Financial advisors always should be looking for new business. In today’s world, there are a variety of marketing, advertising and social media methods that can be embraced in order to get the word out and promote your services. But the most cost-effective way may still be the good old-fashion client referral. Not only are these referrals free, but if a client recommends you to a friend, family member or associate, they are giving you their stamp of approval and naming you as someone they trust. It’s an opportunity you shouldn’t miss out on. (For more, see: Cold Calling vs. Networking.)

Prepare Your Pitch

Asking a client to refer you may feel uncomfortable the first few times you give it a whirl. That’s why being prepared with a short, professional-sounding pitch is a good idea and may help you to more easily bring up the topic. You may even want to practice a variety of approaches, as one approach may be better suited for a certain type of client than another. What’s most important is to talk to your clients in a way that seems casual and relaxed and that might even get them excited about finding you more business. (For more, see: How Business Owners Can Attract Word-of-Mouth Referrals.)

There are certain times when talking with a client about giving you a referral will seem more appropriate than others. For instance, some clients may be more responsive at the end of a productive meeting or client event. If one of your clients takes the time to thank you or notes that they are impressed with your work, you easily could follow that moment up with a suggestion that they refer you to others who are looking for a financial advisor. People typically don’t hand out compliments without good cause, so when you get one be sure to take in what the person says and then use it to bolster your own reputation when looking for referrals. (For more, see: How to Impress Clients: The First Meeting.)

Also key is making sure that clients are referring you to the right type of prospective clients. If you have a minimum asset requirement, make sure that information is known so you don’t end up being referred to people who don’t meet your required criteria. If you only work with high-net-worth clients, you may want to remind your clients that they are part of a specific group of investors to whom you cater and that you would be happy to meet others who are in a similar financial situation. If you focus on retirees or women, let clients know that this is your specialty. People tend to congregate with others who are in the same situation or time of life as they are. (For more, see: Finding & Retaining High-Net-Worth Clients.)

Throw a Party

Another great way to meet your clients' friends and associates is to host an event to which you invite current clients who may be interested in getting to know one another and encourage them to bring guests. Every business benefits from networking, so your clients may enjoy networking with one another, and it will give you a chance to be introduced to their guests in a casual manner. (For more, see: Top Networking Tips for Advisors.)

The event can be an educational one, where you talk about a specific topic of interest, or it can be a time for you to better explain your investment ideas, portfolio management techniques and financial planning methods to clients and then open the floor up to them for questions. If you have literature to pass out at the end of the event, make sure it clearly states your contact information so your clients and guests may pass it along to others. (For more, see: How Financial Advisors Lose Clients.)

Don’t shy away from making these events fun. You may want to choose a theme for the party or host a wine tasting or cooking class. This will not only attract people to come and join in the fun, but will set up a relaxed atmosphere during which you can really let people get to know you, before promoting your services as an advisor. (For more, see: 9 Tips for Getting Free Publicity for Your Business.)

Newsletters, emails, Videos

If you are not already sending out newsletters and email blasts, you should be. These are great ways to stay in touch with your current clients, and they can easily be passed onto friends and colleagues who may be looking for an advisor. You may even want to keep a blog or record a couple videos that you post on your website. Videos add a personal touch by allowing prospective clients to actually see you and hear what you have to say. Posting on social media is also a great way to keep clients in the loop and show prospective clients you're on top of what's happening in the industry and that you have an online presence. (For more, see: How Financial Advisors Can Best Utilize Twitter.)

Follow Up

For those clients who do provide you with referrals, you should make sure to thank them and show your appreciation for the gesture. Some advisors like to send “thank you” cards or gifts. Others prefer to thank the person over the phone or in person, or even offer extra services free of charge. You should do what feels most comfortable, but this lets the person know that their gesture did not go unnoticed. (For more, see: Why Clients Fire Financial Advisors.)

Most importantly, don’t forget to follow up with the people to whom you've been referred. Offer to sign them up for a subscription to your newsletter or email blasts. You also can offer to give them a complimentary informational meeting during which you can review their financial portfolio or assets. Once the referral has been made it’s then up to you to do the legwork to seal the deal. (For more, see: Tips on How Financial Advisors Can Talk to Clients.)

The Bottom Line

Your clients are more than clients; they are also a way for you to bring in more business. If you are not talking to your current clients about referring you to their circle of friends, you may be missing out on a good deal of free advertising. Start utilizing your social network as a way to introduce prospects to all the services you offer. (For more, see: How to Get Referrals.)