Referrals


Golden State has had a great year; winning 73 games, receiving a new record, and now entering the NBA Finals for the second year in a row. They did not achieve this by following the typical style of play. Instead, they moved the boundaries of where to take shots from and created space with great passing. In all, they looked at how the game of basketball was played and changed it. This is what we are going to do with referrals. SHAPING THE STRATEGY ONE ADVISOR AT A TIME Let’s first begin with a typical story on how referrals work and how one financial advisor changed the way he was operating. During one of our recent breakfast meetings, my good friend and fellow financial advisor, Paul asked me for advice on how he could ramp up his company’s number of scheduled prospect meetings. He was reaching out to people, but nothing was happening. Either they did not respond to him, they felt uncomfortable, or they were unsure of whom to refer. Therefore, we had to change the strategy in order for him to compete and retain referrals, just like the Golden State Warriors changed their strategy of play to win more games. I instructed him to follow this process. Over the course of two weeks, he spent a total of four hours sending 11 emails to prospect referral partners. Of the 11 emails sent, nine responded with a yes! He sent four additional emails to set up eight possible meetings, five of which occurred. Paul went from not having any meetings in one week to having five scheduled the next. All of this happened by putting in four extra hours of work. THE TYPICAL REFERRAL PROCESS The typical referral process has four steps. Each step of the process faces the risk of completely and utterly breaking down. Perhaps the exchange does not happen; the referral partner is not suited to make an introduction; the potential partner responds by saying he or she is not looking for a firm, or there is simply no interest. Consequently the typical referral process is outmoded. THE NEED FOR A SIMPLE APPROACH To make an impact, the process needs to be easy. Unfortunately, the typical referral is NOT an easy task. Your first goal should be to make it as effortless as possible for you and the referral partner to succeed. Next, craft and deliver a personal introduction (Note: Your introduction should not be a sales pitch for the product or service your company provides. If you don’t like being sold to, neither will the next person). THE FIVE-STEP PROCESS In the ever-competitive marketplace...

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There’s nothing like 1980s comedies for an analogy. Which one can you relate to more: Brewster’s Millions or Money Pit? My goal at AUM in a Box is to help advisors transform their practice into a business. What’s the difference? A practice results when the advisor is good at investing, financial planning, or just relating to people, but does not have the systems and procedures in place to run the organization like a business. A business is a business—one with well-thought-out practices and procedures to generate consistent clientele and vital services. Brewster’s Millions stars Richard Pryor, who in an inheritance receives a million dollars and can’t do enough to spend it. Wouldn’t we all like to have that problem with our advisory business? Alternatively, Money Pit, staring Tom Hanks, sees dollar after dollar slipping through Hanks’ hands as he attempts to keep a house structurally sound. As much as you do not want to admit it, you may have a money pit on your hands. How? Over the past year, we have revealed several leaks in your practice—from employee relations to poor sales techniques. The leak I’m referring to in this post is the lost opportunity from referrals. Leaks create a money pit. If you don’t have a consistent flow of referrals, then you may have a practice that is costing you money and leaking your profits right out the door. Putting the right procedures in place makes it easy for your clients to refer you and plug up that expensive leak (and turn your practice into a business). Referrals for financial advisors provide you with a better business structure as long as you put procedures in place to consistently and respectively generate referrals. As we all know, it costs much less to acquire referrals than cold calling prospects, which leads to better profit margins. Referrals also typically translate into an easier sale because there is much less sales resistance. We all would like more clients, but how do we go about doing that. How do we create a plan for finding referrals? There is a way to repair your practice and turn it into a business without too much money at all. Plus, it can used over over and over again. To find out the exact strategies we suggest for plugging leaks, click here and get access to a FREE Live Broadcast my friend and bonafide referral guru George Guerra is holding on Thursday, November 6 at 6 p.m. MST. During this LIVE broadcast, George will reveal how to design the perfect system for plugging your leaks. You’ll discover: Why you should plug your leaks, why most advisors...

