The research findings—decades of research—is unequivocal. The most effective way to generate a steady stream of new high-net-worth clients is by building strong relationships with centers of influence (COIs). By establishing and growing powerful relationships with COIs, who are non-competing professionals working with the wealthy, you will likely create a high-end, very profitable wealth management business.
For the most part, the prospective ability of COIs to refer their affluent clients in need of wealth management expertise is well known. Although a great many financial professionals recognize the value of strong COI relationships, relatively few of them have been able to establish and manage relationships that consistently produce new, high-value opportunities.
The methodologies for discerning the best COIs to work with, how to most effectively motivate them and make it relatively easy for them to introduce their wealthy clients to you are not secrets. Specifically, the financial advisors we have coached using empirically derived and field-hardened processes are regularly very successful in building pipelines of new wealthy clients for investment management and other financial products.
The methodologies involved are not inherently overly complex, nor are they very difficult to implement. What is required is that you understand the mechanics and that you persevere. In coaching financial advisors on how to cultivate COIs, we often find some major obstacles many of them need to overcome. Three of the biggest impediments to success are:
• Failing to audition COIs.
• Failing to help your COIs refer their wealthy clients to you.
• Failing to ensure a strong economic inducement to refer you.
Let us consider each of these obstacles in some greater detail.
Failing To Audition Centers Of Influence
From the beginning, a great many financial professionals need to think about working with COIs differently. The general perspective among a large percentage of financial advisors is that they are profusely thankful if some COI would just consider making referrals to them. This is the diametrically wrong point of view.
If you want to have high-caliber COIs sending you wealthy clients on a regular basis, you have to select the right ones to work with. The key here is that you are selecting them; they are not selecting you. The way this works is that you meet with potential COIs and audition them. You need to determine if a possible COI is able to significantly benefit from the value you can deliver to them—not their clients—to them. This value usually takes the form of helping them substantially build up their practices (see below).
Part of the audition is a flexible, systematic assessment of a COI’s world. The comprehensive discovery process addresses five key areas:
• Attributes are the characteristics of the COI, such as how his or her practice operates
• Contacts consist of the relationships the COI has with clients, prospects and other professionals
• Resources the COI can access, such as the firm’s database, meeting rooms and the like
• Intent, which entails the COI’s personal and professional goals and objectives
• Critical concerns are what is most pressing to the COI and can possibly derail the relationship
By going through a discovery process like this one, you are able to determine if a COI passes the audition. In effect, you are deciding if the COI is worth your time and effort.
Failing To Help Your COIs Refer Their Wealthy Clients To You
Even after financial advisors have found excellent COIs to work with, it is all too common for them not to get a steady stream of high-net-worth client referrals or any referrals at all. A pervasive mistake is believing that accountants, lawyers, executive coaches, investment banks and any other possible COI is adept at introducing their clients to other professionals.
The hard reality is that the overwhelming majority of COIs are limited when it comes to their ability to refer their wealthy clients. It is not that they do not want to refer, for they usually do. It is more a matter of not being very comfortable with the idea or being capable. Their lack of proficiency, which is their problem, is also your problem.
The solution is for you to strategically help your COIs to regularly refer their best clients to you. Based on circumstances, a number of very efficacious ways can help to do this.
One proven approach is to educate your COIs on which of his or her wealthy clients would best benefit from your expertise. It is often important to move beyond money management in order for most COIs to see opportunities for you. At the same time, you need to help your COIs know what to say in explaining who you are and why you are being recommended. The more you can tie back to how you are positioning yourself and how this will be valuable to the client all the better.
The easier you make things for your COIs, the more likely you will see potential clients. By taking these actions, you will significantly benefit from the transfer from the COI to you of “client trust and goodwill.”
Failing To Ensure There Is A Strong Economic Inducement To Refer You
Doing a great job for a COI’s wealthy clients is commendable. But how many other financial advisors can that COI turn to who would be able to do an equally great job? Certainly not every financial advisor is of equal value, but a lot of them are.
Doing a great job should be considered table stakes. You also need to incentivize your COIs. You need them appropriately motivated so they are actively looking to refer their wealthiest clients to you and will go outside their comfort zones to make referrals.
Helping them become more financially successful is—for the overwhelming majority of COIs—the answer. Your ability to help them grow their practices and translate that into greater personal wealth for themselves is the best economic inducement for them to refer their best clients to you and only you.
You can help them build their practices in a number of ways. Referring your wealthy clients to them works, but is rarely sustainable. Instead, one of the most powerful approaches is to help them become the experts the wealthy want to work with. You can help them become thought leaders. Again, you can follow a systematic set of procedures to enable your COIs to become thought leaders within a specific ecosystem.
The foundation is for you to provide them with a consistent high-quality thought leadership content that they can distribute to their clients, prospects and even their COIs. It is also necessary for you to show them how to optimize the content and how they can profit from the different pieces.
This methodology, when implemented well, will be able to generate significant new business and fees from their former and existing clients as well as generate new client opportunities. The result is much more successful COIs, and, due to the Law of Reciprocity, you too will financially benefit in the form of client referrals.
Implications
Each of these three obstacles can make getting high-net-worth client referrals from COIs hard and sometimes impossible. Though these obstacles are fairly prevalent, they are also easily conquerable. What is required of you is adopting a perspective that you are auditioning COIs to work with you.
You are doing them a big favor, because if they pass the audition you are going to help them take home a lot more money. Remember, you will provide viable ways for your COIs to build their practices with the wealthy. One established approach is to help them become thought leaders.
You are also going to make it a whole lot easier for them to refer their wealthy clients to you. You will replace uncertainty and confusion with a very clear explanation of “why you!”
The methodologies work; you just need to diligently apply them. By going in this direction, no matter what is happening in the economy or the markets, you are building a more and more successful wealth management business.
Russ Alan Prince is president of R.A. Prince & Associates. Brett Van Bortel is director of consulting services for Invesco Consulting.
