Building referral momentum in your practice

Canadian Institute of Financial Planners May 28, 2012

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WHAT WE’LL BE COVERING TODAY:

• Research on what it takes to get referrals

today • Common misconceptions on referrals • How often to ask for referrals • The best way to initiate referral

conversations

Key obstacles to implementing new ideas

1. ______________________________

2. _______________________________

3. _______________________________

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Referrals are critical 70% of the time

49 %

16 % 7 % 6 % 5 %

16 %

0

20

40

60

80

100

Family/ friends

Bank branch Profile/ advertising

Seminars Already knew/ found on their own Accountant/

lawyer

1996: Sources Used To Select New Advisor

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6 %

7 %

7 %

8 %

8 %

9 %

18 %

24 %

53 %

0 20 40 60 80 100

Professional Qualifications

Reputation

Experience

Friend or Relative

Accessibility/Availability

Record of Performance

Expertise

Good Advice/Results

Trust/Ethics

Trust as important as all other factors combined

1996: Elements Considered Most Important in Relationship

With Advisor

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Why a dramatic drop in referrals?

• ________________________

• ________________________

• ________________________

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Why a dramatic drop in referrals?

• Greater scepticism • Some advisors dropped the ball on

communication in 2008 / early 2009 • Concern about “risk” of providing referrals /

jeopardizing friendships • Advisors not bringing up referrals / not

engaging clients in effective referral conversations

Why advisors don’t bring up referrals

• Puts pressure on advisor and client / not comfortable

• Concern that may undermine relationship with client

• Concern that may undermine perception of professionalism

• Not confident that the approach will get results

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Criteria for effective referral conversations

Yes No Somewhat

• Puts acceptable level of pressure on advisor and client __ __ __

• Won’t undermine relationship with client __ __ __

• Won’t undermine perception of professionalism __ __ __

• Advisors confident that the approach will get result __ __ __

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Referral conversation:

“ I’m glad that you are happy with the job I’ve done for you - I’ve very much enjoyed our relationship over the last while.

I wonder if I could ask a favour of you. In the period ahead, I am hoping

to have the chance to begin working with other clients who share the same conservative, disciplined approach to investing which you and I do.

Can you suggest one or two people out of everyone you know who it

might make sense for me to approach with a view to possibly working together? Should you suggest someone, there will be no hard sell or pressure. I would simply tell them that I am contacting them at your suggestion and offer to provide them with a second opinion on their investments.

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Criteria for effective referral conversations

Yes No Somewhat

• Puts acceptable level of pressure on advisor and client __ __ __

• Won’t undermine relationship with client __ __ __

• Won’t undermine perception of professionalism __ __ __

• Advisors confident that the approach will get result __ __ __

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1. Search for a silver bullet

There’s a magic combination of words that will open the door to referrals for advisors.

Reality: 1. Every advisor is different and needs to

develop the right strategy for him or her 2. There is no silver bullet

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2. You or your clients have to initiate referrals to make them happen

Two kinds of referrals: Proactive referral : Initiated by client “You should talk to my broker” Reactive referral: Initiated by client’s friend “Do you work with a broker you could

recommend?”

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3. It’s good enough to have clients who are satisfied

Need to create clients who are engaged vs “satisfied”:

- both outcome and experience

- focus on total financial picture - superior contact level Source: Advisor Impact, January 2008 – conducted for Vanguard

Practice Management Services

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Two cases of referral success

• Spring 2011: Advisor approached top 50 clients to prepare consolidated account info

• Fall 2011: Advisor called clients in retirement about meeting to develop cash flow forecast

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Why did clients refer friends?

1. ______________________________

2. _______________________________

3. _______________________________

4. You should maintain a professional distance in client relationships

To maximize referrals need to create share of

heart as well as share of mind - 30 minutes a week to focus on above and

beyond activity with one key client - increase “likeability” quotient

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5. Clients make referrals to help you out

Clients provide referrals to help their friends, not their advisors

“I wonder whether I could ask a favour” “Please don’t keep me a secret”

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Key takeaways

Key points about general misconceptions Check as many as apply

( ) No silver bullet ( ) 85% referral fallacy / need to position for

reactive referrals ( ) Focus on engagement, not just satisfaction ( ) With key clients, connect at emotional level ( ) Clients make referrals to help friends, not you

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6. The best way to ask for referrals is spontaneously at the end of a meeting

Use an agenda to integrate referrals into client meetings in a professional and comfortable fashion

“In the next quarter, I have capacity for six new clients.” When we meet, I’d like to spend three minutes talking

about the profile of clients I’ve found I can help the most, in case you’re talking to someone considering making a change who might be a candidate for one of those spots.”

