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On the hunt


Existing clients might be the best source of new business, but when on the hunt for client referrals, many advisers get caught tip-toeing around the edges

Most advisers are aware that the most lucrative force for expanding their business walks through their doors every day. An adviser’s existing client base is not only the source of a practice’s current revenue stream, but can also hold the key to future business.

According to the Association of Financial Advisers’ (AFA) white paper, Pathways to Excellence, 36 per cent of surveyed clients said the most important factor in adviser selection was referral from a trusted source. The study found a further 32 per cent of new clients had been referred by the adviser’s existing client base.

“People do know that they would be better off if they got advice, but they are fearful of getting it because of the bad perceptions in the media, and they are concerned about the fees and commissions,” Elixir Consulting managing director Sue Viskovic says.

“There was a very strong theme in that [AFA] research that people preferred to be referred personally to an adviser by somebody they trust.”

ProSolution Private Clients director Stuart Wemyss operates his business on a referral-only basis, after his own research found that financial planning businesses either grew by acquisition or organically through referrals.

“In terms of new client acquisition, it was the old 80/20 rule – 80 per cent was by referral only,” Mr Wemyss says.

“Financial services businesses have all these different marketing activities that might be going on, but really where the profit and quality was coming from was from referrals.”

So, with a clear demand for referral services, why aren’t more advisers tapping into their current client base to expand their business?

Mr Wemyss says his research found there are only three reasons that clients don’t refer, and all of them could boil down to poor communication by the adviser.

“As humans, we look for complex answers to complex problems but here it’s simple – it’s about communicating three things to clients,” Mr Wemyss says. “You’re looking to grow your business and you want referrals, the type of client you’re best served to help, and how to go about making the referral.

“So, they [clients] didn’t know what they were hunting for, therefore they didn’t know how to go out and hunt for it and when they found it, they didn’t know how to kill it.”


Founder and managing director for referral consulting practice Customer Return, Nathan Williams says that if advisers want client referrals, their first step should not involve the referral process whatsoever.

He says that engaging clients by delivering a high value proposition can be the most effective way to generate a successful referral programme.

“You need to earn the right for a referral and earning the right means you’ve got to first of all understand what your clients really think of your service” Mr Williams says.

The Pathways to Excellence white paper found that strong practice performance was a key driver of client referral, with 94 per cent of clients in so-named “top practices” saying they would refer their financial adviser if a friend or a colleague was in need of advice.

Mr Wemyss agrees that a strong value proposition is a key element of generating referrals.

“We look at different strategies but it really comes down to … earning the referrals, building strong relationships and making sure the trust is there through service and great advice and so forth,” he says.


Once a strong business proposition is in in place, Ms Viskovic says it is important for the adviser to articulate that they are actively looking for client referrals.

“I think a lot of advisers do it in a kind of ‘off the cuff’ way,” Ms Viskovic says.

“Some advisers will say they talk about it [client referrals] all the time, but when we get into the detail, they do it as almost a throwaway line and the clients either don’t take them seriously or they don’t have a call to action from the discussion.”

Mr Williams agrees that articulating the need for referrals is imperative.

“Some clients don’t really know that the adviser is looking for referrals, so there is not really that expectation, or that seed hasn’t been planted,” Mr Williams says.

“A lot of people have the perception that ‘Oh my adviser is busy, I don’t want to bother them with a referral’, so the adviser has to communicate the fact they’re open to receiving referrals.”


Another roadblock to securing client referrals can often be that the client does not know how to approach the subject of financial advice with their friends and colleagues.

“[Some clients] saw the opportunity, but they didn’t know how to make the referral or how to introduce the client,” Mr Wemyss says.

“They wanted to be respectful to their friend or colleague but at the same time, give the adviser a chance of winning the business.”

For this reason, Mr Williams says it is imperative that the adviser sets up a process for client referrals, which is then articulated to existing clients.

He says if there is a referral process in place, an adviser can educate their clients to listen out for certain comments within their social networks, so they know when might be a key time to refer.

“It refers to your clients being an extended sales team,” Mr Williams says.

“It’s not so much about asking for referrals. Rather than trying to get names out of people, it’s about putting the adviser's name into their client’s mind.

“That education rests with the adviser – they need to make it easy to get referrals.”


With the internet changing the way people connect with each other, savvy advisers can get much more creative when it comes to client referrals.

Ms Viskovic says that one thing she has come across in her consulting work is the use of social media to make referring more convenient for existing clients.

Ms Viskovic said that making a post or tweet about their financial adviser can be a very simple way for clients to start the referral process.

“Not sharing any personal information but just saying ‘I just had a great meeting with my adviser’ or something like that,” she says.

“It makes it simpler for the client to do because it means they don’t have to start talking to people at a barbeque about their personal financial affairs.”


After a referral is made, as a matter of courtesy and to ensure the client will want to refer in the future, it is important for advisers to follow up with their existing client.

“I think one mistake we do see is people not thanking people for the referral,” Ms Viskovic says.

“You’re not going to share the financial information of the client that they’ve referred to you, but at least go back and thank them. That can also re-trigger them to remember to refer often.”

Mr Williams says that for clients, referring a friend or colleague to their adviser can put their personality credibility on the line, so following up with a client can ensure a sense of goodwill.

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