Referrals? Don’t Bother Asking.

by George Ray

I just finished reading another article on how financial advisers should be asking for referrals. This one titled “Getting Referrals Your Own Way” by Ellen Uzelac appeared in Investment Advisor magazine ( on the web) in the August issue. It says that 90% of advisers don’t ask for referrals – even after firms host sweepstakes, offering luxury vacations.  These articles appear in the financial services magazines regularly. In fact, a quick Google search of the thinkadvisor website using the word ‘referrals’ produced 874 results – just from one financial advisor publication.

The article mentions Invesco’s new “Preferral’ program which begins ‘with a line that says something like this: “You have probably noticed that I don’t often ask you for introductions. That’s because I never want to make you feel uncomfortable, or seem like I am more concerned with my business than your family’s financial well-being.”

I can just imagine the client thinking: So why are you bothering me with this now? Just because you’ve never asked before doesn’t make it OK now. Just leave me alone. Are we done? Can I go now?

The article goes on to suggest that making the referral request more ‘personal’ by making an ‘appeal that emphasizes an individual advisor’s genuine thoughts, feelings and concerns’ is supposed to make this work.  Really?

20th Referral ImageLook, everyone has their own take on what works in terms of getting more referrals, better referrals, etc. There are referral coaches and lots of books about the subject.  But I truly believe that asking for referrals is not the answer.  In fact, if you have to ask, you won’t be getting anything that’s actually worth something.  And the more you ask for them, the less each one will be worth.  I heard a speaker once say that he could guarantee that his method would get you twenty referrals every time you asked for them.  So, how much do think the twentieth referral would be worth?

Let’s get something straight. You must understand that your client has no obligation to make a referral to you. Yes, even if you tell him that it’s one of the ways that you get compensated. (Most clients have heard that one, and are saying to themselves “No, I already did compensate you for the work you did for me.”)

Secondly, you should know that referrals are a form of social currency. If I make a referral, I’m making it to raise my status with whomever I am giving that referral to.  I’m essentially saying, “I know just the person that can help you with your problem. I’ve already vetted them for you.  I feel very comfortable telling you about them because I know that it won’t come back to haunt me. I’m secure in the fact that they will do a great job and you will come back with your problem solved, a big grin on your face, and a huge thank you for me. And, as a result, I know that to you I will now be a more valuable friend, associate, relative, etc.”

So, the client doesn’t receive an increase in social status by giving you a referral, Mr. Adviser.  Remember, you work for him.  And, he’s paying you.  In his mind, he’s already above you. Yes, you are his financial adviser, but essentially you are his employee — like his gardener, or his plumber.

Now, he may well refer his gardener or his plumber to someone in need of those services.  If he does, it’s for two reasons.  Firstly, he can say exactly what services are performed by this person. “I had a leaky faucet in the bathroom. This guy came and fixed it in five minutes, only charged me half of his regular rate, since it wasn’t a big job, and he was on time and put little booties on over his shoes when he came in the front door.”

Secondly, in order to get referrals, your clients need to be able to easily ‘remark’ about you to their friends and associates.  In order to get them to ‘remark’, you must make yourself ‘remark-able’.  The plumber did several things that made him stand out (i.e., ‘remarkable’) from other plumbers – only charging half his regular rate, being on time, and keeping the house clean by putting on his booties.

So, your client must know exactly how you have helped them, and your services must be outstanding compared to the ‘typical’ financial adviser.  If you satisfy both of these criteria, you’ll get referrals –without even asking.  But I believe that most advisers do a poor job at satisfying either one of these criteria – which is why they must attempt to beg ask for referrals (which, by the way, lowers their own social status in their client’s eyes every time they ask).

How can you make sure that your clients understand exactly what you do and how it has helped them? How can you make your services ‘remarkable’ enough to make your clients want to talk about you? Let’s discuss this in a future post.


1 thought on “Referrals? Don’t Bother Asking.

  1. Pingback: You Can Get Referrals. Just Don’t Ask for Them. | The Business of Financial Advice

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