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Sample client profile

1. People approaching and in retirement 2. Looking to establish a relationship of mutual trust with

an advisor where they will work as partners to achieve their goals

3. Willing to invest the time at the beginning of the relationship to develop a plan to achieve long term objectives

4. Has the ability to stick to their plan even when markets are volatile

5. Typically has investments over $500,000

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The profile of clients you work with the best / can help the most

• _____________________________________________

• _____________________________________________

• _____________________________________________

7. Having objectives for a meeting puts you and your clients under undue pressure

Have two or three objectives going into every client meeting / call:

1. One or two to advance client agenda 2. One to advance your agenda Write down objectives before meeting Track success vs objectives afterwards Set goals for next meeting

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Date: Week of May 15 G OAL ONE G OAL TWO

Client Name Date of Meeting/Call Key Goal Achieved

Key Goal Achieved

In Part All In Part All

Bill and Mary Watson Mon 15 - Meeting Rebalance to equities Call assistant on admin issues

Elaine Wyatt Mon 15 – Call Open TFSA for kids Bring sister to client lunch

John Sabatini Tues 16 – Call Govnt to corp bonds Meet to consolidate accts

Peter Chen Tues 16 – Call Switch RBC to CIBC Permission to call accountant

Joan Merriweather Tues 16 – Call Set up meeting/agenda Reassure re market

Don Fulton Wed 17 – Call Roll over bonds Set up golf with partner

Jack Haber Wed 17 – Call Reinvest dividends Set meeting with son

Sam Kuzmakis Wed 17 – Call RESP for grandkids Discuss family meeting

Peter Phillips Thurs 18 – Call Schedule plan update Schedule plan update

Mary Floyd Thurs 18 – Call Reduce withdrawal rate Update personal info

Chris Johnson Fri 19 – Meeting Reassure re portfolio Switch to fee based acct

Jim Stuart Fri 19 – Call TransCanPipe new issue Agree to return call timing

Total: 10 Calls / 2 Mtgs 3 8 4 6

8. Clients who say “I’m happy” are happy

“Now that we’ve adjusted your portfolio, how comfortable do you feel about with the level of risk you’re taking, with 1 being not at all comfortable and 10 being very comfortable?” “And how about the communication you receive from us – how would you rank us there, from 1 to 10, with 1 being low and 10 being high?” “What one thing could we improve your experience working with us?”

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Key takeaways:

Key points leading up to a referral conversation

Check as many as apply ( ) Set up referral conversation as part of agenda for

meeting ( ) Establish profile of clients you work with best ( ) Set clear objectives ( ) Different way of checking for satisfaction

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9. Your goal in referral conversations should be to get meetings with your clients’ friends

Any referral conversation that smacks of pressure reduces the chances of referrals and hurts client relationships

“Who do you know who I can help in the same way I’ve helped you?” Reduce risk by demonstrating patience and focusing on

delivering real value and truly useful information to your clients’ networks, not setting up a meeting

Focus on getting introductions, not appointments

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10. You should be indirect in talking about introductions to your clients’ network

“The reason that I send you and my other clients the articles and videos from sources like the New York Times and Fortune is to help you stay up to date.

“That being said, I’ve also found them a comfortable way for potential new clients to get to know me.”

“Feel free to forward the emails you get to people you know who might find them of value.”

“And should they wish to get these emails themselves, either they or you can send me a quick email and we’ll add them to the list”

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#1 ranked approach to referrals

“I’m glad you can join me on September 15 for the Board of Trade talk by Mark Carney.

The table I’m hosting is mainly for clients but I do have one extra spot. I wonder if you have a friend who would like to come, who might be interested in meeting me and who I should get to know?”

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11. You should use open ended questions when talking about candidates for referrals

“I’m glad you can join me on Nov 15 for the Canadian Club talk by Mark Carney. The table I’m hosting is mainly for clients but I do have one extra spot. I wonder if you have a friend who would like to come, who might be interested in meeting me and who I should get to know?”

- “Who among the people you know comes to mind?” - “ Is there someone on your management team at work

who might want to join you?” - “You’ve mentioned your CFO Patricia Barnes. Do you

think she’d be interested in attending?”

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Using events to trigger introductions

“ I’d really like to get to know your accountant Joan Wilson. In the next six months, I’m going to be inviting some of my

top clients to two evenings…one of them will be a wine tasting in November in a private room at a restaurant at Yonge and York Mills, where the owner will demonstrate a variety of Italian reds.

