4 Best Referral Sources for Financial Advisors

What are the best referral sources for financial advisors?

One of the best referral sources for financial advisors is mutually beneficial relationships. Referral programs are one of the best forms of marketing for financial advisors because they generate new leads and increase revenue.

The key is knowing who to ask and how to ask for the referral.

  1. Current Clients
  2. Lawyers & CPAs
  3. HR Consultants
  4. Recruiters

Can financial advisors pay for referral sources?

An SEC-registered investment adviser firm may pay cash referral fees to a third-party (non-employee) that solicits investment adviser clients on behalf of the registered investment adviser firm only if such a solicitor arrangement is in compliance with SEC Rule 206(4)-3 under the Investment Advisers Act of 1940.

So, the short answer is, yes. But why would you want to when there are so many free referral sources in your personal circle and your wider community?

  • Clients
  • CPAs
  • Doctors
  • Family
  • Friends
  • Head Hunters
  • Human Resources
  • Lawyers
  • Realtors

Earning Business Through these Referral Sources

How do financial advisors get referrals?

First and foremost, they ask for them.

If your clients trust you and believe you are building long-term wealth for their families, then they will be happy to share your knowledge and expertise with their friends and colleagues.

It never hurts to ask.

What sources can you draw on within your network to feed your sales funnel besides existing customers? Think of all the areas of holistic financial planning—taxes, insurance, health care planning, estate planning, etc. How can you partner with professionals and businesses to share referrals and recommendations?

Marketing for financial advisors includes networking and building mutually beneficial relationships with others both within the industry and on the fringes of the financial sector.

  • People are 400% more likely to become clients after their friend refers an advisor.
  • A customer who was referred has a 16% higher lifetime value than one who wasn’t.
  • 58% of wealthy investors met their wealth planner through a referral.
  • Less than 11% of financial planners ask for referrals.

1.     Your Own Customers

The best referral sources for financial advisors are their own happy customers. Asking for referrals helps clients feel closer to you as their financial planner and your business as a whole. They might feel connected to helping your firm succeed in addition to feeling a sense of ownership of the friends and family members to whom they recommended your services.

If you recommend a less experienced advisor, take on your client’s descendants, who are earlier in their life and career path, they will put trust in that because you have shown your value. Earn business for your junior/second chair advisor with the client’s family so that the clients will remain in-house for generations to come as the advisor progress through the career path.

2.     Working with Attorneys and Accountants

Is there an attorney or accountant you have previously worked with who would agree to trade contacts and lend their credibility to vouch for you to their customers? By partnering with a well-known and trusted professional in your area, you can offer holistic financial planning services to their clients at a special rate.

3.     Human Resources Consultants

People need the most assistance during major life changes and situations that have financial implications. This includes everything from a job change, marriage, divorce, inheritance, births, deaths, etc. HR representatives are one of the first lines of defense during these times.

If you can develop a rapport with them to refer people who are experiencing a crisis or transitionary period, you can find and help new clients during a particularly vulnerable time in their life. The best marketing for financial advisors is helping ease the burden during times of great stress and uncertainty.

HR consultants are also one of the first people to know when someone transitions into a new high-paying role, so it would be wise to build and nurture relationships with them.

4.     Executive Recruiters

Another group first to know about new well-playing jobs is executive recruiters. Don’t neglect a prospect just because they may be early in their career, it’s never too soon to start planning for early retirement.

Give them center stage during your first interaction. Ask about the types of clients and industries they work with. Once you understand that, let them know that you will keep an eye out for opportunities to send your clients to them. Present yourself as someone who adds value before you start making requests.

You could say something similar to:

“We seem to work with a similar high-net-worth clientele. Whenever any of my customers inevitably need a recruiter, I’ll make sure to send them your way.”

After you have sent them some business, you can start discussing reciprocity and arrangements.

The easiest way to get referrals is to earn them and then simply ask for them. Delight your existing customers, utilize the Family Estate Organizer to facilitate the transition between generations, and partner with other professionals in your area.

learn how C2P can become your all in referral source for new customers in your area.

To learn how C2P Enterprises can become your all-in referral for customers in your area, schedule a FREE 20-minute call.

Financial Professional Use Only

The information provided in this presentation is not intended as investment advice or legal advice. The information provided is for informational and training purposes only. The information in this presentation was accurate as of the time of the material was created. Tax laws and rulings can frequently change. Please discuss the client’s current situation with an accountant or tax advisor.