By Jerry Lezynski
In today's market climate, trust in the financial services and banking industry is a critical decision factor for clients seeking financial advice, and that's where centers of influence (COI) relationships can be your most valuable asset. Already a trusted resource for their clients, COIs can offer a credible referral relationship for a financial adviser. As a result, COIs can be the most productive new business tool.
According to a recent study,1 excluding market performance, the best managed firms captured 7.5 percent of average annual asset growth from professional referrals, compared to 7.3 percent from client referrals, 3.1 percent from existing clients and 2.7 percent from all others.
To achieve results in today's market, a successful COI program must be approached as a strategic business initiative. Here is a selection of best practices essential for creating a productive COI network:
Identify different sources. Multiple centers of influence can offer solid referrals-CPAs, estate attorneys or insurance agents naturally come to mind. But these days, it's important to look to other trusted resources. Think about professionals who potential clients would trust to help them make important life decisions, such as mortgage brokers, real estate agents and bankers-even interior designers, travel agents or art gallery owners. They provide important and sometimes life-changing advice that demands a high level of trust from clients.
Ensure you're compatible. Not every COI is going to offer the right type of client referral, so establish clear criteria for your referral sources and the leads they bring you. Consider characteristics such as similar styles, approaches to business and client service, size of the firm, and longevity of client relationships. Naturally, you'll spend more time wooing a warm lead from a familiar source. This step can help ensure that your valuable time isn't wasted.
Instill confidence. Before recommending you to their clients, a COI must know that you and your firm will take care of them. Just as you should interview COIs to find the right match, they should also get to know you. Explain your client process, as well as how you plan to approach and manage their clients. Developing a consistent process for introducing yourself and following up with the referral will not only streamline the process, it will give your COI peace of mind that his or her client will be well-nurtured.
Offer real value. To establish a solid referral network, you've got to provide a win-win value proposition for you and the referring COI. Not only do you need to reciprocate referrals to your COI network, but you also need to show the COI's clients why they should do business with you. A good way to do this is through education, especially in the current economic environment. Explore hosting joint seminars on critical, timely topics of interest to your and the COI's clients.
Keep up the conversation. Just like a good client relationship, approach your COI network with frequent, meaningful opportunities and communication about industry topics, firm news, etc. It will demonstrate that you value the relationship, as well as keep you top of mind when it comes time to refer their clients.
There's a reason professional referrals are one of the best possible ways to build business. But with less time, more competition and a thousand other issues to address, advisers need to develop an approach that's productive. A little investment in careful consideration up front will yield a much better return in the end.
Jerry Lezynski is director of marketing for the SEI Advisor Network, which has provided financial advisers with wealth management services through outsourced investment strategies, administration and technology platforms and practice management programs for more than 15 years. This strategic business unit of SEI works with more than 6,000 advisers and has $25 billion assets under management (as of March 31, 2009).
1 Schwab Institutional, Best Managed Firms: The Business of Serving Clients, March 2009.
Tools to Use
This article is an abbreviated version of the 2009 Centers of Influence/Referral Toolkit. To receive the full version, visit www.seianswers.com/coi, or call an experienced SEI practice consultant at (888) 734-2679.