Need More Referrals? 5 Steps to Building Stronger Word-Of-Mouth Influence

Need More Referrals? 5 Steps to Building Stronger Word-Of-Mouth Influence

Every advisor knows that referrals are the golden key to growth. That’s particularly true when it comes to your affluent clients whose personal recommendations can have the power put your AUM into hyperdrive. Of course, even for the most respected professionals, getting those referrals can be a challenge. Why? In part because doing a great job is simply expected—especially for high net worth clients who are accustomed to stellar service and performance.

If you’ve ever heard Matt Oechsli speak about marketing to the affluent, you’ve surely heard the phrase word-of-mouth influence, or WOMI. (If you haven’t, check out this recent article from Wealth Management magazine.) Matt is a true believer in how WOMI can shift the trajectory of a firm, and I think his findings are spot on: the key to advisor success is creating client relationships that drive word-of-mouth influence.

Word of mouth is a powerful thing. What’s tricky is that, psychologically, we humans tend to focus on negative experiences over positive experiences. Research has shown that while we typically ‘vent’ about negative experiences, we tend to keep quiet about positive ones. It’s no wonder companies in every industry put so much time, energy, and resources into creating positive brand images—and bending over backwards to generate as much positive word of mouth as possible.

So how can you get clients to start talking about all the good things you do for them as their trusted advisor? Create an emotional connection.

The good news is that creating that emotional connection can be quite simple, especially if you’re an advisor that focuses on the personal side of financial planning. After all, the primary reason your clients want to grow and protect their wealth is to help them achieve their personal goals. Whatever their goals may be, nearly all of them are bound to have an emotional component. Follow these 5 steps to help create stronger emotional connections to help drive word-of-mouth influence:

1. Take the time to emotionally connect. 

Start by talking to your clients about what’s happening in their lives and how those events impact their financial decisions. Are they juggling a high-pressure career with the need to care for aging parents? Are they in a high-risk industry and concerned about their ability to sustain their current income? Are they worried that a divorce could derail their financial security? Whatever is happening in your clients’ lives, take the time to sit down with each individual and be present enough to listen. Simply giving your clients the space to share their feelings and thoughts will take your relationship to a whole new level.

Related: New Parents Need Your Guidance on More Than Diapers

2. Share your own experiences.

Empathy can help you connect on an even deeper level, and part of that process is being willing to share your own experiences. While you never want your own challenges to take center stage, talking about parallels in your own life can put your client at ease. Even better, your story may offer some helpful insights, and your willingness to open up about your own life will foster a deeper emotional connection.

3. Reach out when it’s least expected.

If your client outreach is limited to birthday cards and holiday greetings, you’re missing valuable opportunities to create positive word of mouth. Big life events are often the most emotional, and this is when connecting with your clients can have a greater impact. Whether your client is starting a new job, navigating a divorce, caring for aging parents, sending a child off to college, or coping with the loss of a spouse, send a personal note offering your support and invite them to meet outside your office for a personal chat. Later, when the time is right to talk about finances, point them to our Life Events Planner to help understand how what’s happening can affect their financial lives and offer practical steps to help keep their finances on track.

4. Have a little fun!

Of course, the best relationships always have an element of fun. Once you’ve established personal connections with your clients, build on each relationship by doing little things to bring some joy to their day. If your client is passionate about golf, send a quick email about the latest big tournament, or share a good-news article like this just for fun. If you work with divorced or widowed clients, consider hosting a Valentine’s lunch to celebrate your friendships. Need inspiration? Check out our Celebrate the Day calendar for interesting ideas throughout the year.

Related: Worried About Wealth Transfer? It's Time for the Human Touch

5. Foster introductions.

Even when an emotional connection exists, it’s important to make it easy for your clients to start talking with the right people. Invite two or three clients to a non-business event like the theatre or a local wine tasting event and ask them to invite a friend or two. While you’re there, take business off the table and focus on connecting with each person. By bringing the right people together, conversations—and positive word-of-mouth—are bound to happen all on their own.

By reaching out to your clients in ways that have nothing to do with selling, you can foster personal, emotionally-driven connections that not only strengthen your relationships with your most valuable clients, but also fuel your clients’ desire to talk about you, your thoughtful actions and, ultimately, the services you provide. What a wonderful (and fun!) way to drive powerful, positive word-of-mouth.

