A combined study by Association of Financial Advisers (AFA) and The Beddos Institute, a consulting firm in US, shows that 40% of new clients stated ‘a trusted referral’ as the primary reason for choosing their financial adviser. It also states that consumers who do not have a trusted referral to a financial adviser and who don’t have a financial adviser in their network are reluctant to engage in financial advice.
“The importance of a trusted referral in appointing a financial adviser is now clearly established and can be understood by thinking about the gravitas of the decision to entrust someone with your financial affairs and livelihood. Not only is this important for an adviser in terms of getting into the consideration set, but it is also the most important factor for both men and women when it comes to making the final decision to engage a financial adviser,” shows the report.
However, there are some subtle differences in the importance of a trusted referral for men and women.
- Women place greater emphasis on a trusted referral when identifying a potential financial adviser, suggesting that they approach the advice relationship more cautiously than men.
- While a trusted referral is also vitally important for men, but they leverage more on an existing connection or relationship, undertake research and attend seminars to identify a potential financial adviser.
Notably, having a trusted referral will get an adviser most of the way to winning the right to serve a new client; however, interpersonal skills and being seen to deliver tailored financial advice are also important in securing new clients.
What is your role?
- Conduct regular client experience surveys to understand the needs and expectations of your clients so that you are in the best position to deliver on these. It is best practice to conduct formal client surveys every 12 months and clients appreciate being given the opportunity to provide feedback.
- Check in with your clients during every meeting about what else you could be doing to improve your service and their experience.
- Be careful not to communicate how busy you are to your clients as this may create the perception that you are too busy to take on new clients, irrespective of the quality of advice and service you deliver.
- Deliver on promises - always do what you say you will do.
Client referrals result primarily from delivering quality advice, having high-trust relationships and delivering exceptional client service. Even if you ask your clients to refer your business, they will not do this unless they are satisfied with the service you provide.
