Post-RDR, where the professional standards and qualifications of advisers are more closely aligned with those of solicitors and accountants, many advisers see referral relationships with other professionals as a great opportunity to grow their business.
However, developing successful (by which I mean long term and profitable) referral relationships with solicitors and accountants is something many find challenging.
Well, it comes back largely to what they say and do (or, more frequently, what they don’t say and don’t do).
Here are the seven main reasons advisers struggle.
1. Sector Reputation
Let’s be honest, justified or not, the sector doesn’t enjoy the best of reputations. A fellow consultant who specialises in working with accountants recently told me that the main reason his accountant clients are fearful of referring their clients to an IFA, is that in their experience, they do not do what they say they are going to do.
The sector is changing with higher qualifications, increased professionalism and greater regulation but the fact remains that accountants and solicitor’s biggest fear in introducing their clients to you, is reputational risk and fear over the quality of your advice. You might not like it. You might say that it is not justified or fair, but they are the facts.
Let’s face it, they are putting their reputation and client relationship on the line. They are going to be cautious. So would you in their position.
2. Poor targeting
Advisers in my experience do not spend enough time identifying the characteristics of the firms they want to work with (size, age of partners, geography, specialisms) and whether there’s likely to be a good fit.
3. Unstructured execution
The approach to building the relationship is usually unstructured and little time is spent considering what specific steps and materials might be needed to support the relationship development process, but also what specific actions and tactics are needed to move the relationship to the next stage plus how to build credibility and trust one step at a time.
4. No nurturing
Advisers often fail to nurture the relationship through regular contact, identifying opportunities, providing education, resources, support and value along the way.
5. Poor follow up
Another failing can be poor or inconsistent follow up after any initial meeting. This is just a lack of process or discipline. It’s about following a clear process to thank them for their time, to confirm what’s been agreed and diarising the next contact.
6. They quit too soon
Advisers also give up too quickly when referrals are not produced in the first month. They tend to give in and move on, get back on the hamster wheel and overlook the need to nurture the relationship and the need to stay connected, keep communicating, keep building credibility.
7. Unrealistic expectations
It is important not to expect results too quickly. You have to take the relationship through the know/like/trust phases before you can expect even a sniff of a referral.
Would you refer your clients to a third party after just one or even two meetings? No, nor would I. It’s about building rapport, empathy, trust and credibility quickly but professionally.
Steve Billingham is director of Steve Billingham Consulting Ltd