What’s the one thing you can do to attract more referrals? It’s a trick question. It depends. And, there isn’t one thing.
Those are two of the conclusions of a new study I recently conducted with Julie Littlechild, president of AbsoluteEngagement.com, in partnership with SEI. The results of that research are reviewed and explored in a new paper released by the SEI Advisor Network, What Makes You Referable? The Elements of Advisor Referability, which you can obtain here.
In brief, we conclude that referrals are not the result of a single activity. In fact, financial advisors compromise their ability to retract referrals by approaching it tactically. Implementing a campaign to get more referrals from clients over a limited span of time does little to build long term business development. Building specific elements into a service model and brand is more effective in systematically attracting more clients on an ongoing basis. In this study of 512 financial advisory firms, we confirmed that successfully attracting referrals is the result of a framework of characteristics and habits, elements of referability. We learned that advisors who approach referrals strategically attract more referrals.
Included among these elements is:
- A clear understanding of who you are trying to attract
- When and how you communicate to those target markets
- Customizing what you do for those target clients
- Successfully differentiating yourself from other financial advisors
- Having a system for tracking and monitoring the progress of people who have been referred to you
More significant, assembling a strong framework holds the potential to dramatically increase the number of referrals and advisor can receive. While advisors in the study reported receiving referrals from an average of 4% of clients, separate research conducted by Littlechild has established that over 30% of clients on average (and as high as 50% of high net worth clients) report having made a referral in the past 12 months. Advisors who attracted the most referrals in the study, who we refer to as highly referable, comprising the top 15% of respondents, brought in more than triple the number of referrals attracted by the average firm.
It was a wonderful opportunity to partner with Julie and the SEI Advisor Network to conduct this research. I am even more excited that it is a key component in a series of tools in the new SEI ReferralBuilder program. You can get your copy of the full 20-page Elements of Advisor Referability report at the SEI Financial Advisor Knowledge Center here.