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Referral is not the same as recommendation
Referral is not the same as recommendation

Jan 02 2024 / Round the Table Magazine

Referral is not the same as recommendation

Securing new prospects is only the first step in building your book of clients, according to these MDRT members.

Topics Covered

Mastering the art of referrals is the lifeblood of any advisor’s business, but once they’ve become clients, convincing them to introduce you to friends and family, and then recommend you in their presence, can take your business to a whole other level. 

It can be a big ask for clients who are reluctant to involve their friends and family in their financial life, said Sudhakar Gabriel, an eight-year MDRT member from Chennai, India. And there are typical objections when broaching the topic, he said. The most common: “I don’t discuss life insurance and retirement planning with my friends and family.” Gabriel’s strategy for this response is to beat them to the punch with a simple speech.

“I understand that life insurance and retirement planning are not topics of social conversation,” Gabriel tells his clients. “What I require from you today are the names of five people with two characteristics — they love their family, just like you, and they are good at what they do, no matter what they do for a living.”

Stating this most common objection to the client before they can make it themselves typically neutralizes the argument, he said. Another typical response to prepare for is the excuse that they can’t think of any names off the top of their heads or that they want to check with their friends and family first. 

Gabriel tackles these with a few follow-up questions:

  • In your office, who are the top two people you know? 
  • Who is the sharpest person you have worked with?
  • Do you have any brothers or sisters?
  • If you were having a birthday party for your kid, outside of the siblings and the first three people you mentioned from the earlier questions, who would you invite?

He said that about 60% of the clients asked these questions will provide five names or more.

Turn up the volume

Anthony Matthews Jones, BSc (Hons), QFA, a 17-year MDRT member from Wexford, Ireland, said activity is crucial not only for providing the best service for clients but also for bringing in new ones. 

“Our activity is determined by a few factors,” he said. “But a big factor is increasing productivity in referrals.” 

If you only meet with one client a week, you can’t expect to increase your productivity and bring in higher-net-worth clients, according to Jones, adding that he always gives new clients advance notice about referrals. That way he never takes them by surprise. 

“Tell your prospects at the start of the meeting that you will be asking for referrals,” he advises. “It’s often not what we do at the end of the advisor-client relationship that captures a client, but rather what we do at the beginning.”

A big focus of that increased activity should be on meeting with the top 20% of your clients at least three times a year, Jones said. Regular meetings offer more opportunities for prospecting and a better chance of increasing business with existing clients. 

“I guarantee you will do significant business with them at least once, if not twice, out of every three meetings,” he said.

Real-time results

The next step is turning referrals into clients, and Gabriel does that by convincing clients to personally recommend him in the referral’s presence. It can be a tough sell, he said, but those who agree to set up an in-person meeting, call or video conference and then make a recommendation in real time can increase the likelihood of securing a new client. 

Gabriel typically works off a script he’s developed, asking one of three questions: 

  • I would like for you to recommend me to your friend over a cup of coffee or a meal. Can the three of us catch up for lunch tomorrow or this Saturday at your favorite restaurant?
  • Can you please call your friend on the phone right now, and if he is free, can you recommend me on speakerphone?
  • Since you’ve tried calling your friend now and he seems to be busy, can the three of us connect on a Zoom call in the evening for 10 minutes? I will not be giving a presentation to your friend at this meeting.

He says about 50% of those introductions and ecommendations that happen in real time result in a new client. 

This is a critical point in establishing the relationship, and that’s why it’s important that the advisor not give a presentation to the prospect at the introductory meeting, Gabriel said. These meetings have a 50% chance of resulting in new business during the next one-to-one meeting with the prospect, so the ideal scenario is a casual conversation between the advisor, client and prospect.

“In this meeting, I only sell the next appointment for our next meeting,” he said. “Even if the client’s friend asks me about my products and services, I deftly deflect his query and schedule a mutually convenient time to meet. During this recommendation meeting, the client should ideally talk to his friend about me.”