Webinar Referrals: How to extend the trust and value of your advice

(00:02): Hi, thank you so much for joining this webinar. This is part of the Human-Centric Advice series. We've covered elsewhere, the Human-Centric intro meeting, the Human-Centric Planning meeting, the Human-Centric Client Review meeting, the Human-Centric Client Review meeting for long-term clients. This is the webinar where we look at the human-centric way to do referral management. I'm Tom Mathar, I head up Money Mindshift. Money Mindshift is a campaign that helps people, including financial advisers, to live the life, to fund the lives that they want to live. So really, we are inviting people to think more holistically about money. Now, perhaps you'll be familiar with the superstructure of this by now. I always cover very similar elements. There's always an element about listening and trust building. There's always a section about preparing mentally and logistically for particular type of meeting. There's always something on how you set expectations prior to meeting the client and how you follow up afterwards.

(01:07): On this occasion, I weaved in something on the psychology of referrals, and that's the psychology of referrals on both client side and adviser side. Let's go then, and let's bring it to life. As always, I want to bring this notion of human centricity to life, and in the beginning, I want to reflect on what it means to be human-centric. I think the way the industry has often thought about recommendations or referrals is in a rather transactional or product centric way. I give you an example. I met a financial adviser once who told me he's got the killer question of how to get referrals. What was it? The killer question was one where he said, oh, by the way, since I see your phone there on the table, I wonder, can you give me the numbers of three people who you think may benefit from my service as well?

(02:09): Rest assured, this isn't the type of advice or recommendation that I'm giving here in terms of how to go about referral management. In fact, I believe this is the polar opposite of what you should be doing, because this is a way that I would like to think is product centric. Whereby a referral is something that you sort of like chase, like a product, and something that you get just by asking the right type of question. When you think about referral management in a client-centric way, then perhaps what you do is you make it easy to provide the referral. So perhaps, you have like QR codes or you give incentives, et cetera. Now, the human-centric way to think about referrals is one that understands that there's an emotional side to providing a recommendation, and that there are risks on your client's side to provide a referral, and that it may make people uncomfortable that even the language of referral is off-putting.

(03:12): And more so we look into this, but before we do this, I want to share the story of an adviser I met in Stuttgart in Germany, and she told me a story of her meeting a client, and they were sitting there in a client review meeting, and her client was telling about an awful divorce process that a friend of hers is going through. And this adviser, she was listening empathetically to that story, and at one point she asked, is your friend actually looked after as far as the financial score? Or would it be worthwhile if I helped? Yeah, if we met and, and I help her check her financial situation. And you see what's happening here, of course, this, in a way, is a way to be thinking about referrals. And getting introductions to new prospective clients. I want to pick this up later, but to me, this is the perfect example of how you should be thinking about referral management and spotting opportunities.

(04:20): Let's look into the psychology of referrals then on adviser side. And when advisers ask for referrals, they often describe feeling a range of emotions. And here's some quotes that bring that to life, and perhaps you can relate to one of them broadly. I think there's a fear of coming across salesy or needy. There's perhaps imposter syndrome. Perhaps there's a perceived risk of trust. There may be other emotional reactions like guilt or shame. Now, how to deal with this? And what I'd like to bring to your attention, a an episode that I recorded on the Money Mindshift podcast, where I had Neil Bage on in an episode called How to Compare. And one of the things Neil said here was that emotions are data, And we should take it seriously. So if you're feeling guilt, shame, imposter, <laugh>, whatever it is you're feeling, when you bring up the subject of referrals, the point, the advice is take it seriously.

(05:29): So because perhaps it is trying to tell you something, perhaps you are feeling guilt for plausible reasons. Perhaps it isn't the right point in time to bring up this subject at that particular point. So whatever you're feeling, take it seriously. But it may also be the case that what the emotional side of your brain is telling you, or that information that the data conveys or contains isn't useful. And that the cognitive side of your brain should actually take charge and say something to the effect of, okay, I do note you imposter anxiety, guilt, shame, whatever it is. I do, I do hear you, but I'm in charge and I've decided I put you aside and I bring up the subject anyway, because I know that now's the right time, okay? But you see here what this, what is happening here, and how this is a sort of, emotionally intelligent way to think about the subject and to think about how to deal with emotions.

