The Three Biggest Mistakes Advisors Make with Referrals
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New parents are anxious. They want to know what to expect. They search the internet for their answers. They read books by the experts. They talk to a lot of people who have children to satisfy their curiosity and desire to learn as much as they can before their little bundle of joy arrives. Like most of us, when doing something new or challenging, they hope to learn enough to avoid the most common mistakes and find the wisdom to influence their parenting skills.
Advisors do the same when it comes to getting referrals. Getting referrals is not something new for many advisors (although it is for some), yet it remains challenging. So, like new parents, advisors find the latest book, seek out best practices, sign up for a course, look for a mentor, get advice from their broker dealer or wholesaler, hire a professional coach, attend a seminar at a conference, listen to a podcast or read an article.
All for the almighty secrets to getting more referrals and to avoid making those common mistakes.
Experts, like myself, who spend all their time coaching advisors like you, writing articles and books, conducting interviews, speaking to audiences and reading studies, have a lot to say about referrals. We have seen and heard it all from our clients while helping them to grow their practices.
As you might imagine, I have much to say about referrals. For this article, let’s focus in on three of the biggest mistakes I have seen advisors make with referrals. You’ll get the insight you need to avoid making or repeating the same mistakes over and over.
Making referral assumptions
Assumptions are never a good thing. In Don Miguel Ruiz’s book, The Four Agreements, he wrote, “The problem with making assumptions is that we believe they are the truth. Then we defend our assumptions and try to make others wrong.” I can’t agree more and have seen this reflected in the actions of many financial advisors.
One such assumption that permeates the profession is that clients will refer you when they receive great service. Great service has become a client expectation. Great service alone will not lead to more client referrals. If that were true, clients would be referring you left and right. But for most of you that is not happening. You likely have a client base filled with people who think you’re wonderful but still have not referred you like so many other advisors experience.
This belief leads to referral complacency. I see too many advisors putting all their emphasis on the client experience and little to no emphasis on developing a repeatable referral process. Don’t get me wrong, a great client experience will retain your clients, but it needs to be supported by a great referral process to generate referrals.
Confusion undermines referrals. If people don’t understand who you want as clients or are confused due to lack of clarity, they won’t refer you. I’ve seen it happen too many times. Clients don’t refer because they lack the ability to recognize the opportunity. It’s not their fault that you haven’t made it clear for them. One client of mine was so frustrated with a lack of referrals from their COIs that they gave them a survey asking why they have not referred. Surprising to them, they heard loud and clear that their COIs were confused and didn’t know who to bring to them. As human nature would have it, the COIs did not refer. Again, the COIs were not at fault for this lack of clarity.
Confusion causes doubt. Doubt leads to hesitation and then fear. Clients and COIs start to worry that they might get it wrong. No one likes to be wrong, especially when they are trying to help people. All of the “what if” statements enter their head and before long, they chicken out.
People want to help others. It’s up to you to make it easy for them to be successful. When you make it easy for people to refer you, they will. There’s no big secret. One problem is giving mixed messages. For example, saying, “we only work with people who have $1 million in assets or more,” and then accepting people with $250K. Another problem I see is not being clear on how you want referrals delivered to you, which creates more “leads” and fewer closed clients than actual referrals.
Rather than creating confusion in your referral process, focus on taking control and create a clear, concise and consistent description of who you want to serve and share it with everyone.
Asking at the wrong time
Most advisors are already making the mistake of asking for client referrals during a review meeting. Unfortunately, this behavior still happens quite a bit and it often leaves your clients feeling badly after an otherwise good meeting. Clients don’t deserve to have their review meeting hijacked by your referral request. In addition, if they have paid you for this meeting and your advice, they surely don’t want your personal agenda to over-shadow the importance of their meeting.
Another reason why this mistake is so hurtful is because of what it does to your referral conversation. Adding a referral request to the end of a review meeting sends the wrong message about referrals. It could appear and be perceived as an afterthought, sending the message that referrals are something you need to ask but they are not that important to you. That’s why you just throw it at the end of the meeting so you can check the box that you asked. Since referrals are indeed important to you, perhaps it’s time you gave referrals more of your time and energy.
Clients need to be taught to refer you more than they need to be asked to refer you – especially those clients who have never referred you before but have said that they would if given the chance. As I mentioned above, clients need to clearly know who you want to meet and how they can recognize the opportunity on your behalf. When you have an actual conversation with your clients about referring, then you’re sending the message that referrals are important to you and you’re willing to spend time discussing referrals with your clients. For more on this topic, see my previous article, Stop Asking for Client Referrals During a Review Meeting.
Now that I’ve shared three very common referral mistakes, the task for you is to make a decision on what you’ll do with this information. Will you work hard to eliminate any confusion in your messages and begin to clear things up for people? Will you stop asking for referrals during review meetings and instead give more attention to teaching your clients how to refer you? The choice to stop making these three common mistakes is yours.
Michelle R. Donovan is a referral/business coach, speaker and partner of Productivity Uncorked LLC, a coaching firm that specializes in helping financial advisors increase their referrals and get more done in their day. Michelle has written a Wall Street Journal Best Selling book, The 29% Solution (published in seven languages) and an Amazon Best Selling book, A Woman’s Way: Empowering Female Financial Advisors to Authentically Lead and Flourish in a Man’s World. Email Michelle at [email protected] or connect with her on LinkedIn.