"THE" Magic Bullet for Referrals

By Erin Tamberella

Updated 8/13/09

Financial advisors across the country are now, and have always been on a never-ending quest to discover the magic bullet for building their businesses–a quick and easy way to achieve maximum results with minimum discomfort. While I don’t profess to have discovered the financial advisor Holy Grail, the Referral Detective Strategy© comes close.

Every financial advisor recognizes that the key to a thriving, quality book is referrals. Yet, a large majority of financial advisors don’t ever ask, but instead resolve to simply take what comes and hope for the best. In fact, only about 2-3% of financial advisors actually have any kind of systematic approach for generating referral business. For the advisors who do ask, the results are often marginal at best.

In 2009, it’s safe to say that the traditional “who do you know who might be interested in investment advice” strategy for referrals is definitely dead, for a couple of reasons. First of all, besides being awkward for both the advisor and the client, a primary reason this approach has never worked is because you’re asking the client to do all the work. You’re basically asking them on the spot, without any prior notice– to think up someone to refer to you. In most cases, they are unable to do so. And, there’s rarely any follow-up to the question at a later date after they’ve had an opportunity to think about it.

Another common method of asking for referrals is the old, “if the subjects of investments ever comes up, please pass along my card” which doesn’t work either. This approach has never been effective because it’s too vague and open-ended.

Also, playing the performance card to get referrals is also obviously not very effective these days. The markets leveled the playing field from a performance standpoint, so it’s a high touch service model that sets advisors apart and leverages their book better for referrals.

For most financial advisors, asking for referrals has always been awkward and uncomfortable, yet critical to long-term success. Implementing the Referral Detective Strategy© allows you to build your business faster, easier and with less stress by accomplishing the following objectives.

• It allows you to prospect all of the time with no stress.
• It greatly reduces the discomfort and awkwardness associated with asking for referrals.
• You take all the pressure off of the client to think of someone they can refer to you.
• It trains your ear to listen for and hear opportunities that formally, you wouldn’t have noticed.
• It allows you to pre-qualify at least on a basic level.
• It allows you to implement a systematic approach to referral business that consistently generates referrals and introductions for you each and every month.
• It reinforces client retention by establishing you as attentive and engaging.
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The Referral Detective Strategy©

Step 1: Referral Detective Notebook©

The only purchase required for successful implementation of the Referral Detective Strategy© is a notebook. Your notebook should be set up by month. You can use a pocket calendar but you’ll probably run out of space, so I recommend a pocket calendar sized book with blank pages. You’ll want a size that you can carry with you 24/7 wherever you go. A rule of thumb should be: wherever your keys go, so goes your Referral Detective Notebook©. Each entry should include a Source line, a Date line and several lines for Referral Notes.

Step 2: Referral Detective Strategy©

Here’s how the strategy works. Whenever you’re talking to or meeting with anyone and they mention someone in conversation, record it in your Referral Detective Notebook©. You don’t need a formal name and your conversation DOES NOT have to be investment-related. Advisors typically have radar when it comes to business or investment-related conversations but it’s all the casual conversations they have within the course of a week that are often overlooked in terms of referrals. Conversations with friends, family, clients or even prospects all have Referral Detective potential.

For example, during a conversation with a client, he mentions he went camping last weekend with his best friend and had a great time. You simply record the client’s name as the Source, record the Date and “went camping with best friend; had a great time” under Referral Notes. That’s all there is to it.

Once I have clients begin using a Referral Detective Notebook©, they are amazed at how much money they’ve left on the table by simply not paying attention in casual conversation. As you begin to train your ear for opportunities, start asking more questions. How long have you been friends? What does your friend do? Did you go to school together? What else do you like to do? How often do you get together?

Because you’re not asking for anything at that moment, you’ll be more confident in asking basic qualifying questions. This gives you a unique opportunity to pre-qualify your potential referral without any awkwardness. It also establishes you as attentive and interested in the source’s mind. Any additional information you’re able to discover, record in your Referral Detective Notebook©. It will become very valuable to you later.

Your goal is to have as many entries in your Referral Detective Notebook© at the end of the month as possible. As your ear becomes trained, you’ll find yourself with more potential referrals than you can handle every month. My clients are averaging about 20 entries every month just by paying attention. Even if two-thirds drop out for whatever reason, that still leaves six or seven potential introductions each month.

Step 3: Turning Potential Referrals into Introductions

Everyone would agree that introductions are far more effective in the quest for new business than simple referrals. Here lies the beauty of the Referral Detective Strategy©. Instead of asking your client to do all the work by “thinking up” someone they can refer to you, you’re simply asking them for an introduction to someone they’ve mentioned to you.

I recommend that financial advisors analyze their Referral Detective Notebook© on the first day of each new commission month. Identify the introductions that you wish to target for the month.

How you approach your referral detective entries depends on your style.

If you’re a direct, all business type of advisor, you’ll want to put the source in an advisory role on how to best reach the introduction. You can let the source know that you’d like to meet this person and ask their advice on how best to do that.

If your style is more social in nature, Referral Detective is a great way to feed your social and/or educational events. It’s easy to invite the source to a social event and suggest they bring your referral entry along. It’s also far more effective than the classic “bring a friend” strategy because again, you’re not asking them to “think up” someone to bring. You’re directing them on who you’d like them to bring.

Another key advantage to the Referral Detective in a social situation is once you’ve had a chance to interact with the entry socially, they’re yours to pursue. You can proceed without having to ask permission to use the source’s name or endure other awkward formalities typically associated with referral business.

If you’re a social advisor but don’t do events, use the information you have on your referral entry to identify what the source and entry have in common and tailor a social introduction based on their common interests. Although the standard breakfast or lunch meeting will work, whenever possible, try to make the introduction meeting a more casual outing—golf, fishing, cycling, a BBQ, whatever activity the source and introduction may enjoy. Prospecting will not only become much more enjoyable for you, but much more effective as well.

You may also want to consider adding a monthly or quarterly Referral Detective event to your calendar. If your budget can’t handle quarterly events, then make your Referral Detective events semi-annual or annual.

Once you make the Referral Detective Strategy© a habit, you will quickly accumulate a lot of entries in your notebook. Your primary objective in adding Referral Detective events is to avoid having good entries possibly fall through the cracks.

Ideally, these events should be smaller and more intimate in nature—no more than 12 people. You want to ensure that you have adequate time to interact with everyone there. Your invitation list will be comprised of sources and entries from your Referral Detective notebook only. As always, the more creative you can be with your events, the better your attendance will be.

The Referral Detective Strategy© can absolutely change the course of your career but you must be diligent and commit to making it a habit. If you do, you will be well rewarded with more potential introductions than you can handle each and every month for the rest of your career. After 17 years as a financial advisor and three years as a producing branch manager, I know there is no easier way to build a quality business than with the Referral Detective Strategy©. Just remember the rules.

Referral Detective Strategy© Rules:

1. • Carry your Referral Detective Notebook© with you at all times—where your keys go, so goes your RDN.
   • You don’t need a formal name. Entries can simply be casual references.
   • All conversations qualify. They do not have to be investment or business-related.
   • All conversations qualify. They are not limited to client conversations only. Conversations with clients, prospects, friends, relatives, the veterinarian, anyone you have some sort of connection with, all have Referral Detective potential.

 

Best of luck! You have everything you need.