The discussion was based on work carried out by FOX over the past year and half as well as on work Monnier did at his prior firm, PinnacleCare. In both cases, referrals previously represented around 10 per cent of new business but today represent close to 50 per cent.

“I’m convinced these results are quite universal if you focus on referrals in the right way,” Monnier said.

He acknowledged that many attendees will “know the tricks and tools” when it comes to referrals but spoke in detail about the significance of taking those skills and ensuring they are at the heart of an institution’s culture. Attendees heard that referrals should be a firm-wide strategy and not something you “wait patiently for.”

The insights echo those stemming from the recent Futurewealth Report 2014: The Advocacy Impact – published by SEI, Scorpio Partnership and NPG Wealth Management - which found that advisors double their chances of receiving a referral by simply asking for one. For example, 47 per cent of respondents said they would actively refer without being prompted while an additional 47 per cent said they would refer - but only if asked .

Challenges

One of the main challenges with referrals today is that many individuals have opinions and perceptions that are “very often misguided,” Monnier said.

He went on to identify some common myths about referrals, including: the perception that good service automatically generates referrals; the notion that referrals are the responsibility of the business development and sales teams; that the act of generating referrals cannot be taught; that a firm’s largest clients are its best referrers; that referrals can only be obtained from long-standing relationships; and that there is a limited amount of referrals you can get from one client.

Monnier cited research carried out by the University of Connecticut looking at a financial services firm with around 6,700 clients. The research measured the gap between referral intentions and referral behavior and it was found that 68 per cent of clients said they intended to refer and 33 per cent actually did.

“While this referral gap is wide, these results are decent. So, this is an organization where, even though they didn’t focus on referrals as an organization culturally, there were probably a few individuals doing a few good things along the way to get to those numbers,” Monnier said.

He used this as an example of how most clients are conscious of their role in the referrals process but noted that there is huge scope for firms to truly leverage it.

Importantly, referrals can and should come from clients of various shapes and sizes. Whether they are a small or large customer, a low referrer or high referrer, the two are not necessarily correlated - a firm’s biggest clients are not necessarily its most valuable ones.

“Instead of focusing on getting smaller clients to become bigger clients…there is a great opportunity of…getting your clients to refer more business and be greater advocates,” Monnier said.

Becoming and remaining referable

In many ways, client satisfaction represents “the gap between what they expected and what they got,” Monnier said, noting that you have to give clients something they want to talk about because “that’s how the referral process starts.”

Above all, to become and remain referable, advisors have to be committed to their service and willing to demonstrate it continually - in good and in bad times.

“A complaining client is never fun but it can be a great opportunity to increase your ability to become and remain referable,” Monnier said.

He continued by noting that there is a raft of opportunities for advisors to make themselves more referable - and they don’t have to have worked with a client for five years. It could be as simple as teaching a client or even a prospect something new, for example.

Other instances include: getting a client to think in new ways; challenging a client’s assumptions; and doing something for a client without compensation. Monnier asked attendees how often individuals at their firms ask for referrals, in response to which 31 per cent said they didn’t know, another 31 per cent said “rarely” and 21 per cent said “when value has been recognized.”

Why is it that so few people ask for referrals in a space that is frequently referred to as very much a “people’s business”?

Quite often they simply don’t think about it, or, they know it’s important, but don’t know how, Monnier said. Other misconceptions include not having served the client enough; coming across as unsuccessful; being too aggressive; and making clients feel uncomfortable.

Yet the best way to get more referrals is in fact to ask, Monnier said. However, teams need to be taught when, how, what and who ask.