The Best Way to Get Referrals? Stop Asking for Them

Journal of Financial Planning: January 2013


Imagine going to a new restaurant for the first time. The food is great, the service attentive and timely. You have a wonderful time. And with the check, the waiter brings you paper and pen and asks for your credit card and the names and phone numbers of three people you know who dine out periodically. How would you feel?

Most answers I get to that question range from uncomfortable to angry. And yet, that is exactly what financial advisers do to their clients routinely when they ask for referrals. The way you have been told to attract referrals is based on an assumption that’s wrong, and it is undermining your business and your relationships.

I have 25 years of experience in the financial services business. I have tried all the tricks.

“Who do you know that can use the kinds of services I have provided to you?”

“I get paid three ways …”

“Can we agree that if I do a good job you will recommend me to other people you know?”

We now have research that demonstrates clearly that this is not the way referrals naturally happen. In her study “Anatomy of the Referral,” Julie Littlechild surveys several thousand clients of advisers. One of the questions she asks is, “What were the circumstances of the last referral you gave your adviser?”

  • 48 percent said it was because a friend asked for a recommendation
  • 57 percent said it was because a friend described a financial challenge
  • 2 percent said it was because their financial adviser asked for a referral

As social animals, we refer all the time. What referrals have you given this month? A restaurant, a movie, a plumber, a landscaping service? It is social currency, networking, a way to extend influence. We get psychic rewards for making good referrals to our friends. If you want to excel at attracting referrals, embrace that natural motivation.

Don’t Wing It, Create a Plan

As you know from advising clients, achieving a goal is most likely when there is a formal, written plan. The same is true of referral marketing. Your referral marketing plan should address these issues:

  • Identifying your ideal client (target/niche market)
  • Systematically obtaining feedback from clients in that niche
  • Understanding what need separates them from the rest of the population
  • Developing skills or processes that cater to that need
  • Developing a communication strategy and reputation around those solutions

It starts with understanding the niche market you want to serve. Most advisers define their market far too broadly. A niche is a group of people with something in common that differentiates them from the rest of the population. Think of it not as a demographic but as a need. Women, for example, are not a niche. Women executives, women business owners, widows, and single moms might be niche markets, but “women” is too broad. Same for retirees. What ties together the 45-year-old who just sold his Internet company and the 75-year-old drawing a corporate pension? Not much.

After you have identified the group you want to work for and the special needs they have, what can you offer them that would make you irresistible? Do you want to work for corporate executives? You may need to understand 10b-5 distribution plans and stock options. Widows? You will need to know what kinds of counselors or support groups they will need.

Carol Ann Wilson works with people going through divorce. On her website (, you will find articles about what to expect in court, how to maintain your relationship with your kids if you are not the custodial parent, and many other resources her target market needs. The site makes it seem that if you have the misfortune of having to go through a divorce, Carol Ann is the person you should be talking to.

It is this kind of specialized knowledge and skill that will differentiate you from other advisers. When a prospect meets an adviser, the primary question on their mind is “Why should I hire you rather than any of the other advisers out there?” When I ask advisers that question I get the same answers from almost everyone: great customer service, trust, our people, our focus on you, our special relationship with our clients, financial planning.… You get the picture. These are not differentiators; they are what I call table stakes—the things you have to ante up to play the game. It is what your prospects are hearing from every other adviser they are talking to. You have to have them. So what makes you different?

Different doesn’t mean better—it means different. Our customer service is better, our investment process is better, our people are better, probably won’t take you very far. Better is what everybody says, so it isn’t different. And different has to be understandable. “We’re better because we are fiduciaries” goes over the heads of your prospects.

Engage Clients to Learn More About Yourself

You may have a good idea what makes you different, but there is a group that knows better than you do: your clients. Ask them what’s different about you. They are the ones who have selected you over all other advisers—they can provide you insight about why. Even better, they can tell you in their own words, which you can repeat to prospective clients.

Ask your current clients what you do that they find most valuable. Ask what you can stop doing. Their answers may surprise you. Asking for feedback drives engagement, and engaged clients are the ones who refer.

Engaging clients in your target market can help you determine what new services to offer. Unfortunately, this is not as easy as simply asking your clients a few questions. You will need to take their feedback, develop new ideas, and test those ideas with clients to assess their value. It is a cycle of feedback: ask, innovate or improve, promote, ask again. Gradually, through this cycle you will tailor your practice to the specific wants and needs of your target clients. The more you customize the experience you offer, the more you will appeal to that niche market.

Communicate Your Differences

Once you know your ideal clients and have solutions or experiences tailored to them, develop a comprehensive communication strategy around it. Talk about what is different and customized. When people ask what you do for a living, lead with that. Make sure all your marketing—your brochure, website, blog posts, the articles you write for your clients’ trade journals—focuses on it. Train your staff to bring it up when they talk about where they work.

During a break at one of my workshops, I asked an adviser why his ideal clients should work with him rather than his competition. He described his expertise in tax-advantaged programs for high-income investors. He spent a lot of time researching these programs. “I bring accredited investors programs that 99 percent of advisers never even hear about.” “Wow!” I replied. “That’s great! So, if I met you at a cocktail party and asked you what you do for a living, what would you say?” “I’m a financial adviser.”

This experience is not unique; that’s the answer I get from most advisers. When you meet someone new, you have a few seconds to grab their attention and make a point about what separates you from other advisers. Lead with what makes you different.

Look at the websites of your competition. Do they say the same things as yours? If your ideal prospect visited your website when they first heard about you (and they do), would they quickly recognize why you are the one professional they need to hire?

Ask for Your Clients’ Advice, Not Their Referral

Once you have clarified the difference that makes you so valuable to your target clients, you have many ways to use it as a basis for conversations with clients, prospects, and centers of influence. The book Stop Asking for Referrals contains several ways to have “the new referral conversation.” One is to ask for your clients’ advice: “We have been doing some great work with our advisory board to find out what is most valuable about what we do. Through that, we have come to realize that [ideal client description] come to us for [unique solution], just like you did. Now we want to get that message out to more people who need it. If you were in my position, what would you do? How would you get the word out about it?”

By framing the conversation this way, you avoid putting the client on the spot. You engage your client’s creativity, and that helps drive the message in deeper, and helps you take ownership of that spot on their brain.

Now that we have a clearer understanding of why people refer, many opportunities exist for using those motivations to build a practice that naturally attracts new clients. Take the time to synthesize that knowledge into a referral marketing plan of your own, and you will find you can attract more referrals than you ever have before … without asking.

Stephen Wershing, CFP®, is president of The Client Driven Practice, a referral marketing coaching firm. His book, Stop Asking for Referrals, was published in 2012 by McGraw Hill. You can find more about him at 

Learn More

Join author and referral expert Stephen Wershing, CFP®, for a webinar on referral strategies January 9 at 2 p.m. EST. Visit for more information and to register.

Practice Management