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Asking for referrals is awkward. I’ve recently come across a situation where I have been asked to provide one, maybe more. I have thought about how I would bring the subject up with friends. One of the greatest skills financial advisors (and everyone else) can develop is listening. That brings us to the subject of recommendations.
Referrals are easy to give when someone comes to you with a problem. “Do you know any good financial advisors?” An advisor in California made it a practice to ask every new client sent in his direction, “Why did you choose me?” The response he remembers best is “I needed an advisor. I asked around. Yours is the only name that came up twice.” The problem develops when you need to create demand. We will look at that in a moment.
In recent conversations with friends I have come across a close relative to referrals, which is a recommendation. I was chatting with a fellow over breakfast. We know someone in common. I asked how he knew them. He mentioned an issue concerning cancer and the person we knew had the right connections and referred him to a specialist at another hospital. I then recalled a similar situation when I was chatting about a new restaurant with a friend. She said: “You really should try it. They are very busy, but I know the owner. Let me know when you want to go and I will get you a reservation.”
A recommendation is often welcomed. You are helping a person. They have a problem. It is not getting solved at the moment. You have access to something they do not. As the old expression goes, “It’s not what you know but who you know.”
Let us consider two strategies:
1. Look for a problem in need of a solution.
The table at a sold out restaurant or access to the specialist doctor are good examples. If there is a similar problem of a financial nature, you can step up and offer to make a recommendation. To the business on the receiving end, it’s a referral. You are sending them business.
2. Find a common issue.
Your friend is upset about stock market volatility. Maybe they are concerned they will die before their spouse and want to provide for them. You had the same concerns too. Thew difference is you found a solution, having the right financial advisor.
It might sound like this:
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Identify the problem. “Fred, I know you are concerned with stock market volatility. You watch the cable financial channel all day. You can’t sleep at night.”
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The common issue. “I had that same problem too. I didn’t know if I should stay invested or sell everything. I didn’t even know if I owned the right stocks.”
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I found a solution. “Fortunately, I hooked up with a good financial advisor years ago. When I get upset, I call her up. She always takes my call. She calms me down. She puts things in perspective and gets me focused on the long term. Sometimes she shows m e opportunities others are missing.”
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The offer. “Fred, I think you would enjoy meeting her. She is coming over to get some papers signed on Friday. Why don’t you stop by for coffee afterwards?”
In this situation, your client is positioning you as a successful problem solver. It is all very low key. Asking for permission to refer someone can make them uncomfortable. Offering to make a recommendation in the form of an introduction is much sofer.