How to start building trust and earning referrals
Your ability to generate referrals from professionals depends on your confidence. COIs must also have confidence in your technical skills and commitment to client service so they’re sure you’ll add to their professional reputation – not compromise it. Here’s how to start building their trust.
I recall reading twenty years ago about how important it is for advisors to invest time and money getting to know "influencers"—well-connected members of professional or charitable organizations who could become a gateway to other influential people. The equation was simple: The more time spent with these people and the more money given to their associations and groups, the more quality referrals would come an advisor's way.
Well, it's true that joining professional associations and getting involved with community groups are excellent ways to meet prospects and build relationships with centers of influence (COIs). And they always will be. But the suggestion that you can somehow buy referrals or relationships this way is ridiculous. It was silly back then, and it's even more foolish now.
If you want to build relationships with COIs (and you should), you need to be a little more sincere, strategic, and subtle than that. You need a system for converting casual acquaintances and chance meetings into reliable referral sources. That's what we'll talk about here, but first, I'd like to answer the top three questions I hear from advisors about utilizing COIs to build your business.
How many COI relationships do I need? Many advisors take a "quality, not quantity" approach to COI relationships, cultivating solid relationships with a couple of like-minded professionals rather than meeting everyone they can. This can be a very effective strategy, but there's no reason you can't have both quality and quantity.
One client we work with has cultivated as many as 1,100 COI relationships. Admittedly, this is an extreme example, but due to this firm's success, I've realized that establishing working relationships with multiple referral sources is an excellent idea. So, to answer the question of how many referral sources you need … as many quality relationships as you can find. Or instead, as many as you can reasonably communicate or connect with every quarter (more on that below).
Whom should I target? When discussing "professionals," most advisors think of accountants, lawyers, and, perhaps, personal bankers. However, almost any group of professionals can become a source of referrals. Don't limit your thinking to those who work in the financial industry; broaden the scope of your COI search and target well-regarded leaders in the business community. Some examples are a general insurance agent, the president of the local chamber of commerce, the local construction industry association chair, a local radio personality, a luxury car broker, and architects. These people encounter dozens of potential prospects every week. This strategy can be essential in smaller communities, where who you know often means more technical expertise or specialization.
How long should I focus on building COI relationships? Some advisors fail to maximize their referrals from professional sources because of their inability to stick with a referral strategy. The fact is, it takes four or five times longer to secure a referral from a professional source than it does from an existing client. Don't give up if you don't secure a referral from a given source within 12 months. Conversely, if you've had some success at first but then referrals have dropped off, that's not necessarily a reason to change your strategy.
OK, now let's talk about that strategy. We recommend a five-step system:
1. Demonstrate systems and processes to combat misperceptions
Some COIs have the misconception that financial advisors are not their equals in terms of professionalism (this is a particular problem with accountants and lawyers). They often don't hold advisors' designations in high esteem. They view advisors as salespeople rather than counselors or purveyors of investment guidance. These misperceptions, in turn, directly impact their willingness to send high-quality referrals to advisors.
To develop high-quality referral sources, you need to combat this misperception. I recommend informing professionals of the financial services industry's educational requirements, standards, and designations and how your training benefits clients. You need to demonstrate a commitment to professional improvement and show others how you take that commitment seriously.
Most importantly, you must demonstrate how your business relies on processes and systems rather than sales prowess. Do this by systemizing your business practice and implementing a comprehensive, client-centered wealth management and service system. Most importantly, develop a simple, straightforward way to discuss your systems. Remember: accountants, lawyers, and many other professionals are process-driven people. Speaking to them about your evolutionary business process and showing them what you've done to refine and improve the client experience will demonstrate that your professional standards are equal to theirs.
2. Create a Referral Guide
Once you've built your client wealth management and service system, you must articulate that system to your COIs. You can do that with a referral guide, a unique marketing tool designed to educate COIs about when and how to introduce you to their clients. The referral guide is specifically designed to lead COIs to tell your story to their clients in a short, cover-to-cover presentation that makes it easier for them to book an introductory meeting with you. As such, it ensures COIs deliver your brand message consistently and adeptly to the right people.
