Planners who structure their practices in a way that compels their best clients to mention them to friends and family will enjoy a steady stream of right-fit business.

There are really only three primary marketing methods that work for independent financial planners:

-- Event Marketing

-- Public Relations

-- Client and COI Referrals

Filling each of the three funnels is a sure way to ensure you have enough qualified client inquiries come down the spout and, ultimately, become right-fit clients.

If you missed my most recent articles in the three-funnel series, check out "Building Share of Mind as a Local, Vocal Name" and "Creating Perfect Events Can Create Perfect Clients."

This week's topic: Generating a steady stream of client referrals.

The No. 1 Way To Get More And Better Referrals

My friend Steve Wershing, CFP®, better known as "The Referral Doctor" and a regular contributor to Financial Planning, says that the No. 1 way to make sure you don't get a referral is to ask for it. Why? Because studies show that clients don't refer you to benefit you - they refer you to benefit themselves.


In his speech as last week's Business & Wealth Management Forum, Wershing told an attentive audience exactly what they need to do to get people talking about and referring them. The No. 1 way to start getting more and better referrals? Stop asking.

Instead, planners must structure their practices in a way that gets clients to mention them to friends and family when the opportunity arises.

Marketing With Accuracy And Precision

An essential element of the Wershing formula is to target market with accuracy and precision. In a nutshell, you must:

-- Create a unique brand. Use client feedback to help you improve your service package and bring in new business.

-- Communicate your value clearly, consistently and effectively. The more targeted and narrow your niche, the better.

-- Learn how to harness the natural social interactions of your clients by owning a spot on the client's brain.

"One of the primary problems I see in advisor marketing is that it all comes from the advisor's head," Wershing said. "Most of the articles and presentations I have seen that discuss developing a niche, describing a target market, and developing a value proposition regularly end with something to the effect of, 'Now go lock yourself in a windowless room, and come up with it.' That's not how the professional marketers do it - and neither should you."


When serious marketers such as Procter & Gamble set out to come up with a new product or service, the marketing department brings together the sort of people the company wants to sell to and then asks for their opinions. What is missing in their product line? How can they improve existing service? Is their value proposition clearly articulated in their marketing material?

The marketing people take that feedback back to the company, and that's what they start working on. But advisors tend to do one of two things (a) they try to come up with the answer on their own (b) they copy what other advisors are doing and saying - not good.

"Most financial advisors, when pressed to come up with a target market or to describe what makes them different from other advisors, have difficulty doing it," Wershing said. "And when they do come up with a description, it tends to be in the technical jargon on which we're all trained to rely. They actually end up using non-differentiators in an attempt to describe how they're different."

The reality is that most financial advisors don't know what sets them apart from other financial advisors. But there are people who do - they're your clients. They know why they chose you over other financial advisors and why they stay with you. They know the most valuable things you bring to the relationship. They know what you do that has meaning for them.


Systemic Feedback Is Key

"Systematic client feedback is a critical element in a referral marketing program," Wershing said. "And just as important as knowing what clients value is how they describe it. Your value proposition must be compelling to the people in your target market. This means it needs to be in their words. Advisors almost always have settled into a very small vocabulary with too many technical terms. They all use the same words. Not only does that make it difficult to distinguish themselves from other advisors, it may not be the language their clients use at all."

 In "The Economics of Loyalty: Anatomy of a Referral," a paper produced in 2010 by Charles Schwab, Texas Tech University and Advisor Impact, lead researcher Julie Littlechild noted that asking the right questions was one of the primary drivers of client engagement. Asking for and acting on client feedback were components of the relationships for a majority of engaged clients.

"There is a clear disconnect between client satisfaction, loyalty and referrals," Littlechild said.

"Referrals are and always have been something of a mystery," she added. "On the one hand, most professional advisors say that referrals are their one best source of new business. On the other hand, only a small percentage of clients actually provide referrals. And while a majority of clients are satisfied with the relationship, very few take the next step and share that information with friends and family."


The New Referral Conversation

Wershing says the key is to generate something he calls the "new referral conversation." Involve your clients in an ongoing conversation, and discover how they really feel about your service. If you can uncover client disappointments you have the information you need to give them the experience they desire.

As you work to increasingly thrill your clients, you will hear people tell you all sorts of things to do for them. But the key to driving client loyalty is not what gets told - it's what gets asked. The cornerstone of the client-driven practice process is soliciting client feedback."

What's Ahead

Look for me at the following conferences this fall:

Sept 22, 2012: Texas Tech University, Social Media Class, in Lubbock

Sept 29-Oct 2, 2012: FPA Experience in San Antonio

Oct 9-11, 2012: Loring Ward Advanced Symposium in Chicago

Oct 10-11, 2012: Securities America's Assistant University in Omaha

Oct 15-17, 2012: Tiburon CEO Summit in San Francisco

Nov 1-2, 2012:Ladenburg Institute of Women and Finance in Miami

Follow @marieswift on or "like" for breaking news and updates.



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