Top Referral Tips for Financial Advisors

A successful advisor should always be talking to new prospects and clients. Asking for referrals, though, is never easy. It can be difficult to find the right balance between being aboveboard in presenting yourself and your services—with an aim to make a sale down the line—and being pushy. However, referrals are an important part of any financial advisor’s business, and often serve as the best way to reach potential clients. They may make asking for and obtaining a referral a little less difficult and a lot more productive. Below are some ideas for generating referrals without making your existing clients uncomfortable.

Key Takeaways

  • In the financial advisory business, referrals to new clients are the lifeblood of the business.
  • Getting good referrals means being professional, serving your clients first, and doing a good job.
  • The use of incentives, social media marketing, and professional networking through local organizations or societies can also help get your name out there and build your reputation.
  • Referrals are some of the warmest leads that are usually fairly easy to close.
  • Advisors need to maintain a balance between servicing their existing clientele and pursuing new business.

Discounts and Fee Reductions

If you really want to incentivize your current clients to talk to their friends and family about you, you may need to offer them something in return. One way you can do so is to set up a gift program for those clients who do succeed in referring you to one of their contacts. If that referral results in a prospective client meeting, a gift is a nice way to show your appreciation.

Tell all your clients that you are offering a complimentary financial review to any individual to whom they refer you. Another approach is to offer a discount on the services you offer to the clients providing you with a successful referral.

Incentive Programs

One way to get the word out about your referral incentive program is to announce it on your website or in the emails you send out to clients. Just make sure you are in compliance with all corresponding regulations when you do offer gifts to clients. You might also want to rotate the gifts you give, so your clients will be inclined to make more than just one referral. 

You could also set up a contest for your clients. Whichever client provides you with the most actionable referrals wins the contest and receives the prize. You could have first, second, and third place winners, so more people would be encouraged to be involved. Again, let clients know about the contest during meetings or through your newsletter or email list.

Use Social Media

More and more businesses these days are using social media outlets from companies such as LinkedIn Corp. (LNKD), Meta Platforms Inc., formerly Facebook, (META), and Twitter Inc. (TWTR) to get their message out into the world. The more you start linking up with your clients through social media, the more your message has a chance to reach their friends and their colleagues.

Create a Facebook page and ask your current clients to 'like' it, and then ask them to go ahead and forward it to their network of friends and colleagues. Don’t be shy about reminding your clients about how your financial and estate planning services have been beneficial to them and others, so they can use those examples to do a bit of selling for you when making a referral to a friend.

You might also want to start a weekly or monthly blog on your website, with a comments section that could become a platform for interesting and relevant discussions. If a client reads something on your blog that seems relevant to a friend or colleague, the link can be forwarded to that person. In this way, your written words can speak for you and often can be just as good as a word-of-mouth referral.

Make Use of Organizations and Societies

Contacting local organizations about making referrals can also be a good way to get access to many like-minded people at the same time. Offer to give a lecture to the organization about the importance of financial planning, and include a question-and-answer session afterward, in which people can really get to know you and talk about what is on their minds.

Don’t forget to bring business cards and materials about your business for the attendees to read and take with them. You may even want to conduct a survey asking for feedback on your presentation, and for permission to contact the people in the audience by phone or email.

You could look up which of your clients work at large corporations, and then ask them directly if there might be an opportunity for you to talk with the human resources department at the company about offering your services to their employees. If you specialize in a niche, target those organizations that cater to the relevant type of person or group of people in the specialty in question.  

Professional Networking

Is there a lawyer or insurance agent you have worked with in the past whom you admire? If so, you could agree to trade contacts with that person or make a deal to approach all of your combined contacts as a team. In this way, you can offer a selection of services to a group of people, and the offer will be coming from at least one person these individuals already know and trust. You could also ask these professionals to write a testimonial about you and your services and post their comments on your website or social media pages. It’s free advertising, and it’s coming from people who really know and admire your work. 

Closing Comments

Don’t be afraid to periodically remind your current roster of clients that you are looking for referrals. The best time to do this is often at the end of a productive meeting. You can bring up the fact that you are offering initial meetings with prospective clients free of charge, and that you would be happy to answer any questions their friends or contacts may have.

Again, you don’t need to feel like you are asking this person to do you a big favor; rather, approach it as a way of getting the word out about your services to people who potentially need them.

How Do Financial Advisors Ask Clients for Referrals?

Financial advisors can ask clients for referrals in a number of ways, such as offering incentives or, if the relationship is strong, simply just asking. However, advisors need to be careful when asking for referrals because the client may not want to share their advisor, and you may come across as pushy or needy. Either of these could damage your existing client base, so it's imperative to exercise tact when discussing referrals face-to-face.

What Is the Best Way to Get Referrals?

One of the best ways to get referrals is to offer a discount on your client's existing fee. If you give them a 5 percent discount on their fee for, say, a year, this is often enough to incentivize clients to bring you some business. Another way is to speak at public engagements as a way to stay on people's minds and generate conversation.

What Is the Hardest Part of Being a Financial Advisor?

One of the hardest parts of being a financial advisor is servicing the clients you already have to your maximum ability, while simultaneously building your practice by prospecting for new business. Larger firms may have a marketing outreach specialist for this but since many advisors depend on direct referrals for new business, they must do it themselves. Some advisors are so concerned with new business they let their performance slide with those who already depend on them. This is unwise and will result in a client exodus.

The Bottom Line

A referral from a friend, colleague, or industry expert can go a long way in getting more prospective clients to give you a call. Being proactive about asking for referrals and using social media or connections with organizations and other professionals should be a big part of your approach to growing your client list.

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