Ask for referrals from a position of strength, says Prem Khatri. Earn the right to ask for referrals by believing in yourself and ensuring that you create trust among your clients. Read on to learn about the rules of success for growth through referrals
Introduction
Referrals are the life blood of financial advisors. Word of mouth, for most IFAs, is by far the biggest source of new clients. Most of us normally ask our clients for referrals by saying we need help to grow our business or by saying that we will earn commissions by getting referrals from them. But this conventional way of getting referrals is outdated and counterproductive in the long run.
Using these outdated techniques undermines our credibility with important clients. By using these techniques, the client will feel that our business is weak and we are desperate for business. Instead we should let our clients know that our business is successful and ask for referrals from a position of strength. The position of strength does not come from assets under management (AUM) nor from the amount of commission earned by us. In fact strength comes from the value we bring to our clients through our skills and knowledge. Strength comes from our belief in us, our professional skills and in our ability and desire to care for our clients.
Soft Skills and Technical Skills
So what are these skills? Soft skills such as:
-
paying attention to what the clients want
-
listening to them
-
staying in touch with them on a regular basis and
-
being there for them in the tough times.
As far as technical skills are concerned, the minimum basic is that we must have knowledge about the different investment products. In addition, we should be conversant at financial planning.
Any good advisor should make the client feel somewhat respectful of the professional skill they bring. The client should feel that he is fortunate to be working with us and that he is in great hands. Advisors bring tremendous value and we deserve referrals because of the help we provide.
Three Levels of Trust
To earn referrals from a client we need to win their trust. The client should trust us at three levels:
-
when he gives us a portion of this money to manage.
-
when he gives us all his wealth to manage.
-
when he trusts us with his friends and refers us to them.
So to earn referrals from a client, the advisor should reach his third level of trust.
How to create trust?
Honesty Pays:
The advisor should all the time be honest to his clients when talking about the financial risks involved in investment. By talking about the risks, we demonstrate that we are aware of them and the client will have more confidence and trust in us. We should frequently communicate with our clients through face-to-face meetings, phone calls, letters, e-newsletter etc. Newsletters are a way of telling clients that we are not here just to sell them stuff but also to impart value, give wisdom and communicate.
Developing a clear brand identity in the minds of our clients:
Simply put, we need to create a message in the minds of the client about us. The starting point for this is self-awareness, our talents and what we are good at. Once we decide those answers, we should reinforce this message through our actions.
But remember, we can not base our brand on empty words. We can say all day long, “I provide great service.” But if our service is poor, our brand identity goes out the window. We must be able to back up everything you say to the client. We should never build our brand or our relationships on things that we can’t control, such as good portfolio performance. We can say, however, we are going to create a great financial plan for you. Because we can control that.
Now that we have learned how to develop trust, let us now focus on the actual process of asking for referrals.
Rules of Success
Rule 1. Develop a list of prospects that we want to target. We should do a little homework about their personal and professional world. By researching the prospect, we learn which of our clients could introduce us to the prospect.
Rule 2. Be focused. One mantra of successful advisors is to identify a niche or a community or a profession and become an expert in it. Why? We can sharpen our understanding of the needs, concerns and behaviour of such groups that can give us a tremendous advantage over others. Also, doctors hang around with doctors and ex-servicemen with other ex-servicemen and getting referrals is easier and faster within the same group.
Rule 3. Time and word the request well. We must choose the timing of our request carefully and make sure that we approach him with confidence. A direct and professional request would work well,” I understand Mr. Swamy is your colleague. If you believe Mr. Swamy can benefit from my service, I would appreciate an introduction.”
Rule 4. Inform our client once we have established contact with his contact and brief him in general terms. Needless to say, it will be a breach of professional etiquette to be discussing details of financial matters even if the client and his contact are friends, colleagues or relatives.
Rule 5. Finally, once the client refers his contact to us, we should make sure that we give excellent service to the contact or else we will end up losing the contact as well as the client who referred the contact.
