Page 41 - Investment Advisor December 2022/January 2023

THE FAST TRACK

By Angie Herbers

4 Ways to Boost Your Firm’s Client Referrals

Adding services like tax planning can increase client satisfaction and turn
clients into vocal advocates for your firm.

s leaders of financial advisory do, such as with their consultant, they
firms look for ways to boost have it locked up under strict confiden-
A their firms’ organic growth, tiality agreements.
many of them turn to data as a starting Second, these growth-oriented firms
point. This is a wise move, since data don’t focus on the exact number of leads,
can serve as a powerful growth tool. But the exact number of clients who were
there’s one big caveat: Firms should use retained or the exact number of client
their own data as a guide, not industry referrals being received. What’s most
benchmarking studies. important to them is their trendlines.
While it’s tempting to rely on a broader Is the trendline increasing, decreas-
set of data, a narrower dataset is more ing or staying flat? The best firms aren’t
powerful when it comes to organic growth. looking at their data as a snapshot in
One of the principal reasons growth-mind- time; they’re looking at where their data
ed firms should limit their use of industry- trendline is heading. Unfortunately,
wide benchmarking studies is that this most industry studies are backward-
The best solution research tends to lack data from many of looking and focus on what’s happened

(based on our the fastest-growing firms in the business. over the past year or earlier, rather than
looking forward.
From my own knowledge of the
For example, the client referral rate
two decades of industry, I can unequivocally state: is the number-one revenue indicator
Firms that have unlocked the winning
experience) is to formula for strong organic growth aren’t for organic growth at advisory firms.
make every advisor in participating in these studies — and with When you look at client referral trajec-
tories, you’re going to see either growth,
good reason.
the firm aware of the An advisory firm’s data is one of its decline or stagnation. Depending on the
disappointing client- most valuable organic growth tools. trends, different options are available to
improve growth.
Protecting that information and using it
referral trendline. for the firm’s exclusive benefit give it a 2. REVIEW STEPS THAT CAN HELP
serious competitive advantage.
So, if the best firms out there aren’t YOU IMPROVE THE REFERRAL
participating in benchmarking stud- TRENDLINE.
ies, it’s likely that the top firms in the What should you do if your firm’s client
benchmarking studies are only the top referrals are flat or trending down, and
ones in this specific research. This begs you want to quickly get referrals trend-
the question, what are the top firms ing up? The best solution (based on our
across the industry actually doing to two decades of experience) is to make
boost organic growth? every advisor in the firm aware of the
disappointing client-referral trendline.
1. LOOK AT YOUR DATA IN A This will help each individual advi-
BETTER WAY. sor (or advisory team) understand that
Very early in my career, I learned how while certain advisors may be getting a
the best firms look at their data. First, lot of client referrals, the business overall
they rarely ever share their data. If they has been getting too few client referrals.

DECEMBER 2022/JANUARY 2023 INVESTMENT ADVISOR 39