When I first started my financial consulting practice a decade and a half ago, I had to learn a lot of new skills. I had the consulting part down cold, but I had to develop marketing and promotional strategies – both of which were out of my normal wheelhouse.

Getting clients to cross your doorstep is often one of the most challenging tasks in any business, but in financial consulting, it can be even more difficult. Careers in financial services, similar to lawyers and doctors, are professions that require the trust of the client. Potential clients don't simply choose one out of the phone book (or, at least, they shouldn't.) They talk to their friends, their co-workers and their existing advisor network to get recommendations. This means that attracting clients isn't as simple as placing some ads and handing out business cards. It means working through your own networks to encourage them to recommend you to potential new business. The three main groups of referral sources are existing clients, your circles of influence and even competitors.

SEE: Deal Effectively With Difficult Clients

Existing Clients
Your current client base is the most authoritative source for referrals. Happy customers are often pleased to be able to pass your name along to their friends and family. They speak from experience and can explain your services and answer questions from potential clients. Think about referrals you have asked for in the past. For example, if you're looking for a new lawyer, wouldn't you be most interested in hearing from someone you know and trust, who has used the lawyer in the past?

Remember to ask your client base to pass your name along to people they think might need your services. Make it easy for them by giving them a half-dozen business cards for them to keep on hand. If you don't let your clients know that you are actively seeking new business, they may assume that you are busy enough and don't really want to take on new people.

Circles of Influence
One of my best sources of new clients has always been the professionals I know who work in connected businesses, including lawyers, accountants and bookkeepers. These people connect with potential clients every day and most are happy to have your name on the tip of their tongues, when asked by their own clients who they should see for financial services. It makes the advisor look good to have connections with other professionals.

Make a list of those professionals you deal with on an ongoing basis and be sure to remind them regularly that you are looking for new business. Don't forget to reciprocate and send business their way, whenever you can.

It may seem odd to consider your competitors as sources for new clients, but they can be an important piece of your overall referral strategy. Competitors may be at their client limit or they may not offer the exact same services that you do. Talk to your competition on a regular basis and let them know what you can offer potential clients that they can't service. Also, just as with your circles of influence, be sure to send business their way, too.

SEE: Six Rut-Busting Business Moves For Brokers

Should You Pay for Referrals?
A question that I'm asked frequently by new financial professionals is whether they should pay for referrals or not. The answer is, it depends. I would never recommend that you pay for services that give you marketing lists. You have no idea where the lists came from and how aligned the people are on the list, with what you have to offer.

There is a benefit, however, to offering a referral fee to clients and acquaintances for referrals that end up becoming clients. It keeps people motivated to refer you to others and it will boost your bottom line. Calculate the average lifetime revenue from a client and you will quickly see the benefit of offering a referral fee to obtain that new stream of income.

The Bottom Line
As a financial services advisor, you will attract new clients from many sources, but referrals from others will likely be your main fountainhead. Develop relationships with those around you who have the ability to send business your way and, most importantly, give your current clients world-class service so that they can't help but recommend you.

Related Articles
  1. Financial Advisors

    Advisors: Why You Should Consider a Partnership

    Sole practitioners have their benefits but financial planners who team up with likeminded colleagues can increase revenue and improve their services.
  2. Financial Advisors

    Top Compliance Headaches for Financial Advisors

    Advisors who do not devote sufficient attention to compliance issues can find themselves in hot water with both regulators and their clients.
  3. Financial Advisors

    5 Things All Financial Advisors Should Know About ETFs

    Discover five things all financial advisors should know about ETFs, including when ETFs may be a better choice for your clients than mutual funds.
  4. Investing Basics

    Fee-Only Financial Advisors: What You Need To Know

    Are you considering hiring a fee-only financial advisor or one who is compensated via commissions? Read this first.
  5. Financial Advisors

    Becoming an Advisor: Why You Should Shadow a Pro

    Meeting with financial advisors and following them during a workday will help you to know if it’s worth the time and effort to make the career switch.
  6. Financial Advisors

    Financial Fraud: 6 Tips to Avoid It

    A good financial planner should work with you and for you. Ensure you are paying attention if you don't want to be the victim of fraud.
  7. Financial Advisors

    HSAs and FSAs: How to Decide Between Them

    FSAs and HSAs are both excellent ways to help cover a portion of medical costs with pre-tax dollars. Here's how to decide between the two.
  8. Financial Advisors

    When to Develop a Client Mental Capacity Checklist

    Dementia and Alzheimer’s disease aren't uncommon for elderly clients. Here's how advisors can create a plan for when mental capacity becomes an issue.
  9. Investing

    What a Family Tradition Taught Me About Investing

    We share some lessons from friends and family on saving money and planning for retirement.
  10. Retirement

    Two Heads Are Better Than One With Your Finances

    We discuss the advantages of seeking professional help when it comes to managing our retirement account.
  1. Do financial advisors charge VATs?

    The Personal Finance Society (PFS) and with Her Majesty's Revenue and Customs (HMRC) have outlined when a value-added tax ... Read Full Answer >>
  2. How do financial advisors execute trades?

    Today, almost every investor invests through online brokerage accounts. Investors often believe that their trades are directly ... Read Full Answer >>
  3. How do financial advisors help you avoid escheatment?

    Financial advisors can help you avoid the escheatment of your financial assets by regularly reviewing all of your accounts, ... Read Full Answer >>
  4. Why do financial advisors dislike target-date funds?

    Financial advisors dislike target-date funds because these funds tend to charge high fees and have limited histories. It ... Read Full Answer >>
  5. How often do financial advisors have to travel?

    The frequency with which a financial advisor needs to travel varies according to numerous factors, such as the size and location ... Read Full Answer >>
  6. What licenses does a hedge fund manager need to have?

    A hedge fund manager does not necessarily need any specific license to operate a fund, but depending on the type of investments ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Bar Chart

    A style of chart used by some technical analysts, on which, as illustrated below, the top of the vertical line indicates ...
  2. Bullish Engulfing Pattern

    A chart pattern that forms when a small black candlestick is followed by a large white candlestick that completely eclipses ...
  3. Cyber Monday

    An expression used in online retailing to describe the Monday following U.S. Thanksgiving weekend. Cyber Monday is generally ...
  4. Take A Bath

    A slang term referring to the situation of an investor who has experienced a large loss from an investment or speculative ...
Trading Center