(06:40): Now, there's a psychology of referrals on client side too, and I want to pick up the unspoken pressures very quick. And I share a personal example. Actually. I find that perhaps you find this, I find that when you're in London, you are always getting upon receiving the bill. You're always getting this QR code and the request from the waiter to scan it and leave a review on Google very quick. Now, I don't know about you, but I don't like this at all. And I think something's happening in that moment when you're being asked. I think, you were a guest until that point, and all of a sudden you are feeling like you're in a marketing funnel, it doesn't even help that when on the next day there's a social media manager thanking you for the review that you've left.

(07:34): I mean, I get it. It's competitive market. It's probably important for the waiters to as part of the performance review and all those things. I do get it, but it still makes me feel uncomfortable, <laugh>. And I find there's, there's something quite transactional about the way this is being handled it creates discomfort as well. So what's the insight here? Asking for referrals can unintentionally create the same outspoken pressure Yeah. And transactional feel that you noticed with QR codes in restaurants. There's that risk that the client moves from feeling, feeling valued to feeling used. Yeah, there's the risk that clients comply out of politeness, but not because there's real advocacy. And if a referral request feels like a checkbox, that undermines your positioning as a trusted partner. So the key takeaway is, referrals should feel like an extension of the trust and value that you have created, and it shouldn't feel like a transactional exchange. Because the moment it feels like a KPI, then, the magic is gone.

(08:54): Okay? On this slide, why don't you hit pause very quick and ask yourself this question, when have you last recommended something to someone? And when have you not recommended the same thing to someone else? Okay? I can give you an example from myself. I've recommended a movie I've watched with my children. I've recommended that to other parents who have kids of the same age. I haven't recommended that same movie to my own parents, <laugh>. Now, hit pause. And just think of an example like this for yourself. Okay? What's the insight? Number one, I would say relevance matters. Yeah. So I recommended the movie to other parents, but not to my parents because , the other parents they share the same context - Kids, family, entertainment. So in this case, the recommendation feels helpful and it feels authentic, but recommending it to my parents would feel observed because, they're in a different life stage, they have different needs, and it signals that I don't really understand their preferences and needs.

(10:06): Number two, when I make a recommendation, I put my own reputation on the line. If the recommendation feels mismatched, then I risk embarrassment. And the same will apply to your clients. Clients will recommend you only if they're certain that the referral will be relevant or valuable. And then thirdly, my instinct to avoid recommending the movie to my parents shows that, and I believe everyone else filters referrals to through two things: The first one is appropriateness. So does this make sense to them? And secondly, alignment. So will it reflect well on me?

(10:46): I let you pause here and you can go through this list here. It shows a range of risks. There are to provide a referral. I think all it is, is you want to be aware of these because every referral request carries hidden risks for the client. And if advisers, if you ignore these, they can unintentionally create friction or even harm the relationship, I feel like I'm problematising referrals a lot, And I feel like I'm telling you a lot about the risks and that asking for referrals is so full of risks that it's doomed or wrong or inherently flawed. That's not what I want to say. So let me pivot. The good news is that psychologically speaking, there are rewards providing a referral as well. And again, I let you hit pause here very quick, and you can study the benefits at your own pace.

(11:41): But the big insight here is this, referrals aren't just a favour. They can be rewarding, they can be intrinsically rewarding. And advisers who tap into these motivations make the process feel natural, not pressured. You can think about referrals, you can shift your mindset from asking to enabling, So instead of thinking, how do I get referrals? Think, how do I create conditions where clients experience to help us high and reinforce their identity and feel proud to connect me? Yeah. When looking at benefits of providing referral, you realize how to design use better language and timing around referrals and emphasize that it's about helping others. Which triggers Aris and agency . You want to highlight shared values, which, reinforce identity, and you want to frame referrals as a way to support someone they care about, not as a transaction.

(12:43): So this is really so important. You want to convey the impression that you're there to help others. Think of the story of the Stuttgart based financial adviser that I shared. So yes, in essence, what I'm saying is do consider the risks. They are important, but don't just think about risks because then you'll avoid asking altogether, or you will do it sort of awkwardly understanding the upside or the value makes the conversation confident and authentic as well. So this is the way to think about it. When you're in that bottom left corner, then the client would think something like, well, I'd be stupid to refer my adviser. My adviser doesn't offer much value. I'd risk my relationship if I recommended them. If they are in the bottom left, they go, there's no harm recommending my adviser, but why would I do it?