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If you’ve been following my entries, you can see that I am a huge advocate of having a process. Having a process creates efficiency, predictability and accuracy. However, you can imagine my astonishment after speaking with 721 advisors in 2012 when more than  90% of those advisors did not have a plan or a process (read more about my experience in A METHOD, OR RATHER PROCESS, TO THE MADNESS: WHAT FINANCIAL ADVISORS CAN LEARN FROM A FURNITURE GURU). Most of these advisors indicated that they rely on referrals for sales.  FANTASTIC! Naturally, several questions followed:  When do you ask for the referral? What do you ask your client? Does the client know who you are looking for in an ideal client? How does the client make the referral? What do you do follow up with the prospect? When I asked these questions, I typically got an awkward silence. The next time you ask a question, start counting how long it takes the person to answer. I bet you get a response by the time you say four one thousand. Such was not the case during my 721 conversations. The objective of this entry is to provide you with a defined process for capturing referrals. The ideas are from Townsend Wardlaw  http://townsendwardlaw.com, who is a sales architect and member of the Dunn Warren Investment Advisors board. Reality Check The reality is that people make referrals to look good.  Your clients want to look good in front of their friends. Clients want to be helpful and provide value to their contacts. Your job is to make it as easy as possible for your clients to look good. Clients need to believe that you provide value, you have a specific process and you will work professionally with their friends and contacts. You can capitalize on referrals by following our process outlined below: 1.     When to Ask for the Referral Sit down and create a list of all clients that have used a service or a product that you provide. I find that creating a spreadsheet where you can also put when you contact the clients, notes and names given is helpful. After you have the list, call you client and ASK for the referral. 2.     What to Ask the Client If you have been using the questions we recommended in WHY EVERY FINANCIAL ADVISOR NEEDS A NORM PETERSON, you probably already know what to say.  When you call and ask for the referral it is also a great time to understand what the client appreciates most about working with you. Begin the conversation by stating exactly what you want to accomplish: “I...

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Recently, I met with a center of influence, who happens to be a lawyer with a Taxation LL.M., which is an impressive combination of three years of law school and a year of education in taxes.  I highly recommend consulting with a Taxation LL.M. when seeking legal tax strategy—their knowledge and strategic capacity is phenomenal. As it turns out, many advisors try to meet with the person I met with in an attempt to exchange referrals. My contact is not impressed with the approach, and his disdain for advisors is evident. Ironically, though, he needs referrals himself, but he is unwilling to team up with advisors because he believes they are just glorified salespeople. My contact, the lawyer with a Taxation LL.M., is a center of influence for me—someone who is in a position to have an impact on prospects in my target market. As was the case with my contact, it’s not always easy to attract and work with centers of influence … the trick is to show them your true colors. And by colors, I mean your processes and procedures that will assure your COI that you are a strong, legitimate referral for his clients. You aren’t handing out free referrals to just anyone—you want to know that the person you are recommending is going to do a good job. So, why would you think your COI would expect anything less? Your COI wants to look good in the eyes of his friends/clients.  To do this, show your true colors. Start With How You Wow To let your true colors shine, start by showing your centers of influence how you WOW your clients. The best way I know of doing this unveiling your discovery process.  The discovery process is a defined procedure of asking questions that get to, or rather diagnose, the individual’s needs. In many cases, clients do not know what they need.  Therefore, it is your job to figure out what would benefit them. Some individuals need tax planning, others cash flow management, while some are concerned about acting as a benefactor to their children or charities. This is your chance to shine by truly understanding their needs. The diagnosing conversation I use in my discovery process is from New Solution Selling, by Keith Eades. The questions create a roadmap for developing the who, what, why and to what effect something is occurring.  The questions are open-ended for the client to elaborate, but you will have to dig deeper, often prodding “tell me more.” The nine questions are: What are you having difficulty with? What is the cause of the pain? As I understand it...

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