Oct 2 in COI and Client Referrals
How Having Minimums Can Limit Your Referrals!
Most of the firms we work with have grown their business to the point that they have established AUM minimums. Whether that is $500k or $5 million, I notice a few things that I think advisors need to think about.
First, nearly every single firm I have worked with violates their own minimums all the time. While it sounds great to commit to only working with clients who have a minimum of $2 million of investible assets, it's not easy when a $5 million client refers their $400k friend. Now we risk offending the referral source by not helping their friend, or we take on yet another client below our minimum. Second, as you know, I am a big fan of insuring clients understand your firm's ideal client profile. If we are hoping they will become the best source of referrals, they can't be effective if they aren't aware of the profile. I am always amazed at how few clients we interview know the advisors target market. Even worse, many firms aren't able to define it. If you tell a client, we only work with people who have a minimum of $2 million of investible assets, you placed a bottle neck on referring. I have never heard a group of friends discuss what their "investible assets" are up to and if I know you have that minimum but am not sure of my friends "investible assets" you will miss referrals to great people who aren't flashy about their wealth. A couple of quick tips:
If you have minimums, don't discuss them from the company's perspective, but from the client and prospect perspective. Instead of saying "we have a minimum of $2 million of investible assets" try the following: "Most of the people we help have investible assets of $2 million or more. We find this to be the population of people who have the financial complexity to benefit the MOST from the model of planning we have developed. We do not expect our clients to know the investible assets of people they care about. So if there is anyone that you care about who you feel needs help, introduce them to us and we will take the time to understand the situation. If we think we are the best fit to solve any issue that is identified, we will bring them on as a client and provide solutions. If their needs are different and I do not feel we would be the best solution, you can trust that I have vetted people who will be, and I will make sure they are taken care of"
This accomplishes a few things:
- You discussed the minimum to plant the seed that you aren't going to be that valuable to people who do not have any assets as your services benefit people with complex needs. A highly specialized surgeon is qualified to do general, everyday surgery, but they don't because it's not the highest and best use of their skill and experience. It has nothing to do with profitability (although it's more profitable). It is better framed as wanting to insure people with complex needs get resources from people who know how to handle them.
- You acknowledge that they won't know investible assets and that's okay. We still want to help. Believe it or not, clients respect you and don't want to waste your time but making sure they understand that the people they care about are important and deserve help. They don't want to refer the "wrong" people. Most just don't know with any level of clarify who the "right" people are.
- You have positioned the discussion should the referral not be the best fit and as long as they get help because you pointed them in the right direction, the referral source isn't offended.
- You focused only on the needs of the people and the complexity as the reason for the minimum rather than the profitability of those clients.
How have you handled discussing minimums if you have them and what has been your challenge in getting referred to the "right" people?
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How Having Minimums Can Limit Your Referrals!
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