Five Reasons Why You're Not Getting Referrals

Five Reasons Why You're Not Getting Referrals

​Are you getting enough qualified referrals from people within your network? Or are you relationship rich but referral poor?

In my experience working with those in the financial services industry, I’ve seen those who stay in touch with clients, go to networking events, and even ask for referrals, but never get much to show for it.

Here are a few of the reasons why you don’t get more referrals.

1. You don't take the first step.

Before you ask for a referral, you must make sure that your client is happy with your services. If you ask too soon, you either won’t get referrals at all or the referrals will be poor quality. Take a minute to talk to your client and ask, “How are we doing?” That little question works wonders. If you get a positive answer, you can move ahead and ask for referrals. If you get a not-so-good answer, you now have the opportunity to make it better and you’ll live to fight another day.

2.  They don’t care enough… yet.

This goes hand-in-hand with #1. A lot of professionals will attempt to ask for a referral when the relationship is too new. There is a time and a place for everything, but if you’re attempting to build a long-term relationship with a client, it’s okay to take it slow.

Think about that time you found yourself in a networking situation and somebody you just met wanted to ram a business card in your hand. When they talk, it’s “me, me, me” and what you can do for them. That’s how you come across when you ask for a referral too early in the game.

When someone gives you a referral, they are putting their reputation on the line. You want to be sure that your relationship with the person is developed enough to minimize the perceived risk they take on when referring you.
Another reason they don’t care enough is that prospects and clients are busy. I publish a lot of material ondealing with rejection because a lot of people get hurt when the first try doesn’t go well and they shut down. Don’t do this – your clients are probably too wrapped up in their own world. They’re not even thinking about you or what you can do for other people they know. Take it slow, consistently express your gratitude, and remind them of how you could help other people they know. Don’t get discouraged if they don’t hop up and give you twenty names the first time.

3. You’re asking the wrong way.

When most people ask for a referral they do it like this: “Who do you who needs XYZ?” Every time I hear that, I get one step closer to going crazy. Or how about “Do you know anybody who could benefit from my services?” That’s the absolute worst.

In 57 Marketing Tips for Financial Advisors, I explain that you should never force people to do your qualifying for you. The old “Do you know anyone who could benefit from my services?” forces your clients to make a judgment in an area they may or may not feel comfortable with. All you’re doing is making your client mentally organize EVERYBODY he/she knows, which is too overwhelming. Even if the client is deep in thought and genuinely wants to help you, all he or she will be able to muster is a bleak, “I can’t think of anybody.” You want to know why? It’s because you weren’t specific enough.

Clients aren’t giving you referrals because they genuinely don’t know what you’re looking for. Do some filtering when you ask for a referral. If you specialize in working with physicians, ask: “Who is your physician?” and take it from there. If you’re selling life insurance, go ahead and ask, “Do you know anyone who has recently had a child or might be starting a family soon?” By asking more specific questions, you’ve whittled down the five-hundred people that your client knows all the way down to three or four.

4. You aren’t giving referrals.

One of the best ways to get referrals from other people is to give them first. When you give a referral, you demonstrate your utmost trust and confidence in the person. You also show your willingness to assist or help your client resolve a problem he/she has – the mark of a true professional.

It’s likely that at least some of your clients are lawyers, doctors, business owners, managers, or some other type of professional. You are the person who interacts with all of these people. If you know someone who needs a particular service, make a referral! Call your client and check up on them. If they have a problem that can be solved by someone in your network, let them know. Not only will you have stayed in front of your client, but you will kick in a primal urge to reciprocate on the part of the professional. Nearly all service professionals get part of their business from referrals, so send a few their way.

5. You didn’t ask.

Unfortunately, this is the most common and most easily overlooked reason referrals aren’t coming your way. If you don’t ask, you don’t receive. “Oh, I didn’t know you needed more business!” will be heard so much you’ll think it’s your new ringtone.   

Russ Alan Prince’s book, Cultivating The Middle Class Millionaire tells us that 70% of loyal millionaires were likely to refer people to their primary advisor, yet only 10.7% of advisors actually asked clients for referrals. Dan Allison, the founder and president of Feedback Marketing Group, says that when most advisors lay out their method of asking for referrals, they’re not really asking anything. Sometimes clients don’t even know they’re being asked, or they don’t know that you’re taking on new clients. Be clear and direct. 

