5-minute Finance: The Right Way To Ask For Referrals

By GREGORY FOK
For AdvisorNews 

Past MDRT president Tony Gordon once said, “Cold-calling is God’s punishment for not asking for referrals.” It takes courage to request a referral, though, so don’t waste your ask. Set yourself up to receive quality referrals with a few simple questions to make sure you’re asking the right person, in the right way. By adjusting your script, you’ll work smarter, not harder to earn your next quality client and not just a quantity of names and numbers.

Change Your Script

Like many new agents seeking referrals, I was taught to ask clients, “Who are three people you know who would benefit from my advice?” I would then add their names and numbers to my database to call later on. The challenge with asking for referrals this way is that you end up only getting people’s basic information – you don’t guarantee that they want to meet with you, or that they are even a client you want to take on. In a way, it’s not much better than cold-calling.

I knew there must be a more efficient way to turn referrals into clients, so at the 2007 MDRT Annual Meeting, I approached a Top of the Table member and asked how he found success engaging clients for referrals. He recommended approaching my top ten clients and asking them, “Can you refer me to someone just like yourself?” At the time, I had a wide variety of clients, but I knew the ones I most enjoyed working with were doctors, lawyers and business owners. So I decided to test the approach myself with that sub-sect of my client base.

His advice was life-changing. By asking the right people that simple question, I was able to hone my niche and easily procure those with whom I most wanted to work – building an exclusive client base of doctors, lawyers and business owners. Since then, I’ve expanded on his question, creating a tried-and-true script to filter out referrals who may not be a good fit, and ensure that almost every referral will lead to a new, ideal client.

Ask The Right Questions

You can broach the topic of referrals at the end of a meeting by telling clients that most advisors spend 80 percent of their time prospecting, and only 20 percent building relationships. Tell them you want to flip that around and spend more time learning and achieving their goals. Then put that engagement on them with a statement like, “Does that make sense to you? If so, I need your help.”

Make it clear that the more quality referrals they give you, the less time you have to spend looking for other clients, and the more time you have to devote to them. They’ll understand, and begin pulling out their phone to give you a list of friends and family. At this point, gently stop them and let them know that, if they refer someone to you, you have a few criteria to make sure it will be a good fit for both parties.

The goal is to seek quality over quantity, and to end the meeting with one solid prospect instead of a list of names. You can create your own set of criteria, but I’ve found great success by asking the following questions:

• Is this person open to having a chat with a financial advisor and responsible enough to take action with their financial future?
• Are they a good friend who trusts you and your recommendations?
• Do they fit within my industries of expertise?

By setting the right expectations early on with your clients, you let them know that you’re not just looking for a couple of random contacts. Instead, you’re hoping to work with someone as successful as themselves. This provides an added benefit that many new clients, who come in as referrals, will be on their best behavior since they know you only work with the top professionals in their industry.

It takes just a few simple tweaks, but altering how you approach referrals will enhance your entire practice. By zeroing in on the right clients and asking the right questions, you’ll spend less time weeding through a database of prospects and more time making sure your clients feel happy and financially secure. In turn, they’ll work for you to bring your ideal client right to your doorstep.

Gregory Fok, is a 13-year MDRT member and a Court of the Table qualifier. He is the former MDRT Singapore Chair and author of “The Merchant of Time.” He is Senior Director of Financial Services at Manulife Financial Advisers Pte Ltd in Singapore.