(13:39): Given there's little value of me providing a referral. If they're in the top left, they go, well, my adviser's really good and I appreciate all the services, but recommending them to someone else, that just doesn't feel right. And if they're in the top right, they say, yeah, my adviser is really good. There's really no risk in providing a recommendation. So that's the corner you want to be in. And you get into that by considering risks and values of providing the referral. So we want to get here, and, and in essence, this is how you increase perceived value when you deliver outcomes that matter. And you can communicate the impact clearly, and you want to reduce the perceived risk. You want to clarify what is a good fit. So who is a good fit for your service, which reduces social awkwardness, then you want to frame the referral as helping others.

(14:45): That's what I want to hammer into you. It's not about asking for referral, it's about helping. You want to show that the referred person will have a great experience. So that's sort of trust alignment, okay? We get there. But before we do, I want to look at the referral journey. Let us look then at the referral journey. Now, what you see here is kind of obvious, but I hope you'll see soon why it's worth reflecting on this. First, in the referral journey, there's the relationship that you have with the client, and then naturally, the client isn't with you all the time. Most of the time they're going after their everyday lives. At one point they spot an opportunity to refer you to a peer, and that peer having received the referral, will need to consider whether or not to take your client up on their referral.

(15:42): And if they do, they reach out to you and connect. Now, we've done a bit of research over the years and we saw that of a hundred clients who are willing to refer, and bear in mind by the way, that 80% of your clients will be willing to refer of those 100, about 66 make a referral that never leads to the client contemplating whether or not to take your client up on the offer or differently put, and, and it's Dan Allison who made this point on Michael Kitces podcast clients are willing to refer. That's what Dan Allison says, clients are willing to refer, but they're not necessarily capable to do so. So let's dive deeper. Let's look at what needs to happen at every stage to convert a client who's willing to refer into a referral down the line into a new client.

(16:47): Down the line, we know that the transmission stage or the transmission phase is key. It's when your client really opens up the possibility of what comes next. And what they do is they act as your gatekeeper in a way. But barriers can go beyond that phase of transmission. And we want to ask ourselves, where are other barriers that we can work on? So, okay, here I list the four phases that are fundamental for referrals to happen and ultimately onboard, onboard new clients. So first, of course, there's a relationship. All that happens with your client, with your current client, and of course, in that relationship, your client, they’ve got to be happy. It's got to be satisfied with the service that you do. Then in the transmission stage, we just saw this as the key moment and discussed the bottlenecks that exist in this place.

(17:49): So then there's the contemplation. So after your client talks about you, the peer might think about it, might do research, might even look at competitors to check out your reviews and, and possibly your website. And then there's the connection phase. So this is when your client's peer gets in connection with you. And here you want to think about the barriers that exist to optimise the conversion. So what we see here in this slide is that the drop in referral potential through the phases. So you might start with a hundred percent potential based on your client base. And we see from the research, as I said, that really a third gets to the transmission phase, and then less than one in 10 get to the connection phase. So in the relationship phase, I think there are two things that really matter.

(18:44): Number one, I said it before, the client's got to be happy with what you do. And one of the things I want to hammer home today really is that it's less about referrals, but it's about you becoming referable. And of course, you only become referable if the client is happy with what you do in the first place. But then the second thing is equally important that they have an understanding of what you actually do, what exactly is the value that you provide? So, and as banal as it sounds, that's not obvious because, and that's what I touch on in the other of these webinars, there's a range of reasons for why clients reach out or seek financial advice in the first place. So yes, there are the utilitarian reasons, the tax advice, the investment advice, the retirement planning, da, da, da, da, all those things.

(19:32): But beyond that, there are other reasons that are often not being considered, and that's the emotional reasons. Things like, wanting verification, saving time, reducing overwhelm, and so on. And that's important because in the second stage, the client needs to be able to articulate what your value actually is, what you have to offer, and they haven't necessarily been enabled to articulate what it is that you bring, So now if they can't articulate it, well then chances are they won't be describing your value in the sense that would benefit you. Okay? Then in the third stage, the peer, the person that your client referred needs to see the value in what your client has described, and they need to consider this relevant. So perhaps you think not much is in your control, but here, whether or not this is relevant also depends on whether or not your client knows what sort of prospective client you're going after in the first place.

(20:31): If it's people like them, what does that mean in terms of life stage? Is it in terms of assets? What is it? So consider also that in the contemplation phase, the prospective client will look at your website will seek out reviews, we'll check you out, and the information they find about you at that stage is very much in your control. And then bear in mind also that at this contemplation phase, they may also look at your competitor's websites. Then lastly, the prospective client has decided in your favour, and then they want to be seen as quick as possible, of course, and they want to encounter as few barriers as possible. So I suggest later to use a client review meeting to ask a question about how satisfied they are with the service that you provide.

