The Why and How of Building A Referral Based Practice

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 on referrals, common pitfalls, and solutions for asking for and managing new referrals, all to better maximize your efforts in asking for and managing new referrals to your practice.

 

Key Benefits of Building A Referral-Based Practice

If you’re in this 11% of people who don’t ask for referrals, it’s likely for one of three reasons:

1. You feel like you have enough business
2. You simply stopped asking, or
3. 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 builds an extension of trust.

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 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.

Just like you manage your relationships, you have to manage your requests for referrals. This might look like:

• Offering referral incentives,
• Sharing that you’ve reached out to the referral, and
• 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 a sustainable way. 

Over time, especially as your client base grows, you can generate a STEADY stream of referrals.

Of course, relying on referrals alone is not a guarantee for your practice. A strong client service model is just as important to keep 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 asking again.

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 that if you ask enough people, you will get referrals. Asking for referrals boils down to three things:

 

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 – in person, via phone call, or over lunch?

Here are 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.

 

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 stacking up referrals once again.

Without a structured system for asking for referrals, advisors may find the process disorganized and less likely to yield 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’s end
• On anniversaries
• When discussing client goals
• Upon receiving positive feedback

Remember, 91% of customers say they would give a referral if asked.

 

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 referral request is 

your target market, 

your ideal client.

Rather than asking your client, who do you know, and receiving a few arbitrary names, try being more specific. Can you connect me with more young families with multiple children who are building wealth?

With a more specific request, you’ll likely get more thoughtful names.

 

Start Asking For Referrals In Your Practice

Building a referral-based practice doesn’t happen by chance — it happens by design.

If 91% of people say they’re willing to give a referral when asked, the real opportunity isn’t whether referrals exist. It’s whether you’ve built a consistent system for asking.

Start asking today and see how these small, intentional actions can compound in creating a stream of prospects in your practice.

To understand how to build more repeatable processes, talk with a team member at CP.

 

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Exp. 3/2028

 

Consolidated Planning, Inc. is an Agency of The Guardian Life Insurance Company of America® (Guardian), New York, NY. Securities products and advisory services offered through Park Avenue Securities LLC (PAS), member FINRA, SIPC. OSJ: 6115 Park South Drive, Suite 200, Charlotte NC 28210, Phone # 704-5528507. PAS is a wholly owned subsidiary of Guardian. This firm is not an affiliate or subsidiary of PAS. This material is intended for general use. By providing this content Park Avenue Securities LLC and your financial representative are not undertaking to provide investment advice or make a recommendation for a specific individual or situation, or to otherwise act in a fiduciary capacity.