How Four Different Advisors Lost a $3 Million Referral

Sep 25, 2012

The following is a guest blog post by Dan Richards, founder of ClientInsights, a leader in providing financial advisors with video-based content for their own use and for use with clients.  Dan’s articles are on my must-read list; for any questions, he can be reached at

Do you have a clear process for how your assistant responds when a call comes from a potential client? If not, then it could be costing you business.

I teach in the business school at the University of  Toronto and write a regular column in Canada’s largest business publication, the Canadian equivalent of the Wall Street Journal. Last week, I spoke to a highly successful entrepreneur who had read one of my columns and contacted me to describe another instance of how advisors are falling short when it comes to communicating with prospects.

A simple request for information

Now in his mid-fifties, Bob has spent the last 20 years building a successful transportation and logistics management company. Like many entrepreneurs, the bulk of his assets have been tied up in his business – but his situation was completely altered last spring by a generous offer from a U.S. entrant looking to establish a beachhead in Canada.

With the sale closing this fall, Bob recognized that he needed help on managing the sale proceeds. He asked his accountant, his lawyer and a close friend for recommendations on financial advisors and financial institutions.

Bob got five referrals in all. To begin the process, he called the office of each of the advisors he’d been referred to, asking for some background information. Bob consciously avoided speaking directly to the advisors and asked for their assistants instead, since he wasn’t ready to get into the details of his situation.

And that’s where it got interesting.

Sending the right message about your practice

The responses fell into three categories.

One advisor’s assistant mailed a cardboard folder with the firm’s name and logo, containing three pieces of paper – a bio of the advisor, an overview of his team and a one page summary of his process.

“That really made me wonder how interested this guy was” Bob said. “I tried not to be too critical, but his response seemed pretty feeble.”

At the other extreme, three advisors sent thick folders packed with recent material they had sent clients and with examples of research reports and economic outlooks produced by their firms.

“I saw those three as being in the category of ‘throw enough mud at the wall and hope something will stick” was Bob’s observation. “It really felt like they were tossing anything and everything in there that they could, in the hope that I’d either be impressed by the sheer volume of information or that something would strike a chord.

“Most of the stuff they sent wasn’t really that relevant or interesting. In fact I almost missed the one piece in there that was new information, a fairly detailed brochure on tax strategies for business owners.”

A stark contrast

The experience with the last advisor was a different proposition entirely.

In response to Bob’s request for information, the assistant to that advisor (let’s call him Don) said:

“I’m terribly sorry; Don doesn’t like to send out information without having a clear sense of exactly what people are looking for. I wonder whether I could schedule a five-minute phone conversation for you and him to talk – how is tomorrow morning at 9 or 10 o’clock?”

At 10 the next morning, Don called and Bob explained his situation and mentioned who had referred him. Don asked a few questions and said:

“Bob, thanks for taking the time to talk. Based on what you’ve told me, I’ll have one of my team put together an information package that we’ll courier to you. Should you be interested, I’ll also include an invitation to a small client breakfast coming up next month to talk about what’s happening in the markets. This is something I do every couple of months for any clients who are interested.”

At the end of their conversation, Don said:

“If it’s okay with you, I’d like to follow up early next week to briefly review the information in the package and answer any questions you might have; this should take no more than 10 minutes.”

The next morning, the couriered package arrived in Bob’s office, containing a leather bound three ring binder, with tabs dividing half a dozen documents describing Don’s background, team, approach and firm, as well as a couple of articles he’d written for a local business publication.

Bob’s closing comments on his experience:

“Of the five advisors, Don was clearly the most organized and disciplined about how he deals with potential clients. And if he’s organized and disciplined about his communication, chances are that he’s also serious and disciplined about how he manages his clients’ money.

“By the time he called, I was already leaning in his direction, even before he sent me the follow up package. Something else noteworthy was that he was the only advisor who followed up with a call – perhaps because none of the assistants for the other four advisors had asked for my phone number or email address.”

The end of the story

Bob did end up meeting with Don as well as the advisor who’d included the information on tax strategies for business owners. He ultimately decided that Don was the right fit for him and after two lengthy meetings and some reference checking with two of Don’s clients who’d been in situations similar to his, he opened an account.

The message from this experience is crystal clear. Five advisors had impressed an accountant, lawyer or existing client to the point that they received a referral. In times past, when a referral typically led directly to a prospect signing on, that would have been enough. But advisors need to recognize that today, getting a referral is no longer sufficient – more and more, referrals are the beginning of the client acquisition process, not the end. In essence, while at one time a referral won you a new client, increasingly today that same referral merely gives you the chance to compete for a client’s business.

Think about what would have happened if Bob had called your office – would he have received the answer that he got from Don’s assistant or the response from the other four assistants he spoke to?

At your next team meeting, open the floor to a conversation about how to handle calls for information such as this one. After all, the next call that comes in to your assistant could be from a multi-million dollar prospect just like Bob.

The opinions and views expressed herein are those of Dan Richards. SEI bears no responsibility for their accuracy. Dan Richards is not affiliated with SEI or its subsidiaries

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John Anderson

John Anderson

John Anderson is the creator and lead author of Practically Speaking blog and Managing Director of Practice Management Solutions for the SEI Advisor Network.

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