The Secret to Unlimited Referrals

By Lloyd Williams, CIMA

Why are referrals so plentiful in other industries—and so scarce in the financial advisory business? Your
clients may be failing to make the connection between your services and their friends' or colleagues'
needs.

I'm always amazed at how easily professionals in other industries get referrals. Have you ever been to a
cocktail party where someone mentions back pain? Half the people in the room will jump to recommend a
chiropractor. Someone alludes to the fact that her yard is in disrepair—presto, a couple of people name a
fabulous landscaper. In a group setting, describing almost any need seems to elicit the names of
practitioners whom others think will be able to help. Why, then, when the topic of money arises, are
people so hesitant to recommend a financial advisor?

This question has bothered me for many years, but—after hearing myriad advisors describe their clients'
concerns—I think I've finally arrived at an answer. I call it the "referral disconnect."

The client's role

Let's take a closer look at how referrals work in other industries. I had a friend, for example, who for much
of his life suffered from severe neck pain that, at times, totally immobilized him. He had seen countless
chiropractors and orthopedic surgeons, to no avail.

One evening at a cocktail party, a woman suggested that he see a dentist for his pain. When he asked
the obvious question—"Why a dentist?"—she related her own struggle with a similar problem, ultimately
diagnosed by a dentist as TMJ, a dislocation of the lower jaw that pinches a nerve in the back or neck
and causes sharp pain.

The woman went on to say that, after a simple procedure in the dentist's office, her pain had disappeared
and never returned. Naturally, my friend immediately made an appointment with the dentist she
recommended—and after undergoing the same procedure, he never suffered neck pain again.

The professional's role

In the mind of the average individual, there's no connection between neck pain and dentistry. This dentist
was able to establish that connection—and the result: referrals. How did the dentist remove the referral
disconnect?

After performing the procedure, the dentist made a point of saying to his patient, "Occasionally, you may
run across someone who mentions having a recurring neck pain similar to the pain you experienced. I ask
that you pass along my name and encourage them to come see me. Tell them that it may sound funny to
go to a dentist for a neck pain, but explain the symptoms of TMJ and recommend that they have it
checked out."

Now, let's talk about how the referral disconnect operates in the industry of financial advice. When asked
what you do for a living and what benefits you bring to the table, you talk about your experience and
knowledge, the vast resources and services you can provide, the quality you deliver, and the team you
have in place to better meet the needs of your clients. You share the fact that you go through a
disciplined approach to making investment decisions, which reduces overall risk to your clients' portfolios
and helps them meet and exceed their expectations and goals. Virtually no one promotes himself as
being the top performer in the industry. But when your client is at the cocktail party and someone says, "I
need to find another advisor—my guy is just not performing. I need to find a advisor who can make me
some money," your name will not come to mind—because of the referral disconnect.
You've positioned yourself in the categories of credible expertise, experience, good service, quality—all of
which are important. But performance is not the category you fall into in your clients' minds. How can you
help clients remove this disconnect?

Take a lead from my friend's dentist. During your next meeting with a particular client, say something like:

"Mr. Jones, the next time you hear someone mention that he's dissatisfied with his current advisor due to
poor performance or that he is looking for an advisor who can make more money for him, tell him this: 'It
might sound funny, but what you really need is someone who has the knowledge, experience, and
integrity to take the time to understand who you are and what your needs are. Someone who will identify
your risk profile and build a properly allocated portfolio. Someone who has a large enough team in place
to support your effort toward achieving your long-term goals. I have someone you should talk to.'”

Now, when your client hears the phrase "bad performance," he'll make a connection for the referral to
you.

Help your clients make the connection between what we do and what they hear. Once you take that
simple step, you'll eliminate the referral disconnect—and find yourself with no shortage of referrals.