There’s a lot of confusion out there about how independent financial advisors get new clients. Marketers and business coaches may tell you that top advisors are raking in new clients with radio shows or Facebook ads. But the reality is that with all the technology in the world today, people are still choosing an advisor the same way they always have: by asking for a referral.
I was looking for concrete data on this topic for an upcoming webinar I’m creating. Unfortunately, there’s not a lot of statistics out there on the subject. It took me a minute to realize that I actually have access to the data I was looking for!
Each year, we run client surveys for our advisors to help them understand what their clients care about the most. One of the questions on our survey is “Why did you decide to work with our firm?” We know the answer to this question is critical to hone their specialty.
I did a quick sample of the latest surveys we’ve run and began organizing the responses into broad groups. I was surprised that every single answer actually fit into one of just six categories. According to our data, here are the main ways people choose an advisor.
About half of respondents said that they chose to work with their advisor because they had been referred to them, typically by a friend or family member.
About 20% of people chose their advisor because they had actually met them at an event or personally, for example, through church, friends, or a cycling group.
About 10% of clients chose their advisor after working with them through their employer-sponsored 401(k) plan.
Tax Client Conversion
About 10% of clients used their advisor after they began working with the firm to prepare their taxes. For advisors who offer tax services, this model is a great way to bring on new assets.
Seminar or Event
About 10% of new clients came on board after hearing the advisor speak at a seminar, including one event on college planning and another on alternative investments.
Only one new client was the result of an Internet search, which supports the idea that people do not type “financial advisor” into Google and hand over their life savings.
How to Get More Referrals
What does this mean for advisors trying to grow their business? Referrals have got to be at the core of your marketing strategy. And how do you get more referrals?
First, you have to be referable by embracing a specialty. What one urgent problem do you solve for a specific group?
Next, you have to stay top-of-mind and remind people what you do and how you can help with content marketing.