How a Financial Advisor Developers a Referral Follow-Up Process Guide

March 11, 2021 by

Advisor Wealth Mastery Team

When starting as a financial advisor, it can be challenging to find new clients. That’s why many financial advisors tend to start with a referral from a friend, neighbor, or family member. However, consistently generating referrals can be difficult. Referrals offer financial advisors a chance to test their selling skills without being too pushy as trust has been established before you even sit down for a discussion about your services. While referrals may be plentiful in the beginning, that well can dry up quickly. That’s why it’s crucial to have a proven referral follow-up process.

Creating a referral follow-up process will help you consistently bring in new clients and increase your assets under management (AUM). If you’re looking to create a referral follow-up process for your wealth management business, here are some tips you can use.

Why Referrals Are Essential for Financial Advisors

According to Think Advisor, 58% of wealthy investors found their current financial advisor through a referral. Despite this statistic, only 20% of financial advisors ask for referrals!

Still not convinced? Consider this:

70% of millionaires are likely to refer people to their advisor
The lifetime value of a referred customer is 16% higher than a non-referred customer
People are 400% more likely to become a client when referred by a friend

While many financial advisors may not want to come across as pushy or desperate, a reported 80% of clients are willing to refer their financial advisor to a friend or family member. Clearly, there is a disconnect between what clients are willing to do and what financial advisors are willing to ask.

If you’re looking for a way to have a referral mindset, you could always find a mentor or coach to help with this. This can help reduce your learning curve and help you break through mental roadblocks that may be stopping you from asking for referrals.

If you’re the 1 out of every 5 financial advisors who are fine with asking for referrals, then consider yourself ahead of the game. Here’s how you can put those referrals to good use.

1. Start With Your Top Clients

While this may seem like a no-brainer, you’d be surprised how many financial advisors are nervous to ask their best clients in fear of driving them away. In case you didn’t get the memo, your clients already know you will eventually ask them for a referral, especially if you’re providing valuable service.

If you’re shy about asking, wait until you have received a compliment for a job well done. It will make it sound more natural at the moment. It can be as simple as saying thank you and offering two business cards. You can even follow-up by saying, if you know anyone who could value my services, it’d be great if you could pass these along. No pressure.

In most cases, if a client has just complimented you on your phenomenal service, they will most likely be willing to think of two friends, as they’ll already feel great about the service you’re providing.

2. Think About Your Ideal Customer

While you’re thinking about referrals, it makes sense to have an ideal customer you’d like to work with? Really niche down and think about who you feel you could add value to.

By clarifying the type of customer you feel you want to work with and could add value to, you’ll naturally flock to the right type of referrals. While this sounds more like prospecting, and it is, it will save you time in the long run as you’ll start gravitating to your ideal customer when it comes to your referral process.

3. Think About Referrals You’ve Given Before

When setting up your referral follow-up process, think about referrals you’ve given in the past. What made you give it the referral? Was there a particular process for the referral? What was the person’s call-to-action that led to your referral.

By thinking about referrals you’ve given in the past, you’ll be more likely to find ways to ask without sounding pushy, rehearsed, or too forward.

4. Stop Being Vague

When it comes to getting referrals, many financial advisors beat around the bush. They aren’t clear, or they come across as less confident, or worse, unprofessional.

Being vague is not a good way of doing business. When was the last time you were vague about buying a product? Our guess is never! Why, because you know what you want!

Why should it be any different when you know that you have a product that can help people? If you have a quality service, provide a quality product, and know someone else out there can benefit from it, you’re doing a disservice to people by being vague.

Instead, be open and honest. Speak from the heart about adding value, rather than feeling like a burden.

5. Add a Personal Touch

A great way to add referrals to your business is to treat your current clients well. Sometimes it’s as simple as adding a personal touch to your business. Not only will it make your service stand out, but it will also make your customer feel more valued.

Consider sending thank you cards at different points of the year with a card thanking your client for their business. You can slip a Starbucks gift card inside with a message that says something like, “Your next coffee is on me. Enjoy!”

Be sure to add a line asking for any friends, family members, or colleagues that could use your service. Sometimes going the extra mile to add a personal touch is all that’s required to put a referral follow-up program on autopilot.

6. Remove the Risk by Adding Value

Asking someone for a referral is sort of like asking the person to play matchmaker for your business. It can be a bit stressful for the person giving their referral as their reputation is on the line.

However, if you’re adding value consistently, going above and beyond with your service, and changing their financial future considerably with your financial planning, this will remove the risk.

People love to rave about great service. It makes them feel like they are getting a deal. By consistently going above and beyond and communicating your value to your customers, they will naturally feel more comfortable giving you a referral.

7. Be Consistent With Your Marketing

Don’t be afraid to get more social. Building a strong social presence can help bring social proof to your business while also creating brand awareness in your social media marketing.

When you post, think about reaching your ideal customer. Speak to their unique needs and have a unique selling point. Find colors and fonts that work for your brand, and don’t be afraid to add some funny or attention-grabbing posts. People love to share funny posts on Facebook. Just make sure it’s still taken as a professional service that can be trusted despite the joke.

Social Media Marketing can produce leads you never knew existed, so get out that phone and get social.

8. Plant the Seed

When you’re working with your customers, don’t be afraid to drop subtle hints about the value you’re adding or for referrals. Continuing to plant the seed will make asking for a referral sound less out of left field because they’ll be conditioned by your seed planting.

Think of it as a continual way of prospecting even with current clients. Here are some ways you can go about it:

Use the Bill Gates tactic of saying, “Don’t keep me a secret”
Letting clients know upfront that you plan to provide superior service to earn their trust with their friends, family, and colleagues
Telling clients that you work with a particular client or niche

By doing this, be subtly planting the seed to provide superior service in exchange for trusted referrals down the road. Then when you ask, it won’t appear pushy or forward.

9. Change Your Referral Mindset

In order to get serious about creating a proven referral follow-up process, you have to be willing to change your mindset about how you think about referrals. Consider them essential and a part of doing business.

There’s no need to make referrals a dirty part of the job. In contrast, they can become a way of getting closer to your current clients. Changing your referral mindset changes the way you interact with your clients.

That all adds value to your current clients and potential value for your future referrals. Instead of thinking of referrals as a desperate attempt for more business, consider it a way of adding more value to people.