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October 31, 2023

3 Key Strategies for Unlocking Referrals

Most advisors would agree that receiving referrals is an attractive way to grow their practice and is also a nice form of recognition from satisfied clients.

However, advisors often find that the referrals they receive are inconsistent, or don’t necessarily reflect the calibre or type of clientele they’d like to retain.

In this article, we’ll examine common referral pain points, and three key strategies to address them.

Three main reasons advisors experience a referral drought

1. They rely on unsolicited referrals

Many advisors believe that if they simply do a good job for clients, referrals will be made as a natural part of the client journey. In some respects, this belief is true. Occasionally, advisors will receive referrals simply because a client felt inspired to provide it. However, relying solely on unsolicited referrals is a key reason why advisors find that the pace of the referrals they receive is inconsistent.

2. There are inconsistencies in the client experience

Clients are unlikely to refer someone within their circle to their advisor unless they’re certain that the process they’ve experienced is sound and repeatable.

The reason for this is rooted in behavioural science. There is a cognitive bias called “Ambiguity Aversion” that describes a need for certainty and zero ambiguity, especially when it comes to a potential risk in social standing. If a person has experienced inconsistencies within their own client experience, they’ll be less willing to refer a close friend or relative, as it might not reflect well on them. The issues they’ve experienced may be small and not even meaningful enough for them to leave their advisor, but they’re also not worth the perceived reputational risk within their social herd to refer anyone, just in case something goes wrong with the new referral’s advisor experience.

3. Advisors haven’t stated who their ideal client is

It’s common for advisors to feel uncomfortable asking for client referrals. For this reason, the ask is often vaguely stated:

“We want people just like you!”

“If you know anyone who would benefit from our services…”

Unfortunately, while this approach rips the band-aid off, it doesn’t give clients vital information:

“What is it about me you want to replicate?”

“Are you saying you want to work with dentists? Or with women? Or with women who are dentists?”

This avoidance of being specific may create unintended consequences: either the client obliges with a referral that isn’t ideal, or worse, they nod politely and exit the conversation as quickly as possible with little understanding of what the advisor is asking for.

Key strategies to unlock consistent, high-quality referrals

So what can you do to make your referrals more rewarding for both you and the clients?

Create conditions where it’s easy to refer your services

Start by focusing on efficient, repeatable processes for every aspect of the client journey:

  • Commit to evaluating and refining the client experience as a team
  • Truly get to know your clients and understand what keeps them up at night

Develop and articulate your ideal client profile

  • Think about your top five clients (based on AUM, values, wealth trajectory, etc.)
  • What are the tangible and intangible attributes you’d love to replicate with referrals?

Solicit referrals by connecting your ask to your mission

  • “This year, we’re taking on 10 new female entrepreneurs as clients because we believe women should be able to build their dream business while maintaining confidence in their financial future. If there are women in your circle who mirror your ambition, honesty and integrity, we’d really appreciate an introduction.”
  • Getting specific, showcasing your values and acknowledging the values and positive characteristics of your clients is a powerful way to attract high-quality referrals

Getting a steady stream of high-quality, consistent referrals is possible. It simply requires that advisors clearly articulate the pride they have in their offering, keep in mind an ideal client for their practice, and display confidence and sincerity when making the ask.

If you’d like to learn more about how to create and maintain an impactful referral process for your business, please reach out to your CI Sales Team.

About the Author

Kaitlyn Lawson

Kaitlyn Lawson

Director, Advisor Development
CI Global Asset Management

Kaitlyn is a skilled consultant, coach, and content creator bringing over 14 years of industry experience to her role at CI Global Asset Management. As Director, Advisor Development with CI Advisor Consulting’s Practice Management team, Kaitlyn is responsible for creating and presenting industry-leading practice management content to advisors across Canada, as well as conducting one-on-one consulting on a wide range of topics. Additionally, Kaitlyn is extensively trained in behavioural finance and was named one of Wealth Professional Canada’s Leading Women in Wealth in 2022.