7 Reasons Why A Financial Advisor Should NOT Join A Referral Group

For many that have followed my career this article may seem contradictory, or, even heretical.  All I ask is that you read more than the title of this blog.  

One of the massive problems with the referral training and coaching industry is an emphasis on tactics at the expense of strategy.  Every component of you and/or your organizations referral based sales effort must be driven by strategy.  Eliminate the noise from those that teach the easy to swallow, but, difficult to digest emotionally based referral tips and you will be on the pathway for profitability and sanity in your referral efforts.

With no further ado...

1.  Don't join a referral/lead group if you don't enjoy being a salesperson.  I can't even begin to quantify the billions of dollars in wasted sales time that has been expended by 'salespeople' that hate to sell and join a referral/lead group to try and avoid what they get paid for.  Only take the time to join if you are going to focus a serious amount of time and effort into the group.  Which leads to #2.

2.  Don't join a referral/lead group if you have time enough to take at least 5-8 hours per week (minimum) in focused effort on the group.  Travel time to and from and the meeting will be at least 2 1/2 hours in almost all cases.  Add in, if you want to make money, a few meetings and calls per week with group members to develop relationships and work on referral strategies and you easily get to the number above.  

3.  Don't join a referral/lead group if you aren't financially secure enough to do it right.  Everyone that is a member of a longstanding and successful referral/lead group can tell multiple stories of the 'referral predator' that comes into the group with no existing relationships and immediately expects everyone to place all their personal business and clients with them.  That is beyond idiocy.  You need to be focused on 'selling' (yes selling) your value as someone that isn't just a taker, but, a giver of referrals.  I go into more detail on this in this article:  https://www.linkedin.com/pulse/why-how-your-personal-corporate-culture-helps-hinders-mike-garrison/

4.  Don't join a referral/lead group if you haven't developed a decent network.  If you are beginning your financial services career...most referral/lead groups are a bad place for you to be.  Remember, if you don't want to be a referral predator, you have to be able to produce referrals.  I recommend that new financial advisors partner with a senior advisor, learn the business without excess pressure from generating new business from their network and instead focus on building the network for the future that will allow them to give referrals predictably.  That doesn't mean that some financial advisors won't be able to give referrals out of the gate, but, they usually have had experience in another profession and/or have deep family networks that will carry them through until they build up their network of clients and referral sources in their financial career.

5.  Don't join a referral/lead group if you are unaware of risk and how it determines the willingness of clients and referral partners to actually refer you.  There are three basic areas of risk that occur in referrals (as percieved by your referral source:

  • Time - How much time does you referral source and/or client need to expend to get you the referral?
  • Money - How much of chance do I have of losing this client if I introduce them to you? (Hint:  If you haven't had professional sales training that risk is astronomically higher than if you have)
  • Emotion - Will my friend/client like me more or less after I introduce them to you?

The number one thing to remember when it comes to referrals is this:  Everyone that refers you wants to get their relationship back in at least as good a condition as they gave it to you.  Pull that off, and you are well on your way to referral success.

6.  Don't join a referral/lead group if the only type of referrals you want to recieve are 'done deals' and/or prospects that are ready to buy now.  As a financial advisor, you should accept all referrals that drop into your lap, provided they are good prospects.  However, if you focus on getting more social introductions to prospects you have chosen ahead of time, you will fill the top of your pipeline on a consistent basis with the exact types of prospects you want...and over time, you will dramatically shorten your sales cycle.

7.  Don't join a referral/lead group if you aren't prepared to be held accountable and to hold others accountable for production.  In short, groups that don't enforce attendance, ethical conduct and explicitly value members time are a huge risk for any financial advisor.  I talk more about accountability in this blog post:  https://www.linkedin.com/pulse/1-secret-receiving-predictable-referrals-from-other-mike-garrison/

At the end of the day, as financial advisors, the most important thing you have to invest in your career is your time.  In most cases, I don't recommend that clients of mine join referral groups.  If they are already a member at the time of client engagment for coaching we focus on evaluating their group from a data driven POV to see if continued investment of time is worth the past and reasonable future ROI.  Often it is not.

At the end of the day, referral base sales that are predictable and continual rest upon a foundation of giving. This is where my work with organizations on having a real referral culture pays the greatest dividends, both now and in the future.

If this was of value I ask that you share it with any and all business professionals that you feel could benefit from it. I am always open to a conversation about referrals, culture, and the quest for innovation within the independent financial advisor space, or, other players in the SMB space.

Connect with me:

Twitter: @CPRforsales 

LinkedIn: https://www.linkedin.com/in/mikegroanoke/

Email: mike@garrisonsalesconsulting.com

I am a business coach that helps clients improve themselves and their organizations with a massive does of metric driven referral based sales expertise. In addition, I offer keynote speaking on valuable topics like "How to instigate transformation in the culture of organizations ready to grow" and "How to create a Preditable Referral System." Other engagements feature coaching with sales leadership, tightly focused training on referral based sales and consulting strategically with executives on organizational change.