If your firm is performing at the industry average for client retention, you’re retaining 95.5% of your clients on a year over-year-basis.  Translated, 95 out of every 100 of your firm’s clients chose to remain with the firm.   One could infer that the firm has 95 satisfied clients and that a percentage of those clients may even be considered enthusiastic with the firm’s performance, client service, resource base and stability. 

So here’s the question; “Have you asked your satisfied clients for a referral?”  In a fall 2011 “Quick Poll” from SEI they found that only about 20% of Advisors surveyed indicated that asking clients for referrals was a “regular routine.”   What is particularly vexing is the fact that across FAs of all sizes, active and passive client referrals are the source for more than 60% of a firm’s new client acquisition success.  When you look at these two findings in tandem, it would suggest that as important as referrals are to building an FA practice, firms are relying primarily on a passive approach.   

In light of the industry’s client retention efforts it would appear as though there is tremendous upside potential to be had for a firm and its advisors that are willing to ask their clients for referrals.  Take note, various advisor impact studies over the course of the last few years have found that 90%+ of clients are willing to provide referrals.  Advisors should take heed from the words of the early 20^th century English novelist. G.B. Stern; 

“Silent gratitude isn’t much use to anyone.” 

Let’s not forget your professional referral network, those CPA firms, attorneys, insurance brokers and estate planning lawyers that you work with.  In a study by Tiburon Strategic Advisors on “Financial Advisor Sales & Marketing” they found that almost all CPA firms and attorneys make Financial Advisor referrals.  Interestingly, those attorneys specializing in estate planning are dealing with clients that have average investable assets of $2.7 million. 

If you are looking for a quick, cost effective means of acquiring new clients, referral marketing should be high on the priority list.  Interested in a complimentary consultation on building an integrated referral marketing program?  Contact Cliff Campeau, Partner, Evolutionize, LLC at cliffc@evolutionizeMYpractice.com.