5 Ways to Ask and Pay for Referrals as a Financial Advisor

Referrals make getting on a prospect’s radar easier, and delivering a superior client experience can help you generate them organically. If referrals come to your firm in a trickle rather than a flood, it may be a good idea to master the art of the ask. Some of the most valuable financial advisor referrals may come from asking; all you need is the right approach.

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5 Tips to Ask Clients for Referrals (and Pay for Them)

Asking for referrals may seem awkward, at least in the beginning. You may feel like you’re sending the wrong message to clients or come off as desperate. Overcoming this mindset is the first step to successfully asking clients for referrals.

If you’re ready to frame referrals as a stepping stone for your firm’s growth, here are some of the most effective ways to ask clients for them.

1. Refine Your Message

If you’re going to ask clients for referrals, your choice of wording matters. You don’t want your request to come off sounding like a sales pitch, but you don’t want it to be forgettable, either.

Here are a few tips for framing your referral request:

Focus on connection and the value that you bring to your clients.
Let your clients know that you’re looking to grow and that you’d appreciate their help in reaching that goal.
Emphasize that there’s no obligation on their part. You simply want to make your help available to their friends, family members or colleagues if it’s needed.

Be prepared for some clients to say no. Not everyone feels comfortable making referrals. Consider whether it’s worth a follow-up conversation to find out why they may not want to refer someone to your business.

If a client is simply shy, that’s one thing. But if they’re unsatisfied with the service they’re receiving from you, that’s a different issue. Allowing them to share feedback and actively listening to what they have to say could help you improve the client experience, which may encourage them to make referrals in the future.

2. Offer an Incentive

Your clients may send referrals your way because they’re overwhelmingly satisfied with your service, but adding an incentive doesn’t hurt.

Some of the ways you might pay for client referrals include:

Gift cards
Cash
Discounts on services
Small gifts
Invitations to client appreciation events

You may offer one of these options or all of them, but any payment you make requires adherence to compliance rules.

The SEC’s marketing rule, for instance, specifies that advisors must disclose to prospective clients any paid compensation that’s offered for referrals or testimonials. The disclosure must detail whether the referrer is a current or previous client and include information about the nature of the compensation they received.

While you’re establishing the details of how to pay for referrals, consider the amount you want to offer and what would trigger the payment. For instance, you may set the threshold at having a prospect who’s referred to you schedule a meeting, or require them to open a new account before you pay a client for the referral. Whatever you decide, you’ll need to communicate the boundaries to your clients to ensure there’s no confusion.

3. Choose the Right Timing

An advisor sitting down with new clients.

Timing matters when making referral requests, as you want to choose a point where your clients are most likely to be receptive. The end of a positive conversation about their financial plan could be optimal if they’re feeling reassured and confident about the service you’re providing.

You might end the meeting with a statement like this:

“I’m encouraged by the progress you’re making, and I hope you feel the same. If you know someone who’s looking for guidance on how to get their financial plan in shape, I’d love to connect with them.”

If they appear interested, you can ask for their friend/family member/coworker’s information, or encourage them to share yours with the person they plan to refer. And if they don’t seem interested, you can wrap up the meeting as usual.

4. Consider Email

Email offers another way to ask for referrals if you don’t feel comfortable doing it face-to-face.

You can send out an email letting your clients know that you’re working on growing your business and you’re looking for more people whom you can help. Let them know that they can reply to the email if they know someone who might benefit from your services.

If that feels like too much, you might add a postscript to each email you send with similar wording. You can do something similar if you’re sending out quarterly newsletters via direct mail.

5. Look Beyond Your Clients

Your clients aren’t the only place you might turn to for referrals. Centers of influence also have a place in a financial advisor referral program.

Centers of influence are networks of professionals with whom you exchange referrals. For example, say you know an estate planning attorney. You may refer your clients to them for the estate planning services you can’t help with, and they might do the same for you.

Attorneys, CPAs, mortgage brokers and other advisors are some of the people you may include in your centers of influence. Networking, both in person and online, can help you make those connections.

Some of the most effective ways to network as an advisor include:

Attending financial advisor conferences
Leveraging social media platforms like LinkedIn
Collaborating with financial professionals or influencers online
Participating in local community events

Look for professionals who target clients in a niche that’s similar to yours. That could help you draw in leads that you’re most equipped to help.

The Importance of Building a Seamless Referral Process

Even if clients are willing to refer others to your firm, they may hesitate if the process feels unclear or cumbersome. Creating a seamless, repeatable referral experience can increase the likelihood that clients will follow through when the opportunity arises.

Make it easy for clients to refer by offering multiple channels. That might include an online referral form on your website, a simple email template they can forward, or a printed card they can hand to someone. Keep the process simple and client-friendly; your goal is to remove as many steps and uncertainties as possible.

It can also help to document your referral system internally. Make sure your team knows what to say if a client asks how referrals work, who’s responsible for tracking referrals and how any incentives will be delivered. Consider using a CRM or marketing automation platform to monitor referral activity, trigger follow-up communications and keep your efforts organized. When your process is clearly defined and consistently applied, it builds trust with both existing clients and new prospects.

Bottom Line

A group of advisors discuss referral strategies as part of their marketing plan.

Referrals can be immensely valuable to your business, and actively generating them is an important part of your marketing plan. Developing a script and practicing what you want to say to clients can help you feel more confident and prepared when the time is right to ask for a referral.

Tips for Growing Your Advisory Business

Digital marketing is transforming the way advisors connect with prospects and increase their visibility. A well-designed website, search engine optimization (SEO), social media and email are just some of the ways you can market your business online. If you’d like to grow your digital footprint without taking time away from clients, you might consider partnering with an advisor marketing platform like SmartAsset AMP. SmartAsset AMP (Advisor Marketing Platform) is a holistic marketing service financial advisors can use for client lead generation and automated marketing. Sign up for a free demo to explore how SmartAsset AMP can help you expand your practice’s marketing operation. Get started today.
Client appreciation events are another way to ask for referrals indirectly. These events are an opportunity for you and your staff to mingle with clients in a more informal setting and foster deeper connections. Consider your clients’ interests and hobbies and use that as a starting point to research appreciation event ideas.