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Lessons From the Dow Jones Man-on-the-Street Referral Survey

A recent video blog post demonstrates why target marketing is so important.

Veronica Dagher of Dow Jones recently posted a video in which she asks passersby on a Manhattan street what would cause them to make a referral to their financial advisor.  Some sample questions and answers include "What do you like best about your advisor?" "He gives me thoughtful ideas."

"What could your advisor do to improve his service?" "Focus on what I need and my objectives."

"What does it take to get a referral?” "The confidence that they will continue to do a good job for whoever I referred over." "They would have to do a good job throughout the market cycle."

Does it strike you that any of these people come off as particularly enthusiastic about making referrals to their financial advisor? It doesn't come across to me like that. Notice, for example, they answer the hypothetical question “What would it take for your advisor to get a referral” rather than responding “I give my advisor referrals, and this is why.”

My conviction is that the key to being referable is to provide a specific set of services tailored to the needs of a well defined target market. What is the trigger phrase that would get any of the subjects of this survey to tell someone about their advisor? Would one of their friends have to say "I wish I could find a financial advisor who will do a good job for me through the market cycle?" People don't talk like that!

If you have carefully and specifically defined your ideal client and tailored your services to the needs of that group, and that client was interviewed by Veronica, I can envision their response to the referral question to be something like "oh I do provide referrals to my advisor. He works with people exactly like me, and understands the particular things I need. So, when I hear a friend like me talk about their challenges with money, I always pass his name along."

If Veronica buttonholed your clients and asked about you, what would they say? Would it be "he listens to me and does a good job." Or, would it be "he knows me. He specializes in people like me." And which do you think would get you more referrals?

Steve Talks Referral Marketing on RegisteredRep TV!

I was at the Tiburon CEO Summit in New York week before last, and briefly visited with David Armstrong, Managing Editor of Registered Rep magazine. In this interview posted on the RegisteredRep website, we discuss a little about what is wrong with asking for referrals, and how to have a more productive approach to attracting clients through referral. I hope you enjoy this three minute segment!

Technology Won't Organize Us, it Creates a Greater Need to be Organized

Technology was supposed to make our lives simpler, and it has – provided you have discipline and realistic expectations.

One thing it will not do is organize our lives for us.

The inspiration for this post was an article on the Clientwise blog referring to an article in the New York Times recently by productivity guru David Allen. I am a huge fan of Allen's, and over the last few years I have worked hard to incorporate his principles into my daily routine.David Allen, founder & CEO of The David Allen Company

A common complaint I hear relates to information overload. There is just too much we have to process every day. Technology can put information overload on steroids. But it is not the information, it is how we handle it. As David Allen is fond of saying, if the sheer quantity of information were the problem then every time we walked into the library our heads would explode.

Technology is not the cause of our struggle to get the right things done but used poorly it can make the problem a lot worse. Allen's principles can help us do more than get organized (hugely valuable in itself), but can help us tame the technological beast and put it in our service. He suggests a series of five steps to optimize your focus and resources:

• Capture everything that has your attention, at work and at home, and writing. The first time you do this may take as much as six hours to "empty your head." A big project to be sure but a necessary one if the rest of the system is going to work.
• Clarify what each priority means to you. Decide what results you want, and what actions are required.
• Keep an inventory of all your projects someplace where you will see them often, and organize reminders for the to-do lists you create.
• Regularly review your inventory of commitments and projects.
• Deploy your attention and resources appropriately.

As I gradually learn how to utilize technology to apply Allen's principles, I find myself more consistently completing the important tasks I have committed to. I find that the more diligent I am about having discipline in following his ideas, the more productive I am and the more technology helps me accomplish things rather than burying me deeper in a tidal wave of tasks and information. If you struggle with overload of any kind, I strongly encourage you to take a look at some of the articles on Allen's website or to get his book Getting Things Done. His ideas have been a career changer for me.

Curian Makes A Common Mistake In Explaining A Drop-Off In Referrals

A volatile or declining market is too easy and superficial an explanation why clients are not referring.

Curian Capital, LLC, a money management platform, just released its annual survey of 1,000 advisors. In it, 77% of advisors listed acquiring new clients as their top goal for the year. The survey also noted that advisors are receiving fewer referrals than they did last year.

The story about the survey noted comments by Mark Schoenbeck, senior vice president of marketing for Curian. “Clients' reluctance to urge friends or family members to work with their adviser is a function of the negative news and opinions about the economy” the story reported.  “That tends to make them feel less likely to want to go out on a limb by suggesting that their friends work with their adviser, according to Mr. Schoenbeck.”

I disagree. And looking more deeply into the possible reasons for the drop-off in referrals can lead to a strategy less reliant on market conditions.

Clients risk their relationships and reputations when they make a referral to a financial advisor. However, I do not believe that the ups and downs of the market elevator those risks - unless the advisor has established that delivering returns is their primary value proposition. And I believe many advisors have inadvertently done exactly this by failing to consciously design and communicate a better value proposition.

If you represent a solution or experience that your ideal client needs or wants, assuming the solution is not consistently positive portfolio returns, prospective clients will be attracted to that regardless of market conditions. Clients and centers of influence will continue to mention you when they meet prospective clients who are looking to solve the problem you specialize in. Whether the market is up or down should be of little significance to your ability to deliver on your value proposition.

If you find referrals disappearing when the market gets volatile or declines, don't blame it on the market. Take a look at your value proposition instead. It probably needs rewriting or a better communication plan.

Update:

Since posting this article I had a conversation with Mark Schoenbeck. It turns out he believes strongly in target marketing for financial advisors and how that can help in attracting referrals. Mark fell victim to the risk all of us face in the public realm: you may talk with a reporter for 20 min., and what gets published might be a single sentence that doesn't necessarily relate to your point.

My point above holds true. If you fail to identify yourself with a value proposition that goes beyond portfolio returns, you run the risk that your client will assume that positive returns are your value proposition. Mark, and Curian, believe that. The results of their survey update for this year drives home how important that is.