The other will be a golf evening in September at the Launch driving range at Highway 400 and 7, where we’ll have a chance to try the new Nike drivers and get some tips from the pro.

I wonder whether these would appeal to you – and if so whether you’d feel comfortable inviting Joan along.

•

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12. You should bring up referrals at every meeting

Risk of bringing up referrals too often? Whose agenda is it? Rule of thumb: Unless thanking client for referral or providing

update on progress of referral, every third meeting or every two years

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13. You should use lots of low key reminders

“A referral is the finest compliment I can receive” “Thanks to my clients for all their referrals” Under signature line in emails Signs in office Newsletter Voicemail

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Exceptions to low key reminders

“New clients accepted by referral only” Newsletter Welcome Joe and Mary Smith “This quarter, the lucky new clients selected to

receive a welcome dinner were Joe and Mary Smith, referred by Peter and Beverley Watson. For their dinner, they chose Belmondo Steakhouse.

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Key takeaways

Key points about referral conversations Check as many as apply ( ) Goal for referrals – not just meetings ( ) Direct approach to reason for wanting an

introduction ( ) Specific suggestions ( ) Frequency of asking for referrals ( ) Using indirect reminders

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14. Don’t say thank you when someone a client refers signs on

Don: Many thanks for suggesting to Phil that he give me a call and for filling me in on his situation – we are meeting next week. Your confidence truly is gratifying – rest assured I won’t let you down. Thanks again. Michelle P.S. Recently I’ve begun using a Starbucks card for my morning coffee. I’ve found them handy and am sending you one also – your next coffee’s on me!

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15. After a referral, you shouldn’t bother clients with updates on talks with their friend

In an appropriate fashion, keep clients abreast of progress

Take opportunity to thank clients again

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16. After someone becomes a client, you must maintain absolute confidentiality

Without breaching confidences, keep clients who provide referrals in the loop

Reinforce the fact that clients have made the

right decision by introducing you to their friends

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Chairman’s Club 90 Day Welcome Process for New Clients

1. One week: Initial follow up call 2. 30 days: Call to review statement 3. 60 days: Check in call 4. Three months: Check up meeting

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How am I doing?

90 Day Report Card Poor Fair Good Very Good

Excellent

1. We deliver on our commitments

2. We communicate clearly

3. You get enough contact from us

4. Any questions or problems are resolved quickly

5. Your overall satisfaction

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Follow up note:

Don: Thanks again for introducing me to your friend Phil. Last week, we met to discuss how things are going. He gave me permission to share the feedback form that I ask all new clients to complete after we’ve worked together for 90 days – I thought you might be interested in this. I look forward to the chance to chat when we meet next month. Michelle

17. Every client is a candidate to provide referrals

Even engaged clients won’t always provide referrals - high vs low referral DNA

Need to find alternative methods of engaging low referral DNA clients

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A request of low referral DNA clients

• In the next while, I’m planning to contact other Tim Hortons franchisees about the possiblity of working together.

When I do that, Mary Frazee and Joseph Ianucci

have given me permission to tell other franchisees that they work with me. I wonder if I might mention that you and I work together as well?”

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Key takeaways

Key points after a referral conversations Check as many as apply ( ) Thank clients as soon as they provide referral ( ) Keep clients in the loop on what happens after

they refer someone ( ) Reinforce the fact that clients who referred a

friend made a good decision ( ) Use alternative approaches for low DNA clients

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Case study: Advisor 20 + years in business

2006 to 2010: 3 to 5 referrals a year

Sept 2010: Added a line to website

Sept 2010 to May 2011: Averaged 1+ referral per month

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Agenda item for client meetings

“If you’ve been on my website recently, you may have noticed that I have a new policy that I only accept new clients who are referred by my existing clients or by accountants and lawyers I work with. That’s because I have limited capacity to take on new clients – and in my experience, the new clients who I work with best and am able to help the most are referred by my existing clients, as they’re much more likely to be a good fit. So should you be talking to friends who might be interested in sitting down with me, let my assistant Lori know – I’d be happy to schedule a time to meet.”

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Why did this work?

1. ______________________________

2. _______________________________

3. _______________________________

Febr

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Key takeaway ideas from this session 1. ___________________________________ 2. ___________________________________ 3. ___________________________________ 4. ___________________________________ 5. ___________________________________

To do coming out of this session

To do By 1. __________________ ____________

2. __________________ _____________

3. __________________ _____________