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Having trusted centres of influence (COIs) can help advisors grow their practices through the referral of prospects, but developing that network successfully can be a difficult task.
The best way to build and benefit from these relationships is by prioritizing connections with professionals who have similar client bases and philosophies, advisors say.
COIs are fellow professionals such as lawyers, accountants, real estate agents and, in some cases, portfolio managers to whom advisors can refer business and receive new prospects in return.
Capital Group’s 2022 Advisor Benchmark Study, which surveyed more than 2,300 advisors in the U.S., showed referrals from other professionals represented 14 per cent of new business, on average.
Having a strong Rolodex of COIs can also help deepen relationships with existing clients.
“A lot of the relationships I’ve developed with clients I work with year in and year out, beyond being a financial planner that has helped them make financial decisions … has been [about] always finding a way to help them out in any problem,” says Jason Heath, managing director at Objective Financial Partners Inc. in Markham, Ont.
“If you have a strong network you can be the first person they come to for a recommendation, referral, question or a problem.”
Being the one who always has a solution is a very powerful way to build relationships with your clients, he adds.
An-Lap Vo-Dignard, senior wealth advisor and portfolio manager with the Vo-Dignard Provost Wealth Management Group at National Bank Financial Wealth Management in Montreal, points out these connections can allow an advisor and COI to work as a team on behalf of their shared client.
“We have accountants who call us and say, ‘Don’t generate capital gains for the next three months because I’m structuring something.’ It’s much better for the client if there’s co-ordination between experts,” he says, adding that, otherwise, it can be like having “one doctor for the right leg and one for the left leg.”
These connections can be particularly valuable during various life events for clients such as selling a business, entering retirement, going through divorce, or losing a spouse, says Darcie Crowe, senior wealth advisor and portfolio manager with the Crowe Private Wealth Group at Canaccord Genuity Wealth Management in Vancouver.
Drawing on personal connections, clients to build network
But how can advisors find and nurture these relationships?
Ms. Crowe says connecting with professionals that her clients already work with – something she does quite frequently as part of her practice – has been a natural way to build out her network. These COIs often have similar approaches to client relationships as well as a good alignment in terms of their client base.
Professionals that advisors turn to in their personal lives, such as their accountant or lawyer, can also make for good COIs, she adds. Ms. Crowe, who practices in both Vancouver and Toronto, says she’s asked trusted professionals in one city for any similar experts they know in the other region.
She tries to touch base with her COIs roughly once a quarter over coffee, lunch, or a phone call.
Mr. Heath says he has also turned to other advisors if he’s looking for a professional in a particular field or with a certain niche such as employment, immigration or estate law. When having introductory chats with COIs, he asks directly about their average client and the type of business they would or wouldn’t want to be referred.
Mr. Vo-Dignard says it isn’t always wise to go after the biggest fish as they may already have advisors to whom they refer business. Instead, he says to focus on younger or mid-career professionals who’ve racked up enough experience in the field but still have space on their dance cards.
Advisors should aim to have more than one expert from each profession in their networks given clients’ varied needs, Mr. Vo-Dignard adds. He points out that this takes on particular importance in Quebec, where he works with a combination of English and French clients and needs experts in both official languages.
Should you ask for referrals?
Whether to solicit referrals from COIs immediately is an open debate among advisors.
While Ms. Crowe notes that many advisors want to ensure a prospective COI is open to making reciprocal introductions, she’s taken a different approach by making referrals first if they fit the needs of her client.
Mr. Heath says he’s also not been the type to ask for referrals and has instead let his work speak for itself.
“I feel that just by doing a good job and being a professional, it can lead to more referrals than going out of way to ask for them,” he says.
But Mr. Vo-Dignard points out some COIs may be a bit nervous of referring clients to advisors.
“If you want them to be more proactive, you have to put yourself in their shoes and find a way for them to send you a referral without being scared of it,” he says.
Meanwhile, advisors stress the importance of ensuring a personality and situation fit between client and COI when making referrals.
Ms. Crowe says this mindset flips the script on how some advisors view COI relationships.
“A lot of the times advisors think about how this is going to help [their] business – but if you think, ‘How is this going to help my client?’ It inevitably really helps the business,” Ms. Crowe says.
Referring a client to a professional they like and who improves their financial lives will make them think more highly of the advisor, she adds. Similarly, making sure the client and COI are a good fit will likely lead to in-kind referrals down the road.
“It might not be an immediate return, but over the long term, it’s very positive to the client experience and, therefore, your business,” she says.
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