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Referral marketing ideas for financial advisors

Referral marketing ideas for financial advisors

Whenever someone is considering buying a new product or trying a new service, few things move the needle more than a personal recommendation. The same is true for people seeking financial advice.

Referral marketing is an incredibly powerful – though often underutilized – tool that RIAs can use to expand their client base and drive business growth. 58% of high-net-worth individuals say they found their advisor via a referral, yet less than 20% of advisors report asking for referrals consistently. 

By tapping into the trust and goodwill that’s been built with existing clients, advisors can gain access to a broader network of prospects. Leveraging these strong relationships can result in more high-quality leads in your pipeline – and more clients for your business.  

Why is referral marketing important for financial advisors?

Referral marketing is a key strategy for advisors for several reasons. Firstly, it engenders confidence. When a satisfied client refers someone, the prospect usually approaches the advisor with a higher degree of trust compared to those gained through cold outreach. 

Secondly, it significantly reduces the cost of customer acquisition, which often includes expensive marketing campaigns and time-consuming sales processes. A referral is essentially a free lead. Also, referred clients tend to be more loyal and profitable, as they often hold a similar profile to the referrers.

Finally, the process of gaining referrals encourages RIAs to maintain a high quality of service – boosting client satisfaction and retention. Through strategic word-of-mouth marketing, advisors help their businesses grow sustainably and profitably. 

So, what strategies should financial advisors be using for referral marketing? 

Top referral tips for financial advisors

Be referable

This may seem obvious, but to get referrals, your clients must first want to refer you. By keeping your existing clients happy, delivering exceptional service, and meeting (or beating) their expectations, you’ll cultivate the strong relationships that naturally lead to referrals. 

Just ask

Simple as it is, many advisors overlook the basic and highly effective strategy of asking for referrals. The worst-case scenario is they don’t have anyone to refer to you at the moment. If you don’t ask, you’ll never know. 

Create a referral script

Many financial advisors recommend working the question of referrals into your client meeting script to get in the habit of regularly broaching the topic for discussion. 

Yohance Harrison, CEO of Money Script Wealth Management, memorized his referral script and said he used it with “anyone who was willing to listen.” He shared his script on a recent episode of The Advisor Journey:

“Did you enjoy the time we had today? A lot of people I talk to find that to be true as well. If you have a moment, I’d like to ask you one last question. As a financial advisor, my goal is to create a referral-based practice, and I do that by getting referrals from individuals who enjoy me and enjoy the process. So, if you like, I’d like to brainstorm a little bit to see if we can think of any individuals who might be open to this.”

Improve as you go

Over time, Harrison says, he gained the confidence to stray a bit from this script.

“Once I got really good at understanding how important my job was to listen, I didn’t have to do the referral script word-for-word anymore,” he says, offering an example. “I would just say, ‘Hey, earlier you mentioned Carl was a good friend of yours and that you’re going hiking with him, would you mind introducing me to Carl?’”

Of course, not everyone will say yes to your requests. But that’s just part of the process.

“We could go on for days for all the people that told me no. I would just shake it off,” Harrison says. “As you build a referral-based practice, you’ll find out who your champions are.”

Over two-thirds of Harrison’s 300-household practice has stemmed from just one referring client.

Create a referral incentive program

If you believe that incentives matter, consider creating a rewards program to encourage your clients to spread the word about your services within their social circles. 

A financial advisor referral program can be as formal or casual as you make it. Many advisors simply send gifts to clients who send them referrals. If the referral leads to a potential client meeting, some advisors express their gratitude with a free financial review or a service discount. 

Alternatively, consider hosting a competition where the client with the most successful referrals wins a prize.

Important: any rewards program you institute must comply with all relevant regulations.

Expand your network

If you feel you’ve exhausted your existing client pool or just want to branch out to a new market, try getting involved in new in-person and online spaces. Explore membership in local organizations, join online communities relevant to your niche, attend a networking event, or consider hosting an event (here are some event ideas to explore).

Client events and seminars are great settings for seeking referrals. Group gatherings can foster community and bring new prospects into the same room as your current clients. 

Another potential referral source is professionals who deal with good-fit prospects in different areas of expertise. For example, connect with specialized attorneys and CPAs who are currently serving your ideal clients in other ways and might be willing to refer them to you. 

Utilize social media

If you’re easy to find online, you automatically boost your chances of getting a referral. Leverage LinkedInFacebook, Instagram, and Twitter platforms to expand your online presence and grow your brand. The more you connect with your clients on social media, the wider your message can spread amongst their friends and colleagues.

Looking for ways to grow your social media presence? Check out our RIA social media marketing guide

How financial advisors should ask for referrals

When asking for referrals, advisors should consider their approach's timing, ease, personalization, and delicacy. 

Timing is crucial. The best time for advisors to ask for referrals is when clients feel a connection with you and are satisfied with your services. 

As Yohance Harrison’s script demonstrates, a great opportunity to ask for a referral is at the end of a one-on-one meeting. A simple line like, “As you know, I specialize in [insert specialty here], do you know anyone who could use my help?” can be an easy and light-touch way to end sessions with a referral request.

It’s also smart to have multiple referral options (such as business cards and email templates) to make the process as easy and frictionless as possible for your current clients.

When you do get a referral, avoid coming on too strong. You’ll want to assure clients that their referrals will not be bombarded with unsolicited emails or excessive outreach.

“You want to do great by the person who made that introduction,” says Altruist CEO Jason Wenk, and that starts with how you contact and treat referrals from day one.

How to turn a referral into a client

So, you’ve secured the referral and met a great-fit prospect. How do you turn them into a client? As with any aspect of your business, converting referrals requires a thoughtful and effective strategy.

First, respond promptly to the referral to demonstrate your professionalism and commitment to giving them excellent service. 

Next, personalize your outreach. Consider the referral’s unique needs, interests, and goals. Tailor your approach to this unique prospect and showcase how your services can address specific challenges. Build trust by offering insights, resources, and educational content that illustrates your expertise and the value you’ll bring to the prospect’s financial journey.

With the right touch, a high-quality referral can become a high-quality client, providing value to your business for years to come. 

Want further inspiration to invest in your referral marketing strategy? Check out these proven methods for gaining client referrals for your firm. Also, learn more about offline strategies here.

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