The New Dynamics of Referral Generation

Beverly Flaxington

Beverly Flaxington is a practice management consultant. She answers questions from advisors facing human resource issues.  To submit yours, email us here.

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Dear Bev,

The referral environment has changed, maybe forever. We will get a referral from time to time, but only in the specific situation where one of our clients is asked for a possible recommendation, never the other way around where one of our clients actually brings up the topic of money management.  Discussion of financial advice among acquaintances has gone totally off the grid.  It has become an almost universally taboo subject. People are loath to broach any conversation about personal finances.  

Here’s an example. At a recent event, when each person at the dinner table went around telling the group what they did, I said I was part of a boutique money management firm.  There was dead silence and they couldn’t wait to move on to the next person. Before 2008, there would have been a host of questions coming my way.

What are your thoughts?

Louis D, Stamford CT

Dear Louis,

Many advisors would echo similar experiences. The game has changed from the days when the market was exciting for investors, to the last few years when an up-spike is cause for celebration. Investors are definitely more wary and hesitant.

But these markets represent a great opportunity for advisors to stand out and increase referrals. There are a few key things to think about, though, in order to get this working for you consistently.

In difficult times, investors need education. They want to understand what’s happening, why it’s happening and perhaps most importantly, how it will impact them. Make sure you are sharing education and information that could easily be passed around and shared with clients’ friends and families. And don’t just focus on the content; focus on the delivery. Make it easy to share.

Be clear about whom you best serve and why; take the time to paint the picture for clients of the type of people you help. Investors five years or less from retirement? Business owners who are thinking about succession planning? Dentists in private practice with five employees or less, who need retirement planning? The clearer you can be about the people you serve and why you serve them, the easier it is for current clients to identify these people in their lives.

Give clients opportunities to introduce friends and family to you – hold teleconferences, have webinars, have an educational event that doesn’t focus just on the current state of the markets, etc. Do things that allow a client to invite someone for their reasons, not yours.

On your second point, there are ways for financial advisors to be the most interesting people at a cocktail event or dinner table. Stay away from something as bland as “I work for a boutique money management firm.” Instead, think about the problems you solve for people:  “People who worry about whether they can send their children to college and retire, typically seek advice from me on how to do it.” Or, “I help people understand what the vagaries of the investment markets really mean to their long-term plans.” Or, “I make my living answering questions about investments and the market that most people are afraid to ask.”

In other words, find a way to make what you do interesting. People are filled with fear and have loads of questions. If you can be a safe place to get information and education, you’ll be the life of the next party you attend!

Beverly Flaxington co-founded The Collaborative, a consulting firm devoted to business building for the financial services industry in 1995; in 2008 she co-founded Advisors Trusted Advisor to offer dedicated practice management resources to advisors, planners and wealth managers.  She is currently an adjunct professor at Suffolk University teaching undergraduate students Leadership & Social Responsibility. Beverly is a Certified Professional Behavioral Analyst (CPBA) and Certified Professional Values Analyst (CPVA).

She has spent over 25 years in the investment industry and has been featured in Selling Power Magazine and quoted in hundreds of media outlets, including the Wall Street Journal,, Investment News and Solutions Magazine for the FPA. She speaks frequently at investment industry conferences and is a speaker for the CFA Institute.

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