The fundamental flaw in traditional referral requests

In my observation, many financial advisors ask for referrals in the same way. It’s almost as if everyone attended the same training, led by the same instructor and were provided the same script:

“Who do you know that could use my services?”

I’ve heard modifications (“Who are 2-3 people you know…”) and direct orders (“Write down the names and contact information…”) as advisors struggle to deliver the statement confidently and authentically. As entrepreneurs, we rely on referrals to grow our business and it’s proven that existing clients are the best source for quality introductions. And, if we’ve done right by those clients, they should be willing to help us—right?


When you ask for a referral using any derivative of the above sentence, what do your clients hear? Maybe something like:

“I’m putting you on the spot to ask you to do some work for me. I’d like you to give me the names and information of people you care about and tell them lots of great things about me and then I am going to sell them on becoming my clients. Oh, and I need you to do this for me, for free.”

The traditional way to ask for referrals is completely at odds with what psychologically motivates people to refer. Social exchange theory states that humans are inherently social creatures who judge interactions and determine behavior based on the costs and benefits. Ultimately, we aim to maximize the benefits and minimize the costs. Looking at the classic referral request, it’s heavy with costs such as the time, effort and social risk a client would shoulder. On the other hand, the benefits are pretty light, unless you believe the client would get a lot of satisfaction from seeing your business grow.

Motivation begins with me

Which brings me to my next point—what motivates people to refer? First and foremost, people refer to help themselves. They want to feel influential, look intelligent, receive acknowledgement, respect or, they simply want a tangible reward.

Next, people make referrals to help others. They want the people they care about to know about the businesses, service providers or products that would have a positive impact.

Finally, people are motivated to help you and your business with a referral. Let me repeat that—helping you grow your business is low on the list of what motivates a client to refer you. Looking back at the classic referral statement, who is positioned to benefit? It’s clearly you. So, what’s in it to motivate a client to make a referral?

One more hard truth

You may be thinking, “Generally speaking, I get your point but, I’m a really good advisor.”

Being a good advisor is merely the first step to earning a referral. There are many “really good advisors” out there who you’re competing against. And, just because you provide great customer service, the referrals are not going to roll in on their own. Great customer service is the expectation.

Now what?

It should be noted that, for some advisors, the classic referral request works well. If it works for you, great.

For those it doesn’t work for, it’s usually a source of stress and anxiety. Your referral “strategy” hinges on this single request, that you deliver with little confidence and anticipate a lackluster outcome. If that’s you, it’s time to give yourself permission to stop asking for referrals—for a brief moment. Often, the moments that cause us stress and anxiety take up a lot more space in our brains than we realize. With the pressure off, you can dedicate that mental energy to figuring out how to motivate clients to provide referrals. Pull back and look at your client experience—what’s in it for them to do this for you?

Code referrals into your DNA. Referral reciprocity is powerful but it requires you to do your part—it doesn’t work with passivity. Look at the number of real referrals you’ve given in the last six months. How many were professional partners? How many were service providers? Did you refer anyone to a clients’ business? Make it your business to refer others—this will make you feel good and motivate you to continue. The folks receiving your referrals will see that you are a reputable source of reliable, high-quality recommendations. Plus, as you grow more comfortable with giving referrals, you may grow more confident in asking for them.

Move from deluge to drip. Make the in-person request for referrals a piece of your referral strategy instead of the whole strategy. What else can you do to let clients know you would like referrals?

Remove friction to sharing. One of the easiest things you can do is to make your articles, thought leadership, newsletters or web pages simple for clients to share. They might not be ready to give you their sister’s contact information yet but they may want to forward your article on college savings to her. Be sure to ask your compliance department before making any changes to your website or applications.

Change the way you ask. If the way you’ve been asking feels broken, it probably is. I’ll cover this one in more detail in a future post.

Consider the words you use when you ask someone for a referral. Are they intentionally chosen or is it what you’ve been forcing yourself to stick with for years? If it’s never felt quite right, it could be time to give it a rest while you explore new strategies that start with an understanding of the client’s perspective. Ultimately, you’ve got to reconcile your referral strategy with what it is that actually motivates people to give them. Once you do, you’re more likely to earn favorable recommendations from clients.

The views expressed in this article should not be considered investment advice or recommendations to invest in any security or adopt any investment strategy.

From now until normal: 7 ways to reframe and elevate the client experience

If normalcy is many months away, how can advisors provide exceptional value to their clients now?

Productivity in unprecedented times

To thrive in the new normal, advisors may need to reorient themselves both physically and psychologically. Here’s three tips.

Coronavirus, clients and the role of a financial advisor

Escalating anxiety calls for a reliable voice of reason.

Advisor’s guide to the psychology behind goal setting

As more advisors adopt goals-based investing into their practice, the amount of client interactions naturally increases as advisors seek to define (and refine) the full scope of their client’s goals.

Let’s elevate practice management in 2020

Right now, thousands of athletes around the globe have their sights set on one goal—the 2020 Olympic and Paralympic games in Tokyo.

Are you ready for a new decade of financial advice?

This past decade, financial advisors and the finance industry was shaken up and forever changed.

How to help clients be prepared for the unexpected

Having these preparatory conversations with clients are especially relevant now as many begin to reflect on the previous year and gear up for the next one.

Can a group supercharge your growth? This one might.

For the last few years I have focused on helping advisors understand how to create an elevated client experience.

Three ways to reframe referrals (that work)

Let’s be honest, that old way of asking for a referral doesn’t work for a lot of us.

Running your business and managing clients during periods of market volatility

In the past, it might not have been too challenging to field questions from a few concerned clients when the market takes a dip.

Advisors, how are your storytelling skills?

Millions of shows scream for our attention to be watched and, while it can be overwhelming, it reflects an underlying human truth—we love good stories.

The professional contacts every advisor should have

Advisors are hired and given a license to discuss at-length, a topic that for most people, is a pretty touchy one—money.

The fundamental flaw in traditional referral requests

In my observation, many financial advisors ask for referrals in the same way.

What grieving clients need from you

A number of commercials for financial advisors focus on being with clients for life’s high points—graduations, home purchases and retirement.

Best practices for advising couples

Of the 60 million married couples in the US, it’s unlikely that any fell in love over a shared investment risk tolerance.

Anchoring and financial decisions

Anchoring can become dangerous when clients allow anchors to influence their performance expectations.

What Are the Risks?

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