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 we 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.
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 if by chance they do give you a referral, the quality of that referral is usually marginal at best.
Another common method of asking for referrals is the old, “if the subject 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. Results from this method are dismal because even if the referral ends up with your card, they rarely call.
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 potential introductions for you each and every month.
- It reinforces client retention by establishing you as attentive and engaging.
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 we 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. An alternative to using an actual notebook is to use your cell phone and make entries in the Notes app. Regardless of whether you choose to use an actual notebook or your cell phone, a good rule of thumb to follow is: wherever your keys go, so goes your Referral Detective Notebook.
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, people you personally do business with, clients or even prospects all have Referral Detective potential. Each entry should include a Source line, a Date line and several lines for Referral Notes.
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 we 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 guys like to do together? Do you get together often?
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 at least on a basic level 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 and introductions than ever before. Our clients are averaging about 20 entries every month just by paying attention. Even if 80-90% drop out for whatever reason, that still leaves 2-4 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 already mentioned to you in conversation.
We recommend that financial advisors analyze their Referral Detective Notebook on the first day of each new commission month and put together your Referral Detective Hit List. Identify the introductions that you feel have the most potential based on the quality of the source and the potential introduction.
How you approach your Referral Detective Hitlist 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 Detective 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.
After 17 years as an advisor and 13 years as a coach, 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:
- Carry your Referral Detective Notebook with you at all times or use your cell phone to ensure you have it with you wherever you go.
- 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. Conversations with clients, prospects, friends, relatives, people you do business with all have Referral Detective potential.
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’re not getting the quantity or quality of referrals you want and deserve, get our free Referral System Action Plan for a step-by-step guide to building out a complete Referral System for your business.