There’s an obvious flaw in the referral process. It’s the perception of liability, which can be a big turnoff for friends and clients when you ask for referrals. Here’s another approach to consider that addresses the fear of liability.
Fear of liability
As a financial advisor, you seek people with money in motion. You’ve asked friends to be on the lookout. Suppose your friend sends another friend, who just received a large inheritance, in your direction. They invest with you, however, the new client becomes angry with you for losing money or owning a product they don’t understand. The client remembers the friend who made the introduction. This might strain that friendship, but it could be worse if the client sues the advisor and their firm. They might name the friend in the lawsuit because they brought the two parties together. They might wonder if the friend was compensated for making the introduction. The friend wasn’t, of course, but it’s still a mess. This worst-case scenario makes friends hesitant to send referrals. They feel they are going out on a limb.
Seek out complainers
Consider this approach instead. Get your friends and clients looking for someone with a problem. They are easy to find because they are often vocal complainers. Here are a few examples.
- My advisor never calls. This might also be: “I can never reach my advisor, only their assistant.” They don’t feel like an important client. They want more attention.
- Perception of poor performance. The stock market has done well for a long time. The friend feels they haven’t participated fully. They blame their advisor. This may be unfair, but it’s what they are thinking.
- Reassignment blues. They liked their advisor, but they retired. Their account was reassigned, and maybe they don’t think the new advisor is that interested in them.
When someone complains, it’s human nature to want to help and take the pain away. People step up to do their part. It’s easy for your friend to say: “Your advisor never calls? You should really talk with my advisor. She’s very good. She is in touch with me at least once a month.” The friend is trying to offer a solution to the problem.
You can easily see how a similar approach could be used with the other scenarios.
The best part is that follow-up is built into the strategy! Have you ever been on a plane with a screaming child? You want the screaming to stop. Apply the same logic with the complaining friend. The friend complains their advisor never calls, so your client suggests they contact you. Two weeks pass, and your client sees the same friend again. They are still complaining about their current advisor. It’s easy for your friend to say: “Did you call the person I told you about? What are you waiting for?” There’s your follow-up.
Consider asking your clients to keep their eyes and ears open for people with a problem. Give them a few examples of the type of people you can help. When a friend has a problem, it’s human nature to want to help.
Bryce Sanders is president of Perceptive Business Solutions Inc. His book, “Captivating the Wealthy Investor” is available on Amazon.