Systemising referrals to scale client growth

According to the latest Dimensional Global Advisor Study, which surveyed over 800 advice firms globally including 83 in Australia and New Zealand, found referrals from existing clients was the top channel of new client growth.

This was followed by referrals from centres of influence and from a parent company.

Adviser Ratings research in its Australian Financial Advice Landscape Report also found that 81 per cent of practices cite existing clients as their most valuable source of new business, up from 71 per cent a year ago.

Speaking to ifa, Paul Turner, head of adviser group for Australia at Dimensional, said it was worthwhile for advice firms to systemise this process to ensure it is being enacted across the whole firm.

“Systemising the referral program and making it consistent across all client bases is important, firms should build the question of future client referrals into their process so that 1) you know what people are being asked or who has been asked and 2) it provides a mechanism to help train people internally who may not have had that experience before,” Turner said.

Commenting on which members of staff were most likely to be enacting referrals, he said this traditionally would have focused on the owners and founders, but this could fall away as they move into practice management.

“Typically, the owners and founders who built the business, they would be the ones who were going and talking to a lot of people to build a client book. But as those businesses get bigger, they are spending more time managing the business and it is up to other people in the business to engage those new prospects,” Turner said.

“Make sure the right people have the right skills and the firm has the right systems and processes in place for referrals.”

Adviser Ratings added the need for referrals is particularly present at specialised firms where the practice was targeting a specific client base or demographic.

“Practices are also becoming more specialised in their approach to client acquisition,” the report said. “Data shows that larger practices, with five or more advisers, are particularly focused on strategic growth, with 80 per cent targeting specific client types, compared to 54 per cent of solo practices,” it said.

“This increased specialisation enables practices to enhance service quality and operational efficiency by focusing on clients with similar needs and value profiles.”