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The information and opinions herein are for general information use only. The opinions reflect those of the writers but not necessarily those of New York Life Investment Management LLC (NYLIM). NYLIM does not guarantee their accuracy or completeness, nor does New York Life Investment Management LLC assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Such information and opinions are subject to change without notice and are not intended as an offer or solicitation with respect to the purchase or sale of any security or as personalized investment adviceEndFragment    
Laura McCarron
Building Smarter Portfolios
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Laura joined New York Life & MainStay Investments in 2009, and is currently the Director of Value Add Marketing. She is responsible for the development of investor educati ... Click for full bio

All the Talk of an Accelerating Economy and Rising Inflation Just Doesn't Add Up

All the Talk of an Accelerating Economy and Rising Inflation Just Doesn't Add Up

The biggest news for the markets this week came from the Federal Reserve. On Wednesday, it released the January Federal Open Market Committee meeting notes and they were interpreted as dovish by some and hawkish by others as analysts raced to divine insight from the text.

The recent data isn’t supporting the narrative of accelerating global growth and inflation while equities continue to experience higher volatility.  What does it mean for stocks, bonds and yields? Glad you asked! Here’s my take on why all the talk on an accelerating economy and rising inflation just doesn't add up when you look at the data.

Equity Markets — A Relatively Narrow Recovery

The shortened trading week opened Tuesday with every sector except technology closing in the red. The S&P 500 fell back below its 50-day moving average after Walmart (WMT) reported disappointing results, falling over 10% on the day, having its worst trading day in over 30 years.

Walmart’s online sales grew 23% in the fourth quarter, but had grown 29% in the same quarter a year prior and were up 50% in the third quarter. We saw further evidence of the deflationary power of our Connected Society investing theme as the company reported the lowest operating margin in its history.

Ongoing investment to combat Amazon (AMZN) and rising freight costs — a subject our premium research subscribers have heard a lot of about lately — were the primary culprits behind Walmart's declining numbers. To really rub salt in that wound, Amazon shares hit a new record high the same day. This pushed the outperformance of the FAANG stocks versus the S&P 500 even higher.

Wednesday was much of the same, with most every sector again closing in the red, driven mostly by interpretations of the Federal Reserve’s release of the January Federal Open Market Committee meeting notes. In fact, twenty-five minutes after the release of those notes, the Dow was up 303 points . . . and then proceeded to fall 470 points to close the day down 167 points. To put that swing in context, so far in 2018, the Dow has experienced that kind of a range seven times but not once in 2017.

Thursday was a mixed bag. Most sectors were flat to slightly up as the S&P 500 closed up just +0.1%, while both the Russell 2000 and the Nasdaq Composite lost -0.1%. The energy sector was the strongest performer, gaining 1.3% while financials took a hit, falling 0.7%.

The recovery from the lows this year has been relatively narrow. As of Thursday’s close, the S&P 500 is still below its 50-day moving average, up 1.1% year-to-date with the median S&P 500 sector down -1.0%. Amazon, Microsoft and Netflix alone are responsible for nearly half of the year’s gain in the S&P 500. The Russell 2000 is down -0.4% year-to-date and also below its 50-day moving average. The Dow is up 78 points year-to-date, but without Boeing (BA), would be down 317 points as two-thirds of Dow stocks are in the red for the year.

Related: We're Back to “Bad News is Good News” and “Good News is Great News”

Fixed Income and Inflation — the Coming Debt Headwind

The 1-year Treasury yield hit 2.0%, the highest since 2008 while the 5-year Treasury yield has risen to the highest rate since 2010, these are material moves!

What hasn’t been terribly material so far is the Fed’s tapering program. It isn’t exactly a fire sale with the assets of the Federal Reserve down all off 0.99% since September 27 when Quantitative Tightening began, which translates into an annualized pace of 2.4%.

As for inflationary pressures, U.S. Import prices increased 3.6% year-over-year versus expectations for 3.0%, mostly reflecting the continued weakness in the greenback. The Amex Dollar Index (DXY) has been below both its 50-day and 200-day moving averages for all of 2018. The increase in import prices excluding fuel was the largest since 2012 and also beat expectations. Import prices for autos, auto parts and capital goods have accelerated but consumer good ex-autos once again moved into negative territory.

