Financial planners need to institute a system and process to get regular referrals to build their business, according to the principal of Non Executive Management, David Phelan.
Speaking at a Financial Planning Association pre-conference workshop, Phelan said that while nine times out of ten successful advisers told him they built their business by word of mouth, none of them could tell him how they managed to get referrals.
“It’s interesting to me that when I talk to very successful advisers … I ask them why do they get referrals and how do they get referrals, and I get blank faces — they can’t really articulate to me how they go about it, or why it happens,” he said.
Planners underestimate the value of their network to refer them to accountants or another network, he said.
Phelan said financial planners needed to make referrals a mainstream part of their business, and develop a framework around obtaining referrals.
Phelan told the workshop that networking was an important part of developing a system for getting regular referrals, but he warned that planners needed to avoid cold calling or going to breakfast with people they’ve never met and handing out their business card.
“Do not blindly network with strangers … talk to people that you know,” he said.
Phelan said that if a financial planner received a referral from an associate or a client, they had to make sure to involve the associate in the first meeting with the referral.
“When we do get a name from an accountant or a client, and we don’t professionally and appropriately involve them in the process of contacting their client or their friend, we won’t be anywhere near as successful as we could be,” he said.
A good way to involve the associate was to initiate a three-way informal meeting between the planner, the associate and the potential client, Phelan said.
It would also make it easier to “close the deal”, he added.
