The center will hold

Building centers of influence (COIs) into a business is a two-way street that can turn into a 10-lane highway of valuable clients, but expert advisors say that establishing relationships takes commitment and professionalism. New financial advisors spend most of their time prospecting, but MDRT members recommend establishing COIs early to gradually build a pipeline of clients through referrals.

Paresh B. Shah, CFP, an 18-year MDRT member, said his COIs act as a “surrogate trust” that offers instant credibility.

“The client trusts the COI completely and, therefore, when you get referred to the client, automatically that trust comes to you,” Shah explained.

David C. Blake, a 25-year MDRT member, said prospecting is imperative, but building COIs brings business to the advisor.

“There comes a point in time that you can be more effective by trying to identify or establish COIs,” he said. “By creating a value proposition for individuals to share with their clients, they’re going to refer you to people. You become more of a solution provider, and that’s how I try to position myself.”

The so-called “reciprocity principle” is no different than the age-old wisdom of the golden rule: “Treat others as you want to be treated,” said Ana Fanlo, an eight-year MDRT member.

Providing help to others, whether in their business or personal life, “does not take a lot from you, but it goes a long way in building and cultivating relationships, especially with influential people, that will benefit our work as financial advisors,” she said.

Getting started on establishing COIs begins and ends with professionalism, according to MDRT members who shared their pro tips and potential pitfalls.

Professionalism is key

COIs are built on trust, and that relies on integrity and professionalism, according to Shah, and that means keeping your promises.

“You want to determine exactly what you’re able to deliver and let the COI know that,” he said. “When it comes time to deliver it, make good on your word.”

Accountants and tax preparers are the best source of introductions for Shah, but he also reaches out to industry professionals and other community leaders, such as property and casualty brokers, pastors, wealth managers and others.

“Take a minute to make a list of four to six professionals you want to approach,” he said. “When you make the first call, tell them, ‘I want to understand your business and see if I can refer business to you, and I want you to understand my work as well.’”

In that meeting, ask them about their business and their ideal client to help you decide if you want to work in this market. At the second meeting, tell them about what you do to help clients like theirs, he said.

Shah also recommends maintaining close communication with the COI once a client referral is made, so there are no surprises. If the client approves, you can even go so far as to share your recommendations with the COI.

“We ensure that the COI is copied on every single email,” Shah said. “Then when we’ve gathered the adequate facts, we will actually provide a presentation to the COI before taking it to the client.”

Shah said that they almost always defer to him as the expert. He adds that responsiveness is also critical when dealing with COIs. Failure to respond quickly to questions, especially about the business, can end the relationship.

“You want to not only make sure your responsiveness is there for the client at the time when you are making the sale, but also your post-sale process,” he said.

Another key professional courtesy that is more easily overlooked is the potential for accidentally stealing clients.

Howard Allen Hopkinson II, FSS, FSCP, a 10-year MDRT member, described his firm as a multi-line insurance practice that includes a financial practice.

“This can make it a little difficult from time to time to get referrals from other professionals, CPAs, attorneys, etc.,” he said. That’s because they’re concerned about sending clients for insurance and then losing them to the finance side of the business.

Hopkinson’s business invested in software to prevent such oversights.

“We have very robust agency software where when a referral comes to us from another professional, we can log it into our account and make sure that they’re not solicited for any other type of business,” he said. “So, it never puts that COI in a conflict-of-interest situation.”

Empathy matters

Shah describes professionalism as the “hard skill” that must be mastered to build trust, but advisors also must practice the “soft skill” of empathy.

“What the COI really looks for is whether you are taking the time to sit with their client, to understand their needs and to give a thoroughly thought-out strategy or solution,” he said. “The COI wants to know how much you care. That’s the empathy they are looking for.”

Fanlo’s reciprocity principle of giving to others harnesses empathy through generosity. She explained that her tendency toward giving began prior to her work as an advisor, and she earned her first client from it.

That came in the form of a friendship she developed with a fellow mother at her daughter’s school. “I confided to her about my aspiration to become a financial advisor, and the response was overwhelming,” she said. “My friend excitedly told me she’d be my first client as she was confident I’d do well.”

That friendship continued to help build Fanlo’s business over the years, as her friend directed numerous clients her way. Cultivating such friendships can go a long way.

“In our line of work, it is important to treat clients and the people around us the best we can, as they can be our COIs,” she said. “You will be top of mind for referrals because they experience firsthand what you can do.”

She often takes it beyond the typical advisor-client relationship to become a close friend “who will listen to their concerns, understand their life situations and provide practical advice,” she said.

Fanlo emphasized the importance of not pushing that kind of connection or rushing them into providing referrals though. “I value their trust and prioritize being their friend over my job as a financial analyst,” she said.

Once those connections are made, Shah said it’s critical to stay in touch. Connecting on social media with articles that might be of interest to their business is one way he keeps himself in front of his COIs. He also hosts educational seminars and golf outings for his COIs. Shah suggests advisors make a list of potential touchpoints to keep their COIs engaged.

Build a board of directors

COIs can come from practically anywhere, but Blake said advisors should look for a common theme or a common industry among their clients.

“If you’re working with a specific occupation in the business market or you’re working with a specific focus on marketing, are you seeing success there?” he asked. “If so, then build on that, because it’s much more effective to be able to focus on a population where you’ve had success.”

Focusing on an industry can familiarize advisors with the nuances of that market. “You know their stress points, the seasonality of the industry, and insights like when to call and when not to call,” he said. “This knowledge can prove to be invaluable in establishing credibility and cross-referral opportunities with other advisors or business consultants who offer noncompeting products or services to the same industry.”

James Alomajan Peralta Jr., a 12-year MDRT member, advised focusing on companies and industries that have a need for life insurance, such as travel trade, taxation and accounting firms.

“Be patient,” he said. “Begin by understanding their wants and needs before making any recommendations, creating a strong foundation for a fruitful partnership over the long haul.”

Advisors should create their own personal board of directors per Kavita Bothra, a four-year MDRT member. That starts by reaching out to two or three professionals from different industries and then bringing in one or two existing clients.

“Meet them every quarter and ask them for suggestions on how to improve your business,” Bothra said. “When they become part of your company, they will want you to succeed. When they go and meet other people, they will talk about you.”