As for the content of your referral guide, it can have several components:
- a brief (two- to three-sentence) summary of your value proposition
- an explanation of what you do, along with a bullet-point list of services you offer
- a detailed description of your unique business process
- a graphic overview or illustration of that process
- a case study or example of how you helped a client
- testimonials or thank-you letters from satisfied clients or a summary of the depth of services offered by your firm (with a focus on your specific niche)
- a brief biography or profile of yourself and your team
Whichever components you choose, the focus should be on providing COIs with enough information to feel comfortable talking about your services to their clients.
3. Host a Quarterly Leadership Summit
Eventually, you'll want to hold an event for your COIs; a regular "leadership summit" is a great option. Set up a quarterly breakfast seminar, where you have one to three top professionals (in different industries) speak on a unique wealth strategy or topic of broad interest. As the event's host, you invite 20 to 100 professional referral sources to attend and meet several of them at the event itself. In addition to giving your COIs valuable education on improving their businesses, you demonstrate your association with the top talent in the community.
Maximize the power of a leadership summit by following it up with a published summary or analysis of some or all the presented topics. Many times, it's possible to collaborate with your speakers on this: most everyone has notes, and it wouldn't take long to work those notes into an article or white paper. This offers your speakers another opportunity for exposure and profile.
4. Deliver Education Through White Papers or a Book
There are many effective ways to capture the attention of busy COIs, but the most effective is education. For an advisor, education includes information, guidance, wisdom, firsthand stories, or other ideas that may improve a COI's business or professional practice.
The leadership summit described above is one great way to offer education to COIs. Another impressive strategy is writing articles or books explaining some basic investment strategies that COIs could discuss with their clients. You could share your opinion on an event or topic relevant to your industry and explain its implications for your clients. Organize a workshop or breakfast discussion where you share several stories about your client experience that apply to the COIs' practices. You could even present a more formal client case study.
Whatever you do, don't focus simply on how you deliver the information (via seminar, newsletter, published article, or one-on-one conversation) but rather on what that information can do for the COI. By demonstrating the value you can bring to their existing client relationships, you show COIs how their relationship with you can strengthen their practices. That is a compelling way of building referrals.
5. Communicate Regularly
Remember: The quality of a given referral source is directly related to the number of times you communicate with that referral source. Treating your COIs like top clients would be best, making about 20 contacts per year with each one. Phone calls, face-to-face meetings, and COI events are all critical components of this communication effort, but you should publish a monthly COI-focused newsletter. Your newsletter can be printed or distributed through e-mail. You can profile your COI activities, leadership events, and white papers. You'll also want to include content not directly related to your business but to the COIs' business. Suppose you start to have trouble keeping up the communication. In that case, you can hire an in-house assistant or a professional marketing communications company or prune COIs on your contact list to a manageable number. Whichever you choose, make it your goal to touch each COI in your network 20 times yearly to get the desired referral results.
Yes, this five-step system involves more than simply picking up the phone and calling a random number of COIs in your community. But that's the difference between working harder and working smarter. This highly systemized approach allows you to multiply the number of professional referral sources you know without sacrificing the personal attention your existing referral sources require.
Ultimately, your ability to generate referrals from professionals depends on your confidence. COIs must also have confidence that you have the necessary technical skills and commitment to client service and add to their professional reputation—not compromise it. This kind of confidence takes time to build. Take the long-term view. Be authentic. Keep meeting new professionals. You will succeed.
Jeff Thorsteinson is a partner in Advisor Practice Management, an organization that helps financial advisors build world-class practices through innovative concepts, tools, and systems. Jeff works with individual advisors, investment dealers, insurance firms, and fund companies. For more information about Advisor Practice Management, contact [email protected] or 1-800-223-9332, or visit the website at www.advisorpracticemanagement.com.
