91% of customers say they’d give referrals and only 11% of salespeople ask for referrals, according to a study by The Brevet Group.
So, which percentage are you in?
Being at the peak of your career is not a reason to stop asking for referrals. Here we will share some key benefits of building your practice based on referrals, common pitfalls and solutions when knowing how to ask, all to better maximize your efforts in asking for and managing new referrals to your practice.
Key Benefits To Building A Referral-Based Practice Compared To Other Client Acquisition Methods
If you’re in this 11% of people who don’t ask for referrals its likely for one of three reasons:
- You feel like you have enough business
- You simply stopped asking, or
- You receive unsolicited referrals
While all valid reasons as an experienced advisor, asking for these referrals is a surefire way to get more qualified leads to build and scale your practice more efficiently.
#1 Trust and Credibility
Being a financial advisor is all about connections. Making connections is a powerful tool that not only connects us on a human level, but also builds your practice.
When you build your practice on referrals, you’re building an extension of trust. These referrals are choosing to work with you because someone they know and trust, trusts YOU.
Think of the lawyer in your life. We’re willing to bet that your lawyer, unless directly connected, came to be your lawyer because of a family or friend’s referral. Why are we so sure of that?
Because consumers don’t want to spend countless hours googling and meeting with lawyers – they want to find the one lawyer that their connections already use and trust. That degree of connection buildings an extension of trust quite a bit quicker.
And this trust…builds more credibility for you and your practice.
#2 Cost Effective
What if we told you that you can efficiently generate new business by properly building your referral-based business.
Well, you can. And you should.
Think of all of the clients you have today. Let’s say that’s 150 families or businesses. That means you have 150 chances to generate new business by simply ASKING each client for a referral.
Because you’re already interacting with your clients on a somewhat regular basis, adding this topic to your agenda doesn’t cost you anything. But, receiving one referral from each client just one time won’t be enough.
Just like you manage your relationships, you have to manage your requests for referrals. This might look like:
- Offering referral incentives
- Keeping your client in the loop, ex: sharing that you’ve reached out to the referral
- Thanking them
Building this referral-based practice can lead to sustainable growth.
#3 Sustainable Growth
Continuous prospecting is necessary for the longevity of your financial advising practice. And your existing client base is the biggest asset you have in building on the growth of your practice. Building a referral-based practice in particular is not only a natural way to do so but is a sustainable way.
Over time, especially as your client base grows, you can generate a STEADY stream of referrals, that can lead to sustainable business growth.
Of course, relying on referrals alone is not a guarantee for your practice. A strong client service model is just as important in retaining your hard earned clients.
Common Pitfalls And Solutions When Asking For Referrals
When we talk to advisors about asking for referrals, the most common response we hear is, “I used to ask for referrals…I need to start doing that again.”
Yes, you do.
Even if you’re receiving referrals to your practice you could be receiving MORE. And we all know, a high activity level is linked to a robust financial advising practice.
So, why are there so many missed opportunities or pitfalls when it comes to asking for referrals for even the most experienced advisors?
Advisors Struggle With How And When To Ask For Referrals
There are a lot of opinions on how and when you should ask for referrals as a financial advisor. Some believe in being very strategic and others believe if you ask enough people you will get referrals.
Asking for referrals boils down to three things:
#1 What you’re comfortable with
Asking for referrals can feel a bit daunting. But, then again, financial advisors need to be comfortable with rejection to a certain extent. What’s important here is asking for referrals in a way that suits your personality. Is that in person, via phone call, over a client appreciation lunch? This decision is not a one size fits all approach and you better believe that your client will notice if you feel uncomfortable asking them for a referral.
Here’s a few ways to feel more confident in asking for referrals:
- Ensure you’re delivering outstanding service
- Ask at the right time
- Educate them on why you’re asking
- Personalize your request
- Offer an incentive, if applicable
Figuring out what works best for your practice takes trial and error.
#2 How to prioritize it
For those of you who have simply stopped asking for referrals, you need to make it part of your week. Just like you might follow an ideal work week, the process of asking for referrals should be no different. Build this activity into your workflow, add it to your calendar, make it a habit, and you’ll be building your referral practice in no time.
Without a structured system for asking for referrals, advisors may find the process disorganized and less likely to yield results. When done right, asking for referrals may yield better results.
Determine a specific time(s) each year to best prioritize and integrate this into your routine:
- After a successful annual review
- At the year end
- On anniversaries
- When discussing client goals
- Upon receiving positive feedback
Remember, 91% of customers say they would give a referral, if asked.
#3 Knowing WHAT to ask for
Once you’ve decided the best way to ask for referrals, you have to hone in on WHAT to ask for. This is your target market, your ideal client.
Yes, your ideal client…again.
If you ask your client, “who do you know,” they’ll likely send you a few names of their least favorite people. Ok, even if they are their favorite people, they might not be who you’re looking for.
And while receiving referrals are great, they have to be the right referral for your practice.
Your ideal client is who your services and marketing caters to. These people are your bread and butter and the more specific this person is…the better. You can’t be too picky here.
Afterall, it’s better to get one qualified referral, rather than get 10 and you have to qualify them yourself.
Start Asking For Referrals In Your Practice
At this point maybe you’re ready to start asking for referrals, or maybe you feel like you’re just too busy to find the time to ask. Remember, there is a difference between being busy servicing your clients and busy generating new business.
Generating new business is the foundation of practice building, even for experienced advisors.
Building trust and fostering strong client relationships should be the foundation of your referral strategy and therefore, how your practice will grow.
To start growing a better practice, hear from a seasoned CP advisor on why they keep building their practice with us.
2023-162948 Exp. 10/2025
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