Outside the U.S. we see little evidence that inflation is accelerating. Korea’s PPI fell further to 1.2% - no evidence of rising inflation there. In China the Producer Price Index fell to a 1-year low – yet another sign that we don’t have rising global inflation. On Friday the European Central Bank’s measure of Eurozone inflation for January came in at 1.3% overall and has been fairly steadily declining since reaching a peak of 1.9% last April. This morning we saw that Japan’s Consumer Price Index rose for the 13th consecutive month in January, rising 0.9% from year-ago levels. Excluding fresh food and energy, the increase was just 0.4% - again, not exactly a hair-on-fire pace.

The reality is that the U.S. economy is today the most leveraged it has been in modern history with a total debt load of around $47 trillion. On average, roughly 20% of this debt rolls over annually. Using a quick back-of-the-envelope estimate, the new blended average rate for the debt that is rolling over this year will likely be 0.5% higher. That translates to approximately $250 billion in higher debt service costs this year. Talk about a headwind to both growth and inflationary pressures. The more the economy picks up steam and pushes interest rates up, the greater the headwind with such a large debt load… something consumers are no doubt familiar with and are poised to experience yet again in the coming quarters.

The Twists and Turns of Cryptocurrencies

The wild west drama of the cryptocurrency world continued this week as the South Korean official who led the government’s regulatory clampdown on cryptocurrencies was found dead Sunday, presumably having suffered a fatal heart attack, but the police have opened an investigation into the cause of his death.

Tuesday, according to Yonhap News, the nation’s financial regulator said the government will support “normal transactions” of cryptocurrencies, three weeks after banning digital currency trades through anonymous bank accounts. Yonhap also reported that the South Korean government will “encourage” banks to work with the cryptocurrency exchanges. Go figure. Bitcoin has nearly doubled off its recent lows.

Tuesday the crisis-ridden nation of Venezuela launched an oil-backed cryptocurrency, the “petro,” in hopes that it will help circumvent financials sanctions imposed by the U.S. and help improve the nation’s failing economy. This was the first cryptocurrency officially launched by a government. President Nicolás Maduro hosted a televised launch in the presidential palace which had been dressed up with texts moving on screens and party-like music stating, “The game took off successfully.” The government plans to sell 82.4 million petros to the public. This will be an interesting one to watch.

Related: Warning: Suppressed Volatility Ultimately Leads to Hyper-Volatility

Economy — Maintaining Context & Perspective is Key

Housing joined the ranks of U.S. economic indicators disappointing to the downside in January with the decline in existing home sales. Turnover fell 3.2%, the second consecutive decline, and is now at the lowest annual rate since last September. Sales were 4.8% below year-ago levels while the median sales price fell 2.4%, also the second consecutive decline and this marks the 6th decline in the past 7 months. U.S. mortgage applications for purchase are near a 52-week low.

Again, that’s the latest data, but as we like to say here at Tematica, context and perspective are key. Looking back over the past month, around 60% of the U.S. economic data releases have come in below expectations and this has prompted the Citigroup Economic Surprise Index (CESI) to test a 4-month low. Sorry to break it to you folks, but the prevailing narrative of an accelerating economy just isn’t supported by the hard data. No wonder that even the ever-optimistic Atlanta Fed has slashed its GDPNow forecast for the current quarter down to 3.2% from 5.4% on Feb. 1. We suspect further downward revisions are likely.

Looking up north, it wasn’t just the U.S. consumer who stepped back from buying with disappointing retail sales as Canadian retail sales missed badly, falling 0.8% versus expectations for a 0.1% decline. Over in the land of bronze, silver and gold dreams, South Korean exports declined 3.9% year-over-year.

Wednesday’s flash PMI’s were all pretty much a miss to the downside. Eurozone Manufacturing PMI for February declined more than was expected to 58.5 from 59.6 in January versus expectations for 59.2. Same goes for Services which dropped to 56.7 from 58 versus expectations for 57.7. France and Germany also saw both their manufacturing and services PMIs decline more than expected in February. The U.K. saw its unemployment rate rise unexpectedly to 4.4% from 4.3%

The Bottom Line

Economic acceleration and rising inflation aren’t showing up to the degree that was expected, and this was a market priced for perfection. The Federal Reserve is giving indications that it will not be providing the same kind of downside protection that asset prices have enjoyed since the crisis, pushing markets to reprice risk and question the priced-to-perfection stocks.

Lenore Elle Hawkins
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Lenore Hawkins serves as the Chief Macro Strategist for Tematica Research. With over 20 years of experience in finance, strategic planning, risk management, asset valuation an ... Click for full bio