The Wrong Ways to Ask for Referrals

Dear E.O.,

Every time I hear an advisor say they are going to ask their clients for referrals or ask them to help the advisor grow their business I am reminded of a time I had someone here to clean my carpets. He did a very nice job and was quite polite during the process. At the end of the time, he handed me a form where I was to fill in the names of three of my friends who he could call and let them know how happy I had been with the service. My friends are all busy and would be furious at me for giving out their personal information. I refused to do it.

It is not completely analogous. But we need to change the mindset and language around how we think about this process in the financial advisory space. Here are some thoughts I often share. I hope something here will resonate with you to find how best to approach this initiative:

1. It is about referring. It’s about offering an invitation. “Who do you know who is like you that you can refer?” I don’t know anyone like me. What aspects of me are you talking about? How do I refer them to you? Am I getting paid a commission for doing so? The concept brings up a number of difficult ideas in someone’s mind. Instead, an invitation is polite, it infers you have something to offer someone they care about, and you are inviting them to offer it out. Change the frame – from a request that they refer you because you have earned it based on the work you do, to an invitation to help their loved ones learn more where you will extend time to talk with them and explore.

2. This isn’t about growing your business. It is about helping those who your client cares about. If there is one common theme among most human beings, it is that we liked to be asked for help and we like to help others. You help people. You bring answers. You solve problems. You make things happen. Of course, you grow as a result. But that isn’t your lead. Your lead is the work you can do to change someone’s life for the better.

3. Your client isn’t your salesperson. In the hundreds and hundreds of meetings I’ve had with advisors and often with a client they are hoping will “refer,” I’ve learned the client doesn’t often know (a) who to talk to, (b) what exactly to say, or © how to share their own experience without getting into details about their life they might like to keep hidden. It isn’t because they don’t like you or value what you do; they aren’t saying something to others because they don’t know how. In many cases, they don’t even know exactly what you did for them! It is your job to retell, resell, describe the ideal situation where you can help and give them language and ideas about what to say to extend the invitation to discuss more with you.

4. You might put a client in an awkward situation. When I was younger, I had a friend who I thought was the wealthiest person I knew: enormous expensive home, beautiful car, kids in private schools. I was only about 30 years old and thought they must have been a multi-millionaire. Fast forward a few years and they needed to borrow money from me. I learned they were leveraged to the hilt. I share this to say that a client might be hesitant to recommend someone not knowing exactly what their financial situation is. It can be awkward to introduce the advisor when the advisor might not be able to help, or the friend might be embarrassed. Have a plan B. Tell your client, if they were to extend an invitation, what you will do if the fit isn’t good. Give them insight in advance.

5. Emails and letters are tacky. I’m sorry – I know advisors do it. I get emails all the time from advisors with a note at the bottom “Don’t keep us a secret.” I recently got an email from an advisor I didn’t even know asking me who I knew that I could refer. If you want to extend an invitation, you don’t randomly blast out a request. You cultivate a discussion. You guide the client. You are specific and helpful to them. Could you get a response from the blast? Sure, but how many people will delete it, as I do with the ones I receive, because they find it distasteful? You run the risk of alienating people and you won’t even know it because they won’t respond.

Find the opportunities to extend the invitation but keep human behavior and relationship principles in mind when you do it. When you do this, new opportunities come along regularly. Good luck!

Dear Bev,

I am a junior advisor working with a very hard-driving senior advisor. My style is more measured and laid back. His is forceful and has no fear. I wouldn’t mind the differences, but it is increasingly uncomfortable to sit in meetings with him where he will regularly end by asking a client, “Who do you know that we should be talking to? We had our best year ever last year and want to exceed that this year and we need your help.” I can watch the client sit back in their chair taken aback. Sometimes the client will offer up a name or idea, but most times they respond by saying, “I don’t really know”.

I want to coach my senior advisor to be more graceful in approach. But it is hard when I’m the junior and he is making $3 million a year doing what he is doing.

W.D.

Dear W.D.,

Does your senior advisor do this because it works? Is he seeing good results long-term? If he is making $3 million, he is doing something right! I’m not giving him a pass, so to speak, I’m just pointing out that he may believe this approach is very effective. I see it all the time. It’s hard to get people who are by all outside definitions successful to see there could be benefits to modifying what they are doing. And the dynamics aren’t in your favor with you being the learner, the junior person coming up the ranks.

However, there could be an opportunity to adopt a curious, questioning mode with him the next time it happens. When you see the client physically reacting in a negative manner, try asking questions:

1. Did you notice how she/he/they recoiled a bit when you asked them who they knew? (If the advisor says yes…) What do you think that was about?

2. When clients respond negatively as he/they/she did just now, how do you determine what approach you will take next time?

3. What about this approach do you believe is most effective? What is least effective?

4. What other ways have you tried to uncover opportunities with clients?

Do this as if you are learning for your own growth. If the advisor has reasonable emotional intelligence (EQ) and self-awareness, hopefully he will start to think about what you’ve asked and determine in his own mind how this approach could be off-putting to clients.

Beverly Flaxington co-founded The Collaborative, a consulting firm devoted to business building for the financial services industry, in 1995. The firm also founded and manages the Advisors Sales Academy. She is currently an adjunct professor at Suffolk University teaching undergraduate and graduate students Entrepreneurship and Leading Teams. 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, MSNBC.com, 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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