Building a Strategic Referral Process in Your Financial Advisor Practice
Mine Your Book Of Clients – The 80/20 Rule
We’ve all heard of the 80/20 rule, the Pareto principle, where 80% of your revenues are generated from 20% of your clients. That top 20% of your client book is where your focus should be. Once you’ve narrowed that list down, your next goal will be figuring out how you can replicate them. I assume, in this industry, everyone knows this basic concept, but for whatever reason, advisors get stuck here and don’t take proper, thoughtful action.
What do these 20% truly value about your service?
The best sources of new referrals are clients who are already very happy with your products and your services. Understanding what precisely it is that these clients value in your practice, in my opinion, is vital.
Do they most value the service you offer, the way you deliver the service, the communication and relationship you’ve built with them, the outcome they get from your service… what is the one thing that makes them eager to talk about you to their family or friends?
Once you know the specific thing that they value, you can leverage it as a unique value proposition for clients going forward. Understanding this concept is where we want to start. Once this is clear, we’ll look at how you replicate that top 20%.
Build their profile – how did they come to be a client in the first place?
Now that you’ve defined your top 20% and discovered what they value most about working with you, it’s time to dig deeper into this list clients. You need to build a full profile of each of these clients. This needs to be purposeful and intentional. You need to take the time to do your homework on what the composition of your top 20% is.
You’ll need to compile the following information for each avatar:
- Where did they come from? What was the original source?
- Were they referred to you by a center of influence?
- Did they come from a particular industry?
- Are they retired or still working?
- What are their general demographics?
- Where geographically are they located?
- How did they become a client of yours to begin with?
Now that you’ve built a general profile, it’s time to get more specific. You need to know them beyond the way they look ‘on paper’. And more than the goals and objectives you work with to build their portfolio. Here, I’m talking about getting more personal. What do they do for fun? What are their hobbies? Where do they spend their time? What are some things that are truly important to them? What is their passion or special interest? This information will be key in your discussions with them. It’s time to take this relationship further than the typical client meeting.
Everyone Has A Circle Of Influence
You’ve heard this term, right? It’s a term used across many service provider based industries that generally defines your circle of influence; your network, your friends, your relatives, and anyone else you are directly connected to.
Now that you’ve defined your top 20%, discovered what they value most about working with you, and build out their profile, it’s time to start understanding who their circle of influence is. These are the people that they know personally (these people are likely very similar to them). It’s high net worth individuals hanging around with other high net worth individuals. It’s just that simple.
So, you need to figure out who their circles of influence are… how exactly do you do that? You can approach this research project from various angles. You can use social media platforms like LinkedIn, Facebook or Twitter to start some general searches. For example, if you know that someone has retired from a specific industry that might be in your general location and they were a senior manager in that industry, they are likely associated with other senior managers. In this scenario, you can do a little homework to find other managers who are close to retirement or may need your specific services in that area. That’s why we want to identify and have those names and situations in the back of your mind.
The next step is asking the client directly. It’s important here that you are not just asking him to send you any referrals he comes across, but to specifically ask him for an introduction. Remember that list of connections you found when researching on social media? You know some of his personal connections, and you’d like a direct introduction to those people. So you just ask: “Hey, do you mind introducing me to Joe? I know that he used to work with you and is a senior manager at your former place of employment. He’s probably getting up to the same place you were in when you started considering your retirement. Would you mind introducing me to him?” So you’re very specific and very strategic in that introduction.
To further the potential of building a relationship after that introduction, make it less intrusive. Look for an opportunity to be introduced to this person socially. Somewhere they get to know you as a person, versus you necessarily as a business person. A few examples of a typical social meeting with a prospect would be getting together for lunch or dinner or going back to their special interest and playing golf or tennis.
For more elaborate events, be sure you check your top 20% list and their circles of influence and send personal invites to these clients and prospects based on their profile and special interests. If you have a golf pro speaking at a company event, be sure you invite those who have an interest in golf! Selectively inviting prospects to events that are aligned with their interests creates a non-threatening environment where you’re getting a chance to meet them. Once they get to know you, they’re going to see the same value your client sees in you and say, “You know, I need to sit down and talk with you.” This is a non-threatening and authentic way to build great relationships with prospects and continuously replicate your top 20%.
So the key takeaway here is simple, how are you generating referrals? Are you being intentional and purposeful? Or are you sitting back and being reactionary and passive. You can’t count on allowing clients to – when they think of you – send you random business prospects. This is the number one way not to build a strong client book. Your focus should be to come up with a very strategic, very intentional, very purposeful process that they will replicate your top 20% clients. That’s it.
Do You Know Who’s In Your Top Twenty?
Information does nothing for your bottomline without action. Now that you know how to mine your book of clients, you just need to take one step to get started and keep working through this checklist to keep your momentum. Once you’ve established this foundation, update it regularly and keep it accessible and top of mind moving forward.
Here’s the checklist for reference:
- Gather your entire client database
- Narrow this to define your top 20%
- Find the unique thing these top 20% value
- Build a detailed profile for each of these clients
- Research the circle of influence for each of these clients
- Request an introduction to specific prospects from these clients
- Create opportunities that are authentic and casual to meet these prospects
- Keep these prospects ‘top of mind’ as you continue to network and build relationships
If you get stuck in the process or are hesitant to start conversations with these clients, the best thing you can do it just get started. Action creates clarity. Take action and keep moving through the process. If you need backup, this is exactly what we do at Signature Wealth Group – we support advisors as they structure, manage and grow their practice. Reach out to us anytime you need extra support in your corner, and we’ll guide you down this path that we (after decades in the industry) know so well.
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