In a survey of 421 wealth managers, half said client referrals are the best way to get new high-quality clients, and 43% said that client referrals resulted in their best five clients. Client referrals are critical to the ability of many wealth managers to grow their practices.
Even though most wealth managers recognize the importance of client referrals to their success, nine out of ten are reactive, which means waiting for the phone to ring. And even those that are proactive are far from systematic. In general, being proactive is when wealth managers remind clients they would be happy to get referrals.
There are robust processes that can generate a steady stream of new client referrals. One such process centers on Discovery, which entails using open-ended questions to learn about clients. Here, Discovery is essential to learn about clients’ ecosystems and leverage this knowledge by following three steps. The three steps in this process are:
- Step 1: Determining whom your clients can refer. By skillfully asking questions, you can learn about each of your clients’ business and personal ecosystems. There is an excellent chance that some other people would make excellent clients for your wealth management practice. Of course, you are not limited to business owners.
- Step 2: Evaluate referral possibilities. Not only are you identifying potential clients, but you are also gauging the level of rapport your client has with these people. As you know who these possible clients are, you can research them to see if they might be a good fit.
- Step 3: Facilitate client introductions. The way you ask makes a lot of difference. Always ask your client in a manner that focuses on the exceptional value you can deliver.
The more proficient you become at this or similar processes, including the more nuanced aspects of the methodology, the more likely you will be able to quadruple your client referrals over the previous years.
Russ Alan Prince is the executive director of Private Wealth and a strategist for family offices and the ultra-wealthy. He has co-authored 70 books in the field, including Making Smart Decisions: How Ultra-Wealthy Families Get Superior Wealth Planning Results.