James Pollard
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James Pollard is a marketing consultant who specializes in helping financial services professionals grow their business over at ... Click for full bio

Sizing up Strategic Beta

Sizing up Strategic Beta

Interest in strategic beta ETFs is rising. A few simple guidelines can help investors pick from among the often-bewildering number of options.

The number of strategic beta ETFs has grown at 20% a year, consistently in good markets and bad, since the year 2000.[2] With good reason: Strategic beta ETFs offer a more thoughtful passive option than cap-weighted indexes—and they can do so with a more transparent process and lower fees than actively managed funds.

Bright future, dim past    

All well and good, but how should investors assess any particular strategic beta ETF? Close to 40% of these funds have been in operation for less than three years[2]. This lack of an established track record can make it hard to validate their claims. ETF sponsors may try to make up for that shortcoming with back testing, running simulations of holdings they might have had against actual past market performance, but that has its limitations:

Back testing doesn’t always account for fees, liquidity or transaction costs.

Back tests are “selection biased”—that is, back testers have a tendency (conscious or not) to engineer positive outcomes. Live outcomes are therefore likely to be inferior.

Too great a focus on recent history can lead to “driving in the rearview mirror.” While an index or ETF may solve the problems of yesterday well, an investor’s focus should instead be on solving the potential problems of tomorrow.

Three steps to an informed judgment

Because the indexes tracked by strategic beta ETFs are by design somewhat exotic, effective assessment of them calls for some digging:

  1. Investors first have to understand who the index designer and asset manager are (they may not be the same people). They should have a clearly expressed investment philosophy and the expertise to enact it in practice.
  2. The properties of the portfolio should reflect the investment philosophy. Not only does the transparency of ETFs allows examination of the holdings to ensure that this is the case, it also measures such as active share relative to a cap-weighted benchmark or turnover can indicate whether an ETF is performing as designed.
  3. Performance can also be used to confirm that an index is doing its job. While short-term results shouldn’t be given too much sway, the index designer should be able to explain when and why an index will perform and when it might not.

One key aspect of performance shared with traditional passive management is tracking error. Like earlier cap-weighted index tracking funds, strategic beta ETFs should have minimal tracking error to their own indexes. Beware, though, the tracking error to the benchmark can be large and dynamic, it is by this differentiation that strategic beta adds value.

Made to measure

Strategic beta does not defy analysis, despite its novelty. Indeed, it has a lasting advantage over standard active manager due diligence. Strategic beta, after all, is rules-based. What an investor sees in straightforward, well thought-out index composition rules is what the investor will get. In that sense, strategic beta is relatively immune to the personnel changes, style drift and index hugging that can challenge actively managed mutual funds.

Learn more about ETF due diligence here.


This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to be a recommendation for any specific investment product, strategy, plan feature or other purpose. Any examples used are generic, hypothetical and for illustration purposes only. Prior to making any investment or financial decisions, an investor should seek individualized advice from a personal financial, legal, tax and other professional advisors that take into account all of the particular facts and circumstances of an investor’s own situation.

Opinions and statements of market trends that are based on current market conditions constitute our judgment and are subject to change without notice. These views described may not be suitable for all investors. References to specific securities, asset classes and financial markets are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations. Past performance is no guarantee of future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. ETF shares are bought and sold throughout the day on an exchange at market price (not NAV) through a brokerage account, and are not individually redeemed from the fund. Shares may only be redeemed directly from a fund by Authorized Participants, in very large creation/redemption units. For all products, brokerage commissions will reduce returns.

J.P. Morgan Asset Management is the marketing name for the asset management business of JPMorgan Chase & Co. and its affiliates worldwide. J.P. Morgan Exchange-Traded Funds are distributed by SEI Investments Distribution Co, One Freedom Valley Dr., Oaks, PA 19456, which is not affiliated with JPMorgan Chase & Co. or any of its affiliates.

For additional disclosure 

For a longer discussion, please see our recent publication Strategic Beta’s due diligence dilemma (J.P. Morgan, April 2017).

[1] Morningstar.

[2] Morningstar.
J.P. Morgan Asset Management
Empowering Better Decisions
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See how ETFs differ from other investment vehicles, learn how to evaluate them, and discover how ETFs can be used effectively to achieve a diversity of investment strategies. ... Click for full bio