Every financial advisor recognizes that the best source of new clients is referrals. Despite this knowledge, many established advisors with big books struggle to get introductions.

Recently, a successful advisor told me how he had added just one line of text to his website — and got surprising referral results as a consequence.

That line: “New clients accepted by referral only.”



> Positioning Yourself As A “Referral-Only” Advisor

Over the ensuing months, this advi-sor added a “new clients by referral only” agenda item to his client meetings, saying: “If you’ve been on my website recently, you may have noticed that I have a new policy that I accept only new clients who are referred by my existing clients or by accountants and lawyers I work with. That’s because I have limited capacity to take on new clients and, in my experience, the new clients I work with best and am able to help the most are referred by my existing clients, as they’re much more likely to be a good fit. So, should you be talking to friends who might be interested in sitting down with me, let my assistant know. I’d be happy to schedule a time to meet.”

In fairness, this change didn’t mark a big strategic departure for this advisor. Almost all of his new clients were already coming from referrals. He estimates that over the past few years, he has averaged three to five referrals annually.

But since he has put this note on his website a year ago and began using this point to start conversations in every client meeting, the number of referrals he has received has more than tripled. Now, he is averaging at least one referral a month.

What’s interesting about this strategy is that these referrals haven’t happened immediately in client meetings. Rather, the impact typically has shown up during the weeks that have followed these meetings.

This advisor isn’t alone in making a public, written statement that he accepts new clients only by referral. For example, here’s a line from the bio of a top producer with Merrill Lynch & Co. Inc. in Dallas: “She accepts new clients on a referral basis only, from a national network of accountants, attorneys and other professionals, as well as her existing clients.”

But cases like this are unusual: even advi-sors who get the bulk of their new clients from referrals rarely put that policy in writing.

> Creating Exclusivity

What is it that makes this approach effective? There are at least two reasons.

First, it allows you to have conversations with your clients that raise the awareness of referrals and get them thinking about who among their network might be a good fit. I suspect that adding the reference to “new clients by referral only” to the agendas for client meetings is what has made the real difference. In essence, the phrase creates the opportunity to initiate those conversations.

That said, the written policy elevates this advisor’s positioning and creates a sense of scarcity. Human nature being what it is, we tend to undervalue things that are readily available and desire things we can’t have. As most of us realize, being overeager can actually work against you — think about getting a date in high school. It can also hurt your chances when interviewing for a job.

This rule applies to attracting new clients, too. When sitting down with qualified prospects, your goal is to communicate that you’d like to work with them but that you don’t need to work with them. Even a hint of desperation can sabotage your efforts.

By posting “New clients accepted by referral only” on his website, this advisor communicates a level of self-assurance, confidence and exclusivity that makes him more attractive to existing and prospective clients alike.



> Communicating Confidence

This isn’t the only instance in which communicating a sense of exclusivity or scarcity enhances your positioning as a confident, expert advisor and makes you more attractive as a result.@page_break@A couple of years ago, I talked to an advisor who had assumed some management responsibilities in his branch and could devote only half of his time to clients. He’d written all his clients a note about this change, saying that he’d be able to work only with clients with assets of at least $750,000 as a result.

Two interesting things happened. First of all, some clients with less than $750,000 suddenly came up with additional assets to hit that threshold. Other clients asked whether he might be able to make an exception for friends who had only $600,000.

Along similar lines, I recently talked to the principals of an investment-counselling firm that had raised its minimum to $2 million. They found that the demand for their services actually increased as a result; by saying they weren’t for everyone, they had raised their appeal to clients in their target group.

Finally, I talked to an advisor who’d had success with a suggestion I had referred to in a recent article about getting prospects off the fence: communicate scarcity and confidence. When someone you meet expresses strong interest and then doesn’t respond to voice mails and emails, I suggested leaving a message along the lines of: “Just following up on our last meeting. I have capacity for six new clients in the next 90 days. When we met, I thought we might be a good fit and that I could help you achieve your goals. It sounds like you’re really busy right now, so I’ll touch base in April. Let me know if you’d like to talk in the meantime.”

This advisor, feeling he had nothing to lose, left this message for a prospect who had seemed interested but then hadn’t returned his calls. To his pleasant surprise, the prospect called back the next day.



> Less Is Definitely More

The advisor who had achieved success after posting “New clients accepted by referral only” on his website told me that one of his team members had suggested putting this phrase on his business cards and including it in his newsletter. I advised against this for two reasons.

First, the reason this website strategy works is that this is a sincere expression of where this advisor stands rather than a sales pitch. And my concern was that adding it to business cards or newsletters would cross the line to the point at which some clients would see it as a marketing pitch for referrals.

Second, what makes this apparent exclusivity successful is not the line on the website itself but rather the subsequent opportunity to raise this subject in conversation with clients. The only reason to add the “referral only” line to other elements of his communication would be to facilitate more client conversations about this policy. In my view, adding this line to business cards is unlikely to achieve that goal.

Remember the key reasons this website strategy works: first, it enhances the advisor’s positioning as confident and successful. Having done that, he uses this as a jumping-off point to initiate conversations with clients. Communicating the line more broadly risks putting him into the “overeager” category and undermining the sense of exclusivity and scarcity that has made this approach successful.



> Making Exceptions

Some advisors might be concerned that taking a “new clients by referrals only” stance means you have to turn down prospective clients who would otherwise want to work with you. Just to be clear, posting this on your website is really a statement of philosophy and an expression of intent. While you can no longer run prospecting workshops or be cold-calling if you go this route, there’s nothing to prevent you from making exceptions if you encounter people on a charitable board or at a community event you’re involved in who would be a good fit.

In fact, those people may value the opportunity to work with you even more because you are making an exception for them. IE



Dan Richards is CEO of Clientinsights (www.clientinsights.ca) in Toronto. For more of his columns, please visit
www.investmentexecutive.com.