(21:24): Not exactly like this, but to this effect. And the reason is that the answer they give here gives you an idea of how they describe your value when they are out there referring you to their peers. And the point is, you want to help them articulate what they say when often, when oftentimes this is unrehearsed, they haven't practiced this. So by considering both the emotional, social, and utilitarian dimensions of why they seek your help, try to find that out from them. And if you feel there's a gap in what they're describing, you can, you can fill the gap. For example, you could say I know we're doing a lot of retirement planning, but we also help with X, Y, and Z just to bring it to their attention, With regards to the next point, you can say something like, well, we best work with clients who have at least 250,000 in investible assets because that's when we know things are becoming a bit more complicated, and that's when we add real value.

(22:23): Or it could be we are working best with people from the age of 60, because that's when our retirement advice really becomes most beneficial. Or, we work mostly with startup founders because we know that things like equity, compensation, liquidity events, and scaling challenges that require specialized type of advice, okay? Now, in the relationship, also, I said this before, you want to focus on the client being satisfied and the client will only refer you if they had a referable experience in the first place. Sometimes, by the way, I'm asked like, when is a good moment, when is a good point in time to bring up a referral, to ask for it? And is it after the client review meeting or is it after when the markets are doing well or, such like. When is a good time?

(23:12): And my answer is, it depends. Because really the right point in time is when you have provided a referable experience. And that could be at any point, that could be right after onboarding, or it could be a few years later. It, it just depends. So you want to be mindful of when it is that you have provided a referral experience, okay? As you probably know, in each of these webinars, I reflect briefly on what it means to be a good listener and what it means to be trusted. And this here is an insight that comes out of James Woodford's book, the Heart of Finance, and I recommend you look at the work that James does with Raise Your EI, which is emotional intelligence training for advisers. But what he points out here is that trust starts with listening. And listening means setting aside your own lens.

(24:14): So you want to be aware of biases that distort perspective, things like the me theory where you're assuming that others are like you transference, , treating someone as a copy of a past client projection where you're imposing your fears and preferences on them, and stereotyping where you're judging by age, gender, and perhaps background and what James and many others working in this space would point out. Is that true? Listening is about curiosity and not assumption. And when you drop these biases, you create space for trust to grow. And that's because when you're curious, you seek to understand the other person's reality rather than imposing your own assumptions. They shut down dialogue and curiosity, of course opens it up. Well, that said, let's look at how you can bring the referral subject up intentionally considering what we've learned so far around the psychology of referrals and the referral journey. And let me say this here now that this is hopefully the last time, <laugh>, let's see, I use the term referral because you're not asking to be recommended. Really, what I encourage you to think about is that you're wanting to be introduced. So you're asking for an introduction to the right person. Let's look at how to do this.

(25:43): So I suggest you do a certain type of meeting for this, and I want to look how to prepare for this. So by now, if you watched other episodes of this human-centric advice webinar series, there's a logistical piece of preparation, and then there's a mental piece. And logistically speaking, I would send an email like this one, perhaps four to six weeks in advance of a regular catchup with perhaps actually one of your favorite clients. So the type of client that you're hoping to have more of, and what you're doing here is you're setting expectations. So you suggest that you're wanting to use the meeting to get a bit of feedback from, from them, from the client, and you are also hinting at something else in that final part of the meeting. So when you bring up the subject of, of referrals or seeking to be introduced intentionally, then you want to be in a certain mindset that's that mental preparation and that mindset in a nutshell shifts the referral conversation from transactional to relational.

(26:49): And here are a few examples of what this means and the state of mind you want to be in. Most importantly, really, and I said this a few times now, it's about helping others. So it's not about getting business. When you frame referrals as a way for clients to help people that they care about, then it removes your self-interest and it taps into altruism. And clients will then feel like they're doing something good, not just feeding your pipeline. The other thing that I think is really important when mentally preparing is that you want to detach from the outcome. So if you go in expecting names, then clients will feel pressure. When you see it as planting a seed, then the conversation becomes much more relaxed and respectful, and that openness that builds trust, even if referrals come later down the line, you want to focus on risks.

