The search for new clients is a never-ending process in our business and probably the part of the business that advisors dislike the most. There is no shortage of strategies on how to generate new business and the industry is full of stories from senior advisors who recount how they built their books by making cold calls.
Most of the old referral techniques are less effective today. Now, it's all about trust and a client understanding of what you do before a referral is made. An effective referral strategy starts with ensuring that your clients really understand your unique value proposition in their terms.

A different approach

The older clients get, the more that emotion plays an important role in their decision-making. The client's relationship to money is also based on an emotional foundation — it is what money DOES (as Bill Bachrach used to say) rather than what money IS.

An advisor prospecting for new clients doesn't have the emotional connection in place. When younger clients viewed their investments as part of a long-term plan, the advisor could often entice the client with a sales approach that focused on performance or higher rates of return.

Today, the maturing client is looking for a different approach to his or her financial planning. Their trust level for a new advisor is not there initially, which makes it hard for them to go searching for a replacement for their present advisor.

Yet, today more than ever, clients are seeking advisors who understand where they are in life and the role that financial resources play in achieving life goals. They may not always be able to articulate what kind of advisor that is, but they feel that somewhere out there, there must be an advisor "who is different."

Are you worthy?

Most advisors feel that they are different than every other advisor and that if potential clients could just experience the difference, they would flock to the advisor's practice.

Your present clients are in the best position to judge whether you are an engaged, relevant advisor who is worth telling a friend, relative or acquaintance about. The referral starts with your present clients deciding to lend their "trust relationship" to you by making the effort to tell someone else.

In my view, you can't "ask for a referral." You are either worth an unsolicited referral from your client or you are not. Your referral strategy should be to focus on what makes you referrable in the first place rather than on whether you can get your clients to tell all of their friends.

The three keys to referrability

Your present clients have to understand what it is that you really do if they are going to pass on your name. One of the "disconnects" in our business is that advisors feel that clients understand what makes their advisor different. Actually, clients need to be reminded.

Here is a test for your top clients: could they write down three things that you do for them that they can't get anywhere else or that they like about dealing with you?

It is these three things that will form the foundation of the referral they make and the client must be able to articulate your unique difference to another person.

Here are the three keys to referrability:

1. Your clients must understand the needs they have that you meet. A client's needs aren't financial, they are emotional. Your focus should be on helping clients understand the financial planning solutions for emotional concerns they have in their lives.

These needs can be short-term ("I need to put more insurance on my business"), or long-term ("I need to set up an ongoing savings program for my son's college education"). Most investment advisors operate their business by trying to meet client and prospect needs, presenting themselves as "needs providers" or "problem solvers." This service is certainly important in facilitating a transaction but cannot alone imbed the advisor's brand in the mind of the client.

2. The client must have an emotional attachment to the advisor's practice. Remember that buying decisions are made in the emotional, "right brain" side of the client and not in the rational or "left brain" side. Emotional attachment means that the client feels such things as comfort, security, happiness, joy, knowledge, understanding, caring, etc. when they think of their relationship with their advisor. If your clients do not feel any one of these emotions when they view you, then you are only a vendor and not a partner with them.

3. The client must be able to articulate exactly what it is that you do for them. Here is where many advisors make assumptions that are not always valid. They assume that the client could list two or three things that set the advisor apart and create a special place in the mind of the client. In reality, most clients only have a general sense that they like their advisor but would have difficulty telling a relative or friend exactly why.

An effective referral strategy is really an effective communications strategy. If you work on strengthening your client's understanding of these three keys, they will be more open to telling someone else about "their special advisor."