Competing for Referrals
Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives
A list of Dan Richards previous articles appears at the end of this article.
In past articles, Ive discussed how to get prospects off-the-fence when they are thinking about leaving their advisor by providing concrete proof as to why they would be better off with us than where they are now.
Its not only investors on-the-fence that need this kind of evidence even when prospects have been referred to you, you still need to marshal compelling arguments about the benefits theyd get by working together.
At one time in the distant past say ten to fifteen years ago receiving a referral was highly correlated to converting that referral into a new client. It wasnt quite a slam dunk, but it was pretty close.
In our ongoing research with clients who have selected new advisors, we see a couple of important findings.
First, referrals continue to be critical in attracting clients half of investors utilize a referral from a friend, neighbor or colleague when selecting a new advisor.
Second, over half of clients who use referrals talk to multiple advisors before settling on who theyll work with in essence, they shop for advisors the way they would for any important purchase.
This has huge implications unlike in the past when getting a referral won you the client, today getting a referral increasingly only gets you into the game and gives you the right to compete for a client.
The next question: whats your strategy for winning that competition?
A while back, I talked to highly successful advisor located in a major city about his approach.
When he receives a referral, he contacts the prospect, has a brief discussion and arranges a meeting at the advisors office. (A strong case can be made that this first meeting should instead be at the prospects office or over a coffee near their workplace, but thats not this advisors approach.)
This advisor then emails the details of the meeting to his assistant and a letter goes out confirming the date and time and providing directions. With that letter goes a folder with five or six sheets of paper background on the advisor and his firm, a recent report from his firms research department and two or three articles which this advisor has written in a local paper.The advisor could wait to mail this package out but instead sends it by courier.