PANC 2015: How to Ask for Referrals

Ask cautiously for referrals, said Jeffrey Hemker, national sales manager, retirement division at Invesco, speaking at the 2015 PLANADVISER National Conference in Orlando, Florida, on Tuesday.

In a survey of some 1,000 advisers, every one agreed that referrals are important, but only 12% said they actually ask for them. “They said they were too busy serving clients to ask for referrals,” Hemker said, “or said the clients wouldn’t know anyone and they didn’t want to make the client uncomfortable.”

There’s the crux. “Asking for a referral can disrupt the relationship [with a perceived obligation],” Hemker said. Of the three common approaches to asking for referrals—the obligation, the reciprocal “exclusive” look at the contact’s plan and the offer of something free—Hemker believes none works well. In fact, people hate the so-called exclusive offer, what Hemker termed “a good way to lose a client.”

The free offer works best, according to Hemker, who advises using conviction to point out the value brought to the plan sponsor’s own plan—savings or increased participation, for instance—and it conveys a personal concern about other retirement plans.

Hemker recommended advisers convey their concern for plans that need help with such phrases as, “This is meaningful to me—if you can think of someone I can talk to, I’d love to take a look.” About a third of plan sponsors surveyed said this softer approach would motivate them to give a referral.

Referrals are key to business, said Phil Fiore, senior vice president of investments and senior institutional consultant at FDG Institutional Consulting Group, with UBS Financial Services Inc. But, he stressed, “I literally do not ask for referrals. I don’t outright ask a CFO or CEO for names.”

Instead, after a triggering event in the plan—again, an enrollment boost or money saved, for example—Fiore’ team plans a get-together that creates an engagement with someone in the plan sponsor’s circle of acquaintances. Instead of asking, “Who’s your contact at Costco?,” Fiore explained, say, “Let’s play golf, and bring a couple of your friends.” During the afternoon, “eventually we’ll wind up talking about something positive with their plan,” he said. “It’s almost scripted, but not.”

Whether hosting thank-you dinners or paying greens fees, Fiore is unafraid to shell out for the expense from his own pocket.

If getting past the compliance department is an issue, create an opportunity to speak about benchmarking or markets with a contact. “We do it legitimately, and the partners are engaged,” Fiore said.