It’s no secret—more client referrals mean better business. Referrals have become even more crucial to the financial industry since the loss of client trust created by the 2008 crisis. In fact, a 2010 survey done by the Oechsli Institute of over 400 affluent clients found that 54 percent of them had made their selection of financial advisor as the result of a personal introduction from a family member, friend, colleague or another financial professional. So to get ahead in business, you should be asking all of your clients for referrals at every meeting, right? Wrong. Many clients find being asked outright for referrals to be off-putting or overly aggressive. So with the increasing emphasis being placed on garnering client referrals and gaining client trust, the question is: How do you generate one without jeopardizing the other?

Beyond advising—breaking the social barrier  

One way to do this is by stepping outside of your traditional role as an advisor. Sure, you know your clients well on paper. But what about on the golf course? Hosting client events are important because in order to trust you, your clients need to feel that they know you on a personal level. And they’re not going to gain that kind of intimacy from a large, formal seminar on optimizing your stock-bond ratio. Instead, considering hosting a smaller, strictly social event such as a barbecue or wine tasting—an event that allows clients to mingle with advisors in an informal setting. Clients surveyed stated that they would be most likely to attend this type of event and also that they felt the most comfortable bringing guests to this type of an event—and guests mean more opportunities for personal introductions/face-to-face referrals.

By holding these events regularly, you can ensure the maximum amount of client-advisor contact. That’s not to say this is the only way to engage clients–you can supplement these events with more formal presentations, such as a quarterly or semi-annual event that provides general market insight. This type of general informational need, also largely fueled by the financial crisis, allows you to strategically showcase your industry expertise without appearing to be “selling yourself.”  These events generate positive word-of-mouth and the opportunity to meet guests of clients, both of which can generate referrals. Best of all, after establishing a social repertoire with clients, you can feel more comfortable asking for direct referrals without coming off as pushy. More than 40 percent of elite advisors (those making $1 million or more per year) held four or more of these small social events over the past 12 months. Coincidence? Definitely not.

Expand your strategic approach

In addition to hosting social events, these elite advisors employ many other client-generating strategies that are also worth imitating:

• Referral alliances: Develop working relationships with others in the financial field to open up your referral flow. In this kind of a relationship, referrals are both given and received. Look for professionals who don’t compete with you, who appreciate your expertise and who are open to a two-way referral alliance relationship. Work to develop relationships with CPAs, attorneys, brokers and other professionals, and make sure you keep them in mind when your clients are looking for their services. You may be surprised at how many referrals a solid professional presence can provide you.
• Niche marketing:  Focusing on just one or a few types of clients can seem limiting, but often the most successful advisors actually have fewer clients. How? It’s simple—these advisors have learned to focus on client specialization. Whether they concentrate their attention on retirees, business owners, corporate executives, inheritors or professionals, these advisors work within one specific community of clients and become known for serving that particular community exceptionally well. Once you’ve done this, client acquisition through word-of-mouth becomes exponentially easier. Narrower markets such as widows/widowers or medical professionals offer even more opportunity for client recognition and referral. Rather than focusing on gaining as many clients as you possibly can, focus on having fewer clients but stronger client relations. With a smaller number of clients, you can spend more time building client relationships and making sure you are keeping your clients 100 percent satisfied, which eventually leads to greater client loyalty and a greater chance that clients will introduce you to other client prospects.
• Strategic networking: Get involved in organizations within the community that attract high-net-worth clients, and commit to spending some out-of-office time in these places. This can include country clubs, fundraising events and events relating to the arts or more formal associations related to a particular market you may want to enter. By prospecting clients in a narrowed and relaxed environment, you are more likely to attract the type of clients you want and gain respect and trust within these communities.

Each of these strategies deals heavily with building and maintaining relationships within the community and may take a lot of effort on your part to establish. In the end, however, the payoff from these strategies can turn out to be your largest asset.

Above all, don’t be passive

One of the biggest mistakes that advisors make when trying to attract new clients is assuming that if they simply remain in business for long enough, doing what they have always done, they will become more successful over time. While it’s nice to believe that simply doing well and meeting client expectations is enough to succeed in business, this approach is simply not effective. Most financial advisors with the highest earnings actually have less experience than other financial advisors who are earning less. If you’re a believer in the passive approach, this might seem baffling. How could they have built a stronger reputation in a shorter amount of time? After looking at the strategies these advisors use, it’s clear that they have learned where to focus their energy to be successful—and it has nothing to do with sitting back and allowing your experience to speak for itself. Start socializing, find your focus, work at networking within your community and see improvement in your client relationships and client referrals.

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