Referrals 2.0

I authored an article on a couple of the discoveries we made at the Financial Industry Think Tank we held in conjunction with FPA Business Solutions 2011 for the Practice Management Solutions supplement to the Journal of Financial Planning.  It appear as the cover story in the July/August issue.  You can find the article here.

Results From Client Engagement Think Tank, Part 2

Who are your target prospects?

When you bring on a client, what's the process? How do you decide whether you accept a prospect as a new client?

If you are like the advisors we spoke with, there is surprisingly little relationship between the answers to these questions.

At the think tank we convened in Boston in conjunction with FPA Business Solutions 2011 we asked both questions. In response to the target market question, we got pretty much the answers we were expecting – prospects described in terms of demographics, income level, profession, or investable assets. We then wanted to know whether these target characteristics appeared in questions during an initial interview. Whether advisors used checklists or similar device with prospective clients. We wanted to know – did they stick to their own standards? Once they have established what and "A" client is, where they consistent in excepting only "A’s”?

Then we asked those advisors about their client on boarding processes, and the answers caught us offguard. When we posed the question "When you get to the point of deciding whether to accept a prospect as a new client, how do you decide?" We got answers totally unrelated to the description of their target markets. We heard adjectives like feel, fit, comfort, or personality attributes like "delegator" "they buy into our process" "they followed up on advice" "they did not raise strong objections to our fees."

In short, the decision over whether to work with the new client related entirely to the quality of the relationship and have little or no relationship to what advisors told us they were targeting.

This raises a number of questions for us. What is an "A" client really? How can advisors update their client on boarding processes to assure that they are primarily bringing on "A" clients? How do we redefine our target markets to include what we are really looking for in prospective clients? Maybe our concept of a target client is incomplete. I will offer an alternative possibility on defining our target markets in my next post.

Results From Client Engagement Think Tank, Part 1

A few weeks ago, I facilitated an industry think tank on client engagement, hosted by Julie Littlechild, in conjunction with FPA Business Solutions 2011 in Boston.  Our objective was to dig into the conclusions of Littlechild's most recent survey Anatomy Of The Referral and to hear about those experiences from the advisors point of view (the study was based on a survey of investors).

The study revealed critical insights into the process of enhancing client loyalty and attracting referrals. It provided statistics behind many concepts that we had suspected. But, there are limitations on polling data. We wanted to dig down into the results with real-time active conversation.

The study revealed that what drives client engagement are having the right clients, the right conversations, and asking the right questions. Some of what we wanted to know included:

• Do practices that segmented its client base incorporate that market segmentation into its client on boarding process?
• How broad were planning conversations with clients, what kind of leadership to the advisors exhibit with clients, and was there a transition during those conversations to a discussion of referrals?
• How do advisors solicit feedback and do they involve their clients in the strategic direction of their practices?
• Do they attract referrals consistently and do they have a referral marketing strategy to get them?

The results of the conversation were unexpected. There was also consensus on some surprising things. What we gleaned from the meeting was a clear direction on issues that needed further consideration.

In this series of posts, I will discuss a few of these surprising results:

• The disconnects between target markets and client on boarding processes.
• The way we target prospects needs reconsideration and updating.
• Referrals continue to be the most important source of new clients, and no one has a strategy for attracting them.
• Looking forward, what might be included in the design of referral marketing strategy.

The rest of this series will examine each of these concepts in more detail. Click here for Part 2.

Ask For Introductions – Not Referrals

You know I am against asking for referrals. At the same time, I recognize the need for a referral strategy to keep your practice growing. There are a number of ideas I included in a presentation I recently did at FPA Business Solutions 2011, and others came out of a think tank I facilitated in conjunction with that conference, and I will write about them in coming weeks. One of the best ideas I have heard was presented in one of the sessions at that conference by Sam Richter of ActiFi, in a program he called Know! More Referrals – Using Technology To Generate More Prospects And Land More Clients.

Richter's point is that we can in be introduced to more potential clients if we do our homework before meeting with friends and clients who can make those introductions. He calls research the fourth R of our education, to follow ‘readin ‘ritin and ‘rithmetic.

Over the course of an hour, Sam covered a dozen different ways to use clever Internet research to find specific people with whom to connect, and then to find their common connections to us. Once you know someone who knows your prospects, asking them for an introduction is natural and comfortable. It is simple networking. It connects you with someone specific you have qualified as a prospect, and it relieves your connection of the responsibility of coming up with the idea and sending you to that person unsolicited.

Our challenge has traditionally been figuring out who to be introduced to as potential clients. Not knowing who you wanted to meet is a significant contributor to the discomfort of the dysfunctional way we have traditionally been told to ask for referrals. The new web tools available to us help eliminate that challenge. Once we know who we want to meet, asking for an introduction is a natural comfortable process that bypasses most of the problems with old-school referral strategies. Embracing the fourth R elevates us from sales rep to professional networker.



Another Sneak Preview of Tomorrow's Presentation

Here is another sample of the video interviews that will be part of my program tomorrow on clients advisory boards at FPA Business Solutions 2011.  Hope to see you there!