How To Relieve Referral Discomfort

NEW ORLEANS – Asking for referrals is not something every agent or advisor likes to do. It makes some agents feel “a bit uncomfortable,” Dan Allison admits. Being asked for a referral makes some clients feel uncomfortable too, he pointed out in a speech here at the Top of the Table meeting during the Million Dollar Round Table annual meeting.

But if feeling uncomfortable stops an advisor from making efforts to gather referrals, that’s not going to help the firm — or customers.

Allison, who is president of Feedback Marketing Group, talked about ways advisors can overcome that discomfort. His firm specializes in helping professionals attract more quality prospects.

The difficult side of referrals

When he started out working with financial advisors, Allison said he saw how difficult it was for many of them to ask for referrals. A lot of advisors “didn’t want to beat their clients over the head about referrals,” he said. “They didn’t want to beg for them. They didn’t want to look desperate.”

At the same time, Allison said, “they realized that if they didn’t bring it up, they wouldn’t get the kinds of referrals they’d like to see.” Even so, most have never found a really comfortable approach to asking for referrals, he said.

Failure to request referrals impacts clients too. If an advisor never brings up the topic with clients, he explained, that may create “a lot of happy clients who have no idea if we’ll even help other people, if we’re too busy to take referrals, or if we’ll allow our clients to introduce us to other people.”

That’s not a good option “because then people don’t get help,” he said. His suggestion: Learn how to approach the topic with clients more effectively.

To flesh this out, Allison said he has interviewed and conducted focus groups with the affluent and the mass affluent who are clients of financial advisors. His goals were to learn things like why they selected their advisor and how their advisor exceeds expectations or falls short.

In addition, he asked those who reported feeling satisfied with their advisors why they did not refer their advisors more frequently.

Learn how clients want to be approached

The research has led him to conclude that advisors need to ask clients how they want to be approached about referrals. This needs to be done in a way that is “effective but will never make them uncomfortable or compromise your relationships.”

When wrapping up a meeting with a best client, for instance, the advisor can leave 10 minutes for this discussion. Allison suggested a conversation might begin like this:

“John, before you leave, I want to get your feedback on something. You know, we’ve grown this company primarily through our clients introducing us to people whom they care about and need help. You know, mainly through referrals. And, John, when it comes to referrals, obviously that can be an uncomfortable topic.

“On one hand, every time that you came in to see me, I could say, ‘Who do you know?’ or ‘Can you give me five names and numbers?’ And you know I don’t really do that. It’s not comfortable for me, and I’m sure it’s not comfortable for you.

“But on the other hand, I know that if I don’t bring up referrals at all, if it’s not something I address with my clients, I may have a whole client base full of people who have no idea if I’ll even be able help other people. If we want to act as a second opinion for their friends or family or help people whom they care about, that’s not good either.

“So for you specifically, John, how could I approach referrals, if at all?”

A comfortable backdoor

That approach gives clients a “comfortable backdoor,” so they can let the advisor know if they’re not feeling comfortable, Allison said.

If the client indicates discomfort, respect that, he added. Let the client know that, “I just never want to cross that line if it is. How do I approach you about referrals in a way that’s comfortable and does not compromise our relationship?”

Advisors who do that will be amazed at the discussion that ensues, he said. About 60 percent to 80 percent of clients will respond positively, saying something like, “Well, you just need to ask. I’m comfortable with your asking. Just go ahead and ask.”

In addition, they’ll start talking about referrals they’ve already made, and inquiring if those people ever contacted the advisor, he said. That could be an opening for the advisor to start talking with the client about ways to make introductions.

What happens if clients say they are willing but don’t know anybody who needs the advisor’s help? Ask the client to describe the type of person whom the client feels the advisor might want to reach, Allison said. If the client still draws a blank, use that as an “opportunity to educate the client on the kinds of people you actually want to meet.”

Sample case

Does it work? Allison told of one advisor who approached referrals that way. “Four different client meetings led to two referrals that were $20,000 or more life insurance cases within the next 60 days,” he said. In addition, one client asked the advisor to put on an educational seminar for him and some of his business owner friends.

InsuranceNewsNet Editor-at-Large Linda Koco, MBA, specializes in life insurance, annuities and income planning. Linda can be reached at [email protected].

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