How to ask for a referral without damaging the adviser-client relationship

It’s an astounding fact that almost 90% of advisers did not ask for one referral from any of their clients in the past year – even though many think they did.

Speaking to advisers and practices daily, I know that most advisers out there want more referrals, and ideally, more targeted client opportunities. Yet there are very few advisers placing focus on the referral conversation and majority of the reasons I hear for this lack of motivation stems from the fear of rejection.

Advisers don’t like putting themselves out there, not having confidence in their own abilities and doubting their value at times. However, there is another key reason which spiked our interest of the Invesco Global Consulting research team, that advisers are fearful that asking for a referral may be harmful to their relationship with their clients.

This is a scary prospect – that the way most advice businesses grow, could be damaging to existing all-important adviser-client relationships. Talk about counterproductive!  We wanted to investigate this in more detail, and what we found was daunting, as it was proof that adviser intuition was in fact correct. When positioned the wrong way or brought up at the wrong time in the conversation, the simple ask for a referral is emotionally damaging to a client relationship.

Invesco Global Consulting, with our partner Prince & Associates¹, researched the top ten most common proactive referral strategies used by advisers and focused in on the top three: the ‘free offer’, the ‘obligation’ method, and the ‘promise of exclusivity’. What we found wasn’t pretty – the free offer doesn’t damage the relationship but does undermine an advisers’ value. The other two methods guarantee damage. There is a better way. With our ‘Preferrals’ method, there’s no one-size-fits-all script but rather, a personal appeal that emphasises an individual adviser’s genuine thoughts, feelings, and concerns. It’s a way to stop the adviser from asking for the client’s help and instead, the adviser is offering help to the client.

All Preferrals begin with a line that says something like this: “You have probably noticed that I don’t often ask you for introductions. That’s because I never want to make you feel uncomfortable or seem like I am more concerned with my business than your family’s financial well-being.”

The second step is where you can tell your clients your purpose that might sound something like, “I am so passionate about providing financial advice and helping Australian families reach their goals that at times can seem so far out of reach…. For those reasons, if there is anyone that you care about, who you think could benefit from another pair of eyes, I would be glad to help them.”

There is so much going on here, but remember, everything about a Preferral is client focused and the key is the strategic use of the word ‘help’ and making sure that you don’t end in a question. A Preferral is a statement of value if nothing else.

It is important to note that this isn’t a script; this is a framework for every adviser to build their own Preferral that works for them. I see advisers getting so tied up in learning specific scripts, but I don’t think you can use a script, particularly someone else’s script, or you’ll never be you, and you’ll never come across as authentic.

The Preferrals strategy works because it doesn’t upset the equilibrium of the adviser-client relationship. It’s incredibly disarming for a client to highlight – ‘You notice I’ve never asked for a referral (and if I have, I won’t again). I’ve never challenged the expectations in our relationship and I’m not going to start now.’ The second step allows an adviser to express genuine passion for what they are doing and how they are adding value by the work they have chosen. The entire Preferrals method is a combination of strategically chosen language that ultimate says, ‘I’m here for you, and the people you care about’.

¹R. A. Prince & Associates, Inc. study of 338 advisers with an income between $200k and $500k after expenses and before taxes.Invesco Global Consulting is a unique resource that exists to help advisers in the three areas all advisers consistently focus on – winning new business, retaining existing clients and growing their wallet and market share. We focus solely on the importance of the client relationship, methodically researching the language of our industry and the emotions associated with it to create actionable and implementable practice management and business strategy program

Eleece Quilliam