(27:41): So as I said before, referrals happen when, when clients perceive high value and low risk, and understanding what value means to them and what risk they see, that makes the conversation collaborative and shows your empathy. And then to pick up this point on the back of James Woodford's insight, you want to be curious. So you're wanting to explain why you're bringing it up and asking about their comfort level as well. That's signals some honesty, and it turns the conversation into a dialogue, not a pitch. And then lastly, you want to stay human. You don't want to feel scripted. So scripts they feel, of course, mechanical and structure helps, but genuine tone that matters more. So clients respond, they will respond to authenticity, not rehearse lines. So you see here, this mindset respects the client's autonomy, it reduces pressure, and it builds trust, and it transforms referrals from a KPI driven tactic into a natural extension of the relationship that you have with the client.

(28:48): Okay? So let's look then into a structure of the meeting that your client is now expecting after you have sent that email. So I'll let you read this here at your own leisure, so feel free to just hit pause. But by the way, I'm also not telling you like this is exactly how you are to do it. So this is more like a ballpark or a landing zone and you, but you script this in a way that you're comfortable with. But I wanted to give you this as an example. So I wanted to convey with, with this here that there's a lot of psychology behind the way things are put here. So overall, what you see is that this conveys safety and control. So clients feel the conversation is structured non-threatening. There's reciprocity that you're tapping into, so you're sure you care and you'll invite that reciprocity.

(29:42): I suppose there's cognitive ease. Yeah. So questions that are simple and sequential and framed positively. And then you by discussing value, you set up the logic for others could benefit to. By the way, can I say, I'm a bit concerned that this comes across as though I'm sort of providing psychological tricks. So let me reframe or frame what we're doing here, and I do hope you're coming from a place where you're not wanting to persuade, but where you're listening. So this conversation should really help you understand what's working well and where you can improve so that you can deliver the highest possible value to your clients. So when we talk about people you care about, it's never about pressure. There's hopefully, genuinely a desire to help people. So it's about making sure you're available to help someone else.

(30:37): Okay? That being said, let's move on. <Laugh>. Here, here's an example of how you could acknowledge the feedback and transition to the subject of referrals. Again, it's not to say this is how to do it, but an example, please don't tell untruth. Yeah. So if you think that the statement many clients have, people they care about doesn't apply to you, that don't say it. But overall, I'd like to think this isn't manipulative because it's transparent. You're not hiding your intent. It's human first. The focus is on their experience and people they care about. It's also permission based in general. You're not asking yet, you're just planting a thought gently. And, and please give them a way to opt out if you sense they're not comfortable with where this is going.

(31:31): I said this before, don't ask for referral. Forget the word. Ask for an introduction to someone who could benefit from your help. So referral, that sounds transactional, and clients will feel that they've got to find someone who feels ready to buy the service introduction. However, that feels more relational. So it highlights connection. So here are two examples of what it could sound like. Option one is one where it's perhaps more comfort first, low pressure, easy action, future oriented. Option two is more logic and social proof. So why introductions work better backed by experience. I have a great example, by the way of someone using a cheesecake in his phrasing, <laugh>. And, he says, oh, and when someone I'm really happy to meet them over a cheesecake in the local bakery. And, I really like this because cheesecake suggests a real simple method.

(32:28): Over a cheesecake that reduces cognitive load, makes the action feel enjoyable, easy and doable. It also doesn't suggest you've got to give something back. If you invited someone for dinner, for example, that person may feel pressure to give something back. The cheesecake, however, or the coffee or the brownie or whatever it is, is low pressure, and it's also socially safe, So the overarching philosophy that I want you to think about is that you are not asking for referrals, you're focusing on becoming referable. And the second important thing to consider here is that to become referable the client has to have had a referable experience. So the right time to bring it up as I said before, is when that there has been a referable experience.

(33:29): And lastly, it's the client who defines what a referable experience is. It's not you after the meeting then what you do as always is you follow up with a mail that reinforces the main message that was conveyed what you learned and what you want the client to take away. Again, this is just an example. Hit pause, read it, and adapt as you see fit. And that covers the human-centric referral management system. As I said, this is part of the Human-centric Advice webinar series, checkout Aegon's CPD Hub to find the other webinars of this series, as well as a range of other webinars including webinars that cover investments that cover, growing your business as well as tax and, and technical webinars. If you're interested in this type of thinking, check out the articles on the adviser facing pages of Aegon's website, Money Mindshift pages there, and check out the Money Mindshift podcast as well, where I'm meeting many experts where I'm learning from many experts. And oftentimes these are experts who are training financial advisers themselves. Thanks very much for watching.