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We talk a lot about referrals. Should we ask for them? How and when to ask? I want to explore referrals from a different angle – from the mind of the referrer – to shed light on the psychology to inform your approach.

Referrals are the most significant driver of new growth, as confirmed in InvestmentNews 2020 Price & Profitability Study.

Advisors who figure out the art of the referral will be very successful at asset gathering. One advisor I know has $80 million in new assets at late stages in their pipeline from referrals they have received over just the past six months. They have grown their $1 billion business almost exclusively from client and professional referrals.

Once an advisor figures out how to consistently get referrals, they keep flowing in like magic.

In my role as a growth consultant, I work with financial advisors and am often asked by friends and people in my network for referrals. Of course, I have a short-list of advisors I know and trust, but I don’t always share the same names.

When making a professional referral, these are the things a referee considers:

The referee’s personality, is there a personality fit?

  1. What does the referee want and need? Can the advisor and firm address their specific needs?
  1. What is the investor’s expectations of service, investment outcomes, cost, etc.? Does the service model(s) make sense – is it too much, too little or just right? Is the investment approach appropriate? Are the advisor’s fee structure and cost inline?
  1. Is an introduction going to be mutually beneficial? Is this investor within the advisor’s ideal client profile?