Planning firms not utilising all referral sources
Boutique financial planning practices could be better utilising referral sources available to them in order to maximise revenue, a study has found.
Three quarters of financial planning firms claim their primary referral source is existing clients, according to Macquarie Practice Consulting’s 2010 Boutique Practice Benchmarking study — up from just over half in the 2009 study.
The proportion of firms that listed accountants as their primary referral sources fell from 42 per cent to 23 per cent in the same period, suggesting there is an opportunity for firms to re-engage with other financial services professionals.
More than half of referral alliances were informal arrangements, suggesting these types of relationships could also be managed more proactively, Macquarie found.
“There are certain centres of influence that practices need to re-engage and build deeper relationships with,” said Liz McCarthy, head of Macquarie Practice Consulting.
McCarthy suggested formalising some client referral programs and making sure the other party understands what a firm’s perfect client and opportunity looks like.
The growth in the number of firms identifying existing clients as their primary referral source also means there is an opportunity to better meet client needs by providing them with more services.
“What we are seeing from financial planning firms is that they are diversifying and offering new services such as mortgages and insurance to provide their clients with a more holistic solution. This brings a benefit not only to clients by offering them comprehensive financial advice services in one place, but also helps firms diversify their income stream,” McCarthy said.
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