction will be received can make clients reluctant to take the initiative.
Addressing these challenges involves providing guidance, clear communication on the advisor's value proposition, and a supportive environment for promoters. Some ways that an advisor can offer direction to promoters is to help them understand how the advisor's services can meet the specific needs of the potential client, which can allow for a more personalized approach in crafting the introduction. Additionally, sharing success stories of previous introductions and ensuring promoters have the necessary tools and information can bolster their confidence to make introductions confidently.
Consider the following sample introduction email sent by the Active Promoter to both the advisor and the prospect they are introducing the advisor to:
[Prospect name and Advisor name],
I am very excited to introduce you to each other. I am confident you will enjoy the conversation together and will find it informative and beneficial.
[Prospect name] – [Advisor name] is a partner at ABC Wealth Management (abcwm.com). We have had the opportunity to work with [Advisor name] and his team for the last 10 years and have benefitted greatly from their unique approach to planning for our financial affairs.
[Advisor name] – [Prospect name] is the President and Chief Operating Officer of XYZ Corp, a family business that was started by her father and that she now leads with the help of her 2 younger brothers. [Prospect name] and I recently discussed her need for a great financial advisor who she can fully trust.
I will leave it to the 2 of you to make the connection, but I am always available if I can be helpful. I do look forward to hearing how your conversation goes!
Warm Regards,
Ryan & Michaela
Thanking The Client After The Introduction
Advisors should consider sending a thank-you gift to the individuals who facilitated the introduction(s), regardless of whether the introduction was a good fit for the firm. It's essential to approach this gesture as a social exchange rather than a market exchange (so money or a gift card would not be appropriate. Approach it like being invited to a friend's home dinner; you wouldn't thank them with money, but rather with flowers, a nice bottle of wine, etc.). Advisors should aim for something considerate, personal, and modest.
Ultimately, the introduction process can be more than just a strategy; it can also be a valuable key to unlocking meaningful and beneficial relationships through clients who are willing to serve as their advisor's Active Promoters. Having a clear understanding of their own niche market can help advisors ensure their Promoters will target the right introductions most effectively.
And because the introduction process should be about valuing genuine connections and not pushing boundaries, an effective approach relies on requesting permission to engage in the process as well as instilling a sense of safety and trust for the Promoter to do so. This reinforces the trust and respect that advisors have built with their clients through the advisor's commitment to both ethical practices and the strength of their network. By adopting these principles, financial advisors can find a potential wealth of opportunities that connect them with their ideal niche prospects!
