One of the great misconceptions in our business is that clients "give" us referrals. As in offer us the name and number of someone they know as if it were a gift to us or a reward for a job well done. Clients may give us a gift occasionally because they like us or because we did a good job for them. However, if you want to learn how to attract a significant number of ongoing referrals, you must first understand the dynamic that causes people to make referrals.
We all make referrals. As social animals, we have a need to. It is social currency, a way to expand influence, networking. When we introduce a friend to a solution or experience they seek, we get a reward - we feel good about helping a friend and our friend thinks more of us for giving them something they were looking for.
If you as an advisor embody a solution or experience that fills a person's particular need, you enable your clients to experience the reward of telling people about you when they hear their friends expressed that need. For this to work, you must say more than most advisors say in their marketing.
Good customer service (even great customer service), wealth management, customized recommendations, trust, our people, and integrity - none of these is specific enough to represent a way to satisfy a specific need a prospect may express. Your clients are not likely to hear a friend say "if only I could find an advisor who provided me customized recommendations." When was the last time you heard someone say "I wish I could find a financial advisor who employed good people?"
That's why a niche and specialized expertise are so important. If you specialize, for example, in executive benefits and have expertise in concentrated stock positions and stock options, you represent a solution your prospects may describe a need for. It is easy for me to imagine a conversation where one of your clients hears a friend say "I just got another award of options, and I'm beginning to wonder if I should do something different now that I have so many." If your client hears that and knows of your expertise it is likely that she will make a referral to you.
So, if people want to realize the benefits of providing a referral (obtain social currency, expand influence, etc.) and can accomplish that by directing a friend to you because they believe you will help them solve a problem, they will make a referral to you. It's all about helping people remember you when they can benefit from mentioning you. It's not about giving you names when you ask, it's about remembering to refer you when the opportunity arises.
You have to prepare clients for the opportunity to refer. "Who can you think of that could use my services?" is about asking your client to help you. "I know someone who can help you solve that problem" is about a client helping a friend. And when they can help a friend and gain that social currency, they will make referrals.
Stephen Wershing, CFP® is President of The Client Driven Practice. He coaches financial advisors to be more effective and successful, and attract more clients and referrals, by developing more client-connected and client-driven practices.