October 31, 2023
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.
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.
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.
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.
So what can you do to make your referrals more rewarding for both you and the clients?
Start by focusing on efficient, repeatable processes for every aspect of the client journey:
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 brings over 16 years of industry experience to her role as Director, Advisor Development with CI Advisor Consulting. Kaitlyn has a proven track record for helping advisor teams across Canada get to the next level, both through 1:1 consulting and broader speaking engagements, like this one.
Throughout her career, Kaitlyn has leveraged her expertise in behavioural finance to help advisors consistently turn prospects into clients and grow their businesses with intention. For her focus on helping women advance in finance, and for providing financial literacy education to women across Canada, Kaitlyn was recognized in 2022 as one of Wealth Professional Canada’s Leading Women in Wealth.