Generating Referrals From Trusts and Estates Lawyers
In the many studies we have done over the years, the number one concern of life producers has remained consistent–to generate more clients, specifically, more wealthy clients.
Successful producers know that the tried and true way of generating more clients is through referralsboth from clients and from other advisors. In this referral process, trusts and estate lawyers play a critical role. Trusts and estate lawyers make referrals of affluent clients in need of life insurance, and they can facilitate or disenable a life insurance sale.
In many ways, relationships with trusts and estate lawyers are central to a life producers practice. To gain a deeper understanding of their role, as well as what they look for in deciding which producer to refer their wealthy client to, we empirically studied 619 of them.
Trusts and estate lawyers are active referrers to life producers. Out of 10 affluent clients, trusts and estates lawyers will, on average, refer 2.1 of them to producers. These clients have an average estate of $8.1 million (see Exhibit 1). Moreover, trusts and estates lawyer referrals result in business for the producer 3 out of 4 times (73.2%). (See Exhibit 2.)
Life producers are quite correct in targeting their development activities at trusts and estate lawyers, who have affluent clients and are willing to refer them.
But do these referrals stick? Do clients comply with the referral recommendation? The data shows that they do. When trusts and estates lawyers make referrals, affluent clients are inclined to follow their recommendations.
This is an important point. Trusts and estates lawyers are influential in moving private wealth to financial advisors. In just this limited sample of 619 private client lawyers, there is an aggregate client net worth of $13.9 billion, which works out to be an average estate of $10.7 million.
This is not news to life producers, who are already very proactive in calling on trusts and estate lawyers. Most trusts and estate lawyers were approached by six or more producers in the past year (81.1%). And the rest of them were approached by between one and five producers (18.9%). Producers are calling on trusts and estates lawyers to try and capture their share of referrals.
Just how trusts and estate lawyers choose which producers to refer to and work with is encapsulated in the Advisor Selection Hierarchy TM. Understanding this hierarchy will help producers work more effectively with lawyers. They will be able to position themselves more effectively and they will also provide value in a manner that translates into significant wealthy referrals.
The Advisor Selection Hierarchy is a framework created to help producers better understand how trusts and estate lawyers think when selecting producers to whom they are willing to refer their wealthy clients. The more insight a producer has into a lawyers thought process, the more effective he can be in garnering referrals.
In the ASH, there are four constellations of criteria. They can be thought of as four levels of a hierarchy as organized by significance. The four levels are:
–Level I: Foundation Criteria.
–Level II: Collaborative Criteria.
–Level III: Financial Criteria.
–Level IV: Legal Practice Management Criteria.
The criteria of Level I include the "absolute givens" or "must haves" of any producer to whom trusts and estates lawyers are willing to make a referral. Because these are the essentials, any producer who is not able to meet these criteria is immediately placed in the "avoid at all costs" category.
Elements of Level I include personal integrity and technical expertise. Unfortunately, these are not givens. Lawyers cannot assume that all producers who they meet will share their ethical standards or bring the requisite technical expertise. Producers should be mindful that they will have to take care to position themselves on these dimensions and communicate these qualities clearly to the trusts and estates lawyer.
Paying attention to Collaborative Criteria means a producer ensures that the trusts and estates lawyer is always appropriately involved. This also means that the producer openly exchanges information and ideas.
