As Prospecting Gets Harder, Advisers Remain Shy on Client Referrals

A global pandemic has opened advisers to new modes of communication, but many still fail to utilize some of the easiest – and most effective – tactics for client growth and retention, new industry research finds.

Video meetings, emails, phone calls, webinars and social media are all on the rise at most firms. But many advisers are still reticent to ask clients for referrals. A surprisingly high number of advisers have also limited their communications to only one family member, a potential stumbling block to client retention further down the road.

The findings are part of an ongoing research project between Transamerica and InvestmentNews Research exploring how the pandemic has reshaped adviser business practices. Our latest industry survey looked at advisers’ communication methods.

The most surprising finding was that in an environment where finding new clients was presumably more difficult, few advisory firms were reaching out to existing clients for referrals. Only 18% of surveyed advisers said they reach out regularly to solicit client referrals, and only 33% said they reach out occasionally.

Advisers also don’t appear to be leaning on their centers of influence (COI) for client growth any heavier. When asked how their communication with COIs has changed, only 18% of advisers said it has increased in recent months.

Why are referrals a tough ask?

Advisers’ reticence to ask for referrals seems illogical, said Stephanie Bogan, a business strategist and high-performance coach for advisers. She points out that advisers are comfortable asking someone to hand over their life savings, yet hesitate to ask for a referral.

Two factors drive their reluctance. First, advisers don’t want to seem like “a schmucky salesperson,” Bogan said. But it is also hard because asking for a referral means you are asking for validation. She says advisers can become more comfortable by reframing the conversation.

“You can ask from a place of authenticity and service,” Bogan said. “Then what you’re doing is shifting the frame from ‘will you validate and approve me’ to ‘I’m here to help, who can I serve?’ … It’s not about you, it’s about them. If you believe in the cause and calling of financial planning or wealth management and you think that you add value that can improve someone’s life then presumably it’s incumbent upon you to talk to your clients about friends and family and being that first phone call for financial guidance.”

Several steps can instill a culture that drives effective referrals, according to Bogan. The first step is to define the role you want referrals to play in the firm’s growth strategy. For example, setting a target such as getting one high quality referral per year from each top client, or aiming for referrals to represent 25% of the firm’s growth.

Next, advisers should determine a multi-touchpoint strategy for driving referrals, then standardize the system of what those touchpoints are. For example, a firm might determine they will discuss referrals in client review meetings and in their annual letter. The business would then standardize this by outlining that referrals be added as an agenda item in client meetings, or dedicating an area of their annual client letter to mention referrals.

Finally, advisers must build the “scaffolding,” Bogan said. She defines this as the “actual systems and scripts that you will use to pull the trigger.”

Advisory firms willing to utilize referrals can find meaningful growth. At Destiny Capital, referrals from clients and COIs have historically accounted for the vast majority of the firm’s new business.

Part of what’s driven Destiny’s successful referral process is being specific with the client on ways the adviser can help other people, says Tiffany Charles, chief growth officer with the firm. If an adviser has expertise in a specific area – for example, working with recently widowed spouses – tell the client and ask if they know someone in that situation. Or if the adviser has just worked through a trust or estate plan with the client, ask them if they know anyone else who needs that type of guidance.

“That makes it a lot easier than just continuing to say ‘we serve anybody and everybody,’” Charles said.

She has also had previous success driving client referrals by establishing client advisory boards, a group of six to eight clients who meet with the firm and provide input on how the firm is serving clients.

The adviser shares some of their firm’s client service and communication aspects, but also shares how it is looking to grow and market the business.

By sharing, “you’re equipping them with who you are, what you do and how you do it … they are then able to communicate that message in a much stronger way,” Charles said. You’re building real advocacy, and in the meantime you’re getting really good feedback on how to up the client experience.”

For many advisers, communication with family remains isolated

Another key finding from the research was that many advisers still communicate with only one family member. The isolated communication strategy comes as advisers likely had an audience of both spouses, and even children, together during stay at home orders, and as both spouses were likely thinking about finances.

Roughly two-thirds (66%) of surveyed advisers say they communicate with both spouses in less than half of their client relationships. (See pie chart below for full breakout.)

Interestingly, RIAs and hybrids were more likely to engage both spouses. Nineteen percent of RIAs and hybrids said they communicate regularly with more than one family member in at least three quarters of their client relationships. Only 8% of other adviser types reported such a high rate of engagement with both spouses.

Advisers ramp up other communication modes

While advisers may not have leaned on client referrals as much as they could have during the pandemic — or taken advantage of the opportunity to work with the client’s broader family — they have nevertheless adapted. With offices still closed in many states, other modes of communication are up across the board.

Perhaps not surprisingly, 88% of surveyed advisers said their use of video meetings has increased in recent months. More than half of surveyed advisers say their use of email, outgoing phone calls, webinars and social media also increased.

These new communication strategies may be paying dividends for advisers. The first survey in this research series found that 67% of advisers who have grown their business during the pandemic onboarded new or previously self-directed investors. These self-directed investors are often younger investors who are more likely to communicate through digital channels.


Transamerica Resources, Inc. is an Aegon company and is affiliated with various companies which include, but are not limited to, insurance companies and broker dealers. Transamerica Resources, Inc. does not offer insurance products or securities. The information provided is for educational purposes only and should not be construed as insurance, securities, ERISA, tax, investment, legal, medical or financial advice or guidance. Please consult your personal independent professionals for answers to your specific questions.

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