Referrals to attractive potential clients are the lifeblood of a financial advisory practice.

However, not everyone who is referred to a financial advisor will be a worthwhile client. How can advisors focus on the A-listers and avoid devoting huge amounts of time to those they don’t seek?

The source of a referral can be a key indicator, says Becky Krieger, shareholder and senior director for wealth management teams at Accredited Investors Inc. in Edina, Minn.

“Typically, professionals such as accountants and attorneys provide us with qualified referrals,” she says. “If they’ve worked with us, these professionals know how we practice and what type of clients we serve.”

However, advisors also may get referrals from clients.

“Those can be more difficult to judge as they may or may not be best suited for our firm,” Krieger says.

The lack of suitability may be financial or temperamental, if individuals are looking for hot stocks, say, instead of a long-term plan to meet their goals.

The first step in screening referrals is often a phone call, Krieger says.

This helps her to learn something about them and what they might want from an advisor. That is followed by face-to-face meetings with promising prospects.

“If we agree that working together does not make sense, I’ll provide the names of a couple of other advisors who might be more suitable,” Krieger says. “As former president of the Minnesota Financial Planning Association, I often know advisors who might be a good fit.”


Similarly, Christopher J. Cordaro, a certified financial planner and the chief investment officer of RegentAtlantic Capital LLC, in Morristown, N.J., tries to make sure that those referred to him would be suitable, prior to personal meetings and doing something to make an impression.

“In some cases, though, we do some work for them, meet with them and then find out they are not appropriate prospects,” he says.

“Then we do our best to help them out,” Cordaro says. “We either show them how to do it themselves or refer them to a planner who would be a good fit.

Cordaro realizes that some observers may see such an effort as a waste of time.

“I see this as spreading good karma,” he says.

“Many times, I have met with a prospect and found out that he or she did not have the resources or need for my services. I’ve helped these prospects get onto the right path and told them to call me when they get to a certain point,” Cordaro says.

“Years later, I’ve gotten calls from some of those people, when they are at our minimum, ready to sign up,” he says. “Good things come from good deeds done.”

Donald Jay Korn is a New York-based financial writer who contributes to Financial Planning and On Wall Street.

This story is part of a 30-day series on how to generate the best referrals.

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