(April 14, 2004) When was the last time you were approached by a pushy salesperson and thought: “Wow, I have got to tell my friends about this great service!”

Never? Really? Now think about how you approach the topic of referrals with your clients.

In The ADVISOR Group’s second Annual Dollars & Sense Survey of Canadian advisors, prospecting or attracting new clients was identified as the number-one greatest single day-to-day challenge. At the same time advisors often list referrals as the best source of new clients.

“Never before have the friends and family members of your clients been so predisposed to listening to your clients brag about you,” says Duncan MacPherson, co-founder of business development and marketing consulting firm Pareto Systems.

At the Toronto stop of the Mackenzie University lecture series, he warned there is a right way — and a very wrong way — to let your clients know you may consider their friends and family at your practice.

MacPherson says that too often an advisor will approach the subject of referrals too directly. This is a mistake, as it can make the professional money manager look like their business is struggling.

“Most advisors position it as a favour, putting the onus on the client from the standpoint of obligation, rather than pure reciprocation,” he says. “You can never look needy.”

He says the key is making clients understand they are not doing you a favour by bringing their friends and family to your practice, but that you are offering them a service, simply by being willing to speak with their friends.

And he says you can plant the seed of the concept of referrals, as early as your first meeting — even before you have decided to take them on as clients themselves.

He offers the following example of how to broach the topic: “Invariably over the lifetime of our relationship, someone is going to ask you about me or you’re going to feel compelled to introduce someone to me who is looking for a second opinion.”

It is important to let the client know that their friends need not become clients. You are simply offering their friends guidance as part of your service to them. If the friend is already seeking a second opinion, they may be dissatisfied with their current advisor, or be flying solo.

But just because a client introduces you to a prospect, MacPherson warns you should not lower your standards on which referrals you will accept. Your clients should be made aware of these standards upfront, understanding where your specialty lies and which clients you can serve best.

“The ideal client understands the merit of belonging to a small exclusive club and they don’t introduce people to you because they’re trying to help you grow your business,” he says. “They introduce people to you because they think they’re doing their friends a disservice if they don’t.”

He says it is important to develop an “ideal client” profile which looks not only at prospects’ assets, but also their attitude and whether they will become advocates for your business.

“The ideal client does not worry about what you cost, all they think about is what you are worth,” he says, urging advisors to never negotiate their value.

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    “Who views it as an accomplishment when you take on a new client, you for closing them or the client for qualifying?” he asks.

    At the initial meeting with the new prospect, it is again important to avoid looking desperate. From the outset, the advisor should tell the prospect that no decision will be made at that meeting. This will help to put the prospect at ease, since there will be no pressure to make a commitment on the spot.

    MacPherson says prospects may try to close the deal with the advisor, but warns against accepting.

    “If that ever happens, don’t waiver,” he says. “Simply say ‘If that’s how you feel, I appreciate that, but you’re not going to change your mind in 48 hours.'”

    The client will appreciate the fact you let them think about it.

    Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com