Identify COI potential to capture more assets

Practice Management

Identify COI potential to capture more assets

How do you know when a Center of Influence will be a viable referral source for new clients?

By: David R. Lee, CFP®, Raymond James Director of Practice Intelligence

Ask advisors where most of their new business comes from and they’ll typically tell you referrals from existing clients. A recent study confirmed this, with client referrals tripling that of referrals from centers of influence (COIs). But when asked where the best clients were coming from, the answers reverse course – and COIs won by a factor of four! If the goal is to have as many clients as possible, it makes sense to continue relying mainly on clients for referrals. But if you would rather focus on gathering more assets by taking better care of fewer clients, you have to build a better mousetrap to encourage COIs to beat a path to your door.

Data from Russ Alan Prince helps explain why COI relationships are so productive. In one study, nearly 70% of affluent individuals found their primary advisor through their CPA or attorney. Additionally, the conversations COIs have every day with clients make them much more likely to uncover a need for a client to use financial planning services. The question is, how do you convert the casual acquaintance relationships you have now with COIs into strategic partnerships that inspire them to refer you to a client? There are many pieces to this puzzle, but it basically boils down to the acronym F.E.E. (fit, entrepreneurial, equitable).

You should always be assessing COIs for F.E.E. potential. Here’s why:

Fit – We all have an inclination to do business with people we like and get along with, whether they are clients or colleagues. If personalities are incompatible, there may still be referrals based on respect for the other person’s competence but they will be infrequent. Look for professionals you enjoy spending time with and arrange opportunities to do so. The most successful advisors find professionals with strategic partner potential and treat them like their best clients.

Entrepreneurial – Part of what makes a strategic partnership is a vested interest in the continued growth and success of the other person. If that person is on cruise control and not particularly interested in growing, they won't be driven to reciprocate for something that they aren’t really interested in receiving from you. Look for someone like you, who has a strong desire to grow their practice.

Equitable – For strategic partnerships to work effectively there should be equitable give and take. This typically means that the work that both partners do is compatible. This starts by identifying your ideal client so you can figure out who else works with that same client profile. When describing your ideal client to a potential COI, don’t describe them in terms of what the relationship can do for you, describe the ideal client in relation to problems you can solve for them. Instead of saying that your ideal client is someone with $1 million, describe them as someone with “money in motion” challenges or as “women in transition.”

Finally, focus on quality versus quantity. Invesco’s Rainmaker COI referral program found that the most successful advisors had, on average, four strategic partnerships but never more than five. This is testimony to the time investment needed to create solid relationships like this. If someone’s F.E.E. potential isn’t coming into focus, go to the next acronym (which is literally “N.E.X.T.” or “Never Expend X-tra Time). 



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