The majority of consumers who have had a great experience at a restaurant would recommend that establishment enthusiastically to their friends. However, the same cannot be said about clients who have a great experience buying life insurance – a reality that’s of concern to insurance advisors who rely on referrals.

A recent survey conducted by Connecticut-based global insurance association LIMRA International Inc. found that among the various products and services and the professionals that consumers buy or rely upon, insurance advisors are among the least likely to earn a recommendation.

In fact, only 29% of those surveyed said they would very likely recommend a life insurance agent following an “extremely favourable” experience. In contrast, 69% said they would very likely recommend a restaurant; 58% would recommend a grocery store; and 50% would recommend a hotel. Banks and automobile insurance companies also ranked higher than life insurance agents, at 39% and 37%, respectively.

These results are not entirely surprising, as life insurance is not typically a topic that comes up casually in conversations. “It’s almost a cultural taboo to talk about finances and money,” says Jennifer Douglas, associate research director with LIMRA. “And, let’s face it, it’s boring.”

But given the prominent role that referrals can play in building your insurance advisory business, the survey results should be a wake-up call, says Jim Ruta, managing partner and chief sales officer with InforcePRO in Mississauga, Ont.: “It’s a sad commentary on maybe just how much we’ve earned [referrals]. But we can fix it. It’s not like it’s hopeless. People do give referrals.”

Indeed, advisors who have been successful at earning referrals say referrals represent, by far, the most effective way of growing your insurance business. Says Dale Abrams, insurance advisor and president of Abrams Financial in Toronto: “It’s the only way to survive – and thrive – in the business.”

The good news is that LIMRA’s research did not indicate that consumers’ reluctance to recommend their insurance agents was the result of being unhappy with the experience they had with their advisor, Douglas says: “Their reasons really had nothing to do with how satisfied they were with the experience. It was more that they don’t talk about insurance [with their friends]. The topic never comes up.”

Privacy could be another factor holding clients back from recommending their advisor, Abrams suggests. Given the sensitive nature of the information that clients share with their advisors, he says, some may not like the idea of their friends or colleagues working with the same advisor.

“In the conversations we’re having [with clients],” says Abrams, “I’m getting the most personal information you can get about a person – both financially and medically. It’s very personal and private. There could be some personal apprehensions about that.”

High-quality service

Despite the apprehensions clients may have, he adds, clients generally are willing to recommend advisors when they receive high-quality service and advice. In some cases, it simply doesn’t occur to clients to provide referrals if you fail to ask.

“You can’t be shy to ask for referrals,” Abrams says. “If you can get your clients to believe in you and appreciate the service that you’ve done for them, there really is no reason why they shouldn’t want to refer you. But you have to ask.”

Abrams suggests implementing a process for pursuing referrals and raising the topic with every client. In his case, he tells his clients up front that he relies on referrals; upon closing the sale, he follows up by asking clients for the names of any friends or colleagues who may be interested in working with him.

More subtle approaches also can be effective, Ruta says. For example, including the phrase “by referral” on your business card and in your email signature can send a message to your clients that you’re eager to work with more individuals like them.

Advisors who are not getting referrals should think about whether they are making the effort to earn them, says Ruta: “What are you doing to be referral-worthy?”

Demonstrating a high level of insurance expertise is one way of impressing clients, he says. With the industry having shifted largely toward comprehensive financial planning, he adds, advisors who focus exclusively on insurance can stand apart for their intricate knowledge of the products and strategies in that space. Says Ruta: “Expertise is often referred enthusiastically.”

Even small gestures can help advisors leave a lasting impression on clients. For example, Ruta says, some advisors have creative ways of delivering insurance policies once the sale has closed, such as enclosing the paperwork in a leather binder that clients can use for other purposes.

© 2014 Investment Executive. All rights reserved.