Curian Makes A Common Mistake In Explaining A Drop-Off In Referrals


A volatile or declining market is too easy and superficial an explanation why clients are not referring.

Curian Capital, LLC, a money management platform, just released its annual survey of 1,000 advisors. In it, 77% of advisors listed acquiring new clients as their top goal for the year. The survey also noted that advisors are receiving fewer referrals than they did last year.

The story about the survey noted comments by Mark Schoenbeck, senior vice president of marketing for Curian. “Clients’ reluctance to urge friends or family members to work with their adviser is a function of the negative news and opinions about the economy” the story reported.  “That tends to make them feel less likely to want to go out on a limb by suggesting that their friends work with their adviser, according to Mr. Schoenbeck.”

I disagree. And looking more deeply into the possible reasons for the drop-off in referrals can lead to a strategy less reliant on market conditions.

Clients risk their relationships and reputations when they make a referral to a financial advisor. However, I do not believe that the ups and downs of the market elevator those risks – unless the advisor has established that delivering returns is their primary value proposition. And I believe many advisors have inadvertently done exactly this by failing to consciously design and communicate a better value proposition.

If you represent a solution or experience that your ideal client needs or wants, assuming the solution is not consistently positive portfolio returns, prospective clients will be attracted to that regardless of market conditions. Clients and centers of influence will continue to mention you when they meet prospective clients who are looking to solve the problem you specialize in. Whether the market is up or down should be of little significance to your ability to deliver on your value proposition.

If you find referrals disappearing when the market gets volatile or declines, don’t blame it on the market. Take a look at your value proposition instead. It probably needs rewriting or a better communication plan.



Since posting this article I had a conversation with Mark Schoenbeck. It turns out he believes strongly in target marketing for financial advisors and how that can help in attracting referrals. Mark fell victim to the risk all of us face in the public realm: you may talk with a reporter for 20 min., and what gets published might be a single sentence that doesn’t necessarily relate to your point.

My point above holds true. If you fail to identify yourself with a value proposition that goes beyond portfolio returns, you run the risk that your client will assume that positive returns are your value proposition. Mark, and Curian, believe that. The results of their survey update for this year drives home how important that is.

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