When current clients refer their friends and colleagues to your advisory firm, it has a powerful ripple effect. It not only creates a network of trust, but also attracts only those clients who need financial planning advice and services.

A financial advisor referral program has immense potential for expanding your client base. Many financial planners and advisors don’t actively seek referrals from existing clients, so they’re missing out on a reliable source of new leads. Embracing this simple yet impactful marketing strategy lets you leverage the satisfaction of existing clients. 

In this in-depth guide, you’ll discover:

  • Benefits of referral programs
  • Easy tools for financial advisors to use when building a program
  • How to know if you’re ready for one
  • Best practices for your referral program’s success

What is a financial advisor referral program?

A financial advisor referral program is a formalized way to encourage and reward your current clients for referring your services to their friends, family members, and colleagues. It goes beyond just asking for names.

Your program’s software tracks your customers’ referrals, giving you valuable insights into how much new business they’re generating. The program automates the tracking and rewards process, eliminating the need for manual recordkeeping.

financial advisor referral program retirement

Referral program benefits 

When it comes to their finances and finding an advisor, people need to feel sure that they’ve found the right fit, often investing significant time researching options. Using a financial advisor referral program will not only benefit you and your business, but also those potential clients looking for that right fit.

Implementing a referral program offers several benefits:

  • Track every referral your customers make: Monitor the performance of your program at a glance, and make data-driven decisions.
  • Raise awareness of your financial planning services: Word-of-mouth recommendations are powerful endorsements, expanding your reach to ideal clients who may not have discovered your services otherwise.
  • Attract new clients: Recommendations from friends hold much more weight than other promotion methods. As a result, client referrals are four times more likely to bring you new business.  
  • Foster loyalty: Referral marketing brings the best clients, who tend to be more loyal. They are more likely to continue utilizing your services, resulting in a higher customer lifetime value. Such clients have a 16% higher customer lifetime value compared to non-referred clients.
  • Save money on marketing: Referral programs have a relatively low client acquisition cost compared to other marketing methods, such as ad campaigns. You only pay for referrals when they result in sales, making them a cost-effective strategy. 
  • Market with low risk: Referral programs are low risk, as you only reward clients when their referrals become your clients (or your qualified leads). 

Referral software for financial advisors [Free Tools]

These referral tools for financial advisors are a free and easy way to help you start your referral program.

Free Tools + Services:

Want a fully automated referral program for your financial advisor business? Run your referral program with us at Referral Rock. Find out how we can build your program with you (and tailor it to your unique needs)

Referral program essentials 

Despite the benefits, not every financial professional is ready for a referral program. For a referral program to be successful, you must have the following elements in place before you launch:

  • A healthy network of satisfied clients who would willingly recommend your services
  • Strong client relationships, built through a track record of stellar service
  • An online presence you can direct referred leads to
  • The capacity to keep delivering the stellar service you’re known for, even with an influx of new clients
  • A profile of your ideal new client
  • Knowledge of existing clients, including:
    • Demographics
    • What made them seek your services
    • Why they chose you over competitors
    • Where they get information from you and about you
    • How they communicate with their friends
    • What rewards would motivate them to refer friends

Financial advisor referral program best practices

Follow these best practices to make your referral program a success:

Mobilize your best advocates first

Before you announce your program to everyone who uses your advisor business, start by reaching out to your most committed clients, who will make the best advocates for your services.

The most committed advocates are existing clients who match the profile of clients you want to recruit, and:

  • Are your longest-standing clients
  • Have used your services most often
  • Already shared how awesome your services are (in person, on social media, in positive reviews) – the more frequently, the better
  • Recently posted a positive comment, left a positive review, or gave positive in-person feedback

Send them a personalized note expressing your gratitude for their support and inviting them to help recruit new clients through the referral program. Once you’ve mobilized these advocates, you can roll out the program to your full clientele.

Ask for referrals at the right times

One of the best (and easiest) ways to get a client referral is simply asking outright; after all, you’ve already established a relationship with your client and converse with them regularly.

Timing is crucial when asking for referrals, though. Take advantage of moments when clients are happiest, and you are top of their minds. For example, you might ask when they:

  • Post a positive review or social media comment
  • Give you positive comments on a survey
  • Provide excellent in-person feedback after you’ve completed a financial goal for them
  • Recommend you to friends outside of the referral program
Pro tip: If you know they were satisfied with your services, ask a client for a referral when you’re sending the invoice for a completed appointment.

Additionally, consider asking for referrals on special occasions, like anniversaries of when you started assisting them. 

Know how to make the ask

When asking for referrals, it’s important to show your client appreciation for what they’re potentially going to do for your business.

  • Tell them you appreciate them as a client and their decision to choose your business for their financial advising.
  • Explain the qualities that make them an ideal client and how this makes them ideal for referring potential new clients.
  • Avoid being vague! Ask if they know someone who fits the ideal profile and who could benefit from your financial advice.
  • Finally, provide a direct link to your referral program, making it easy for clients to take action.

paramount wealth management advocate for us

Choose motivating rewards

Motivating rewards encourage clients to refer their friends to your services. We recommend awarding gift cards or cash rewards, as the recipient can choose how they want to use the reward. Plus, with Referral Rock and Tango’s gift card menu, customers can select their preferred type of gift card for even more freedom of choice.

You might also award gift baskets, or offer a discount on a client’s next payment. Or, introduce a contest where the person who makes the most referrals in a year receives a bigger-ticket reward. 

We recommend a double-sided reward scheme, where the referring and new clients both receive incentives. For instance, you might offer 25% off both the new client’s first consultation and the existing client’s next meeting with you.

Consider providing a smaller reward when a referred lead schedules a prospective client meeting, and a larger reward when the new client starts paying for your services. This is known as a multi-step reward structure, and it reflects the longer discernment process when selecting a financial advisor. 

Be sure to check state and other regulations to ensure that the referral rewards you want to offer comply with legal requirements in your state or area. If direct rewards to clients are not permitted, you can still explore alternative options, such as donating to charity on behalf of the client.

Make sharing easy

To encourage active participation in your referral program, make it simple for clients to understand and share.

  • Present the program in a few straightforward steps (three to four is best).
  • Include concise benefits of sharing (both rewards and intrinsic benefits).
  • Clearly define when rewards are earned to avoid any confusion.
  • Make sure your program page is uncluttered, without too much text or distracting elements.
  • Include a clear, easy-to-find  call to action (CTA) that encourages sharing.

Additionally, strive to minimize the effort required for clients to share referrals.

  • Provide various sharing options based on how clients already share information with friends, such as email, social media, and texting.
  • Offer a referral link that clients can easily copy and paste anywhere (referral software generates these links effortlessly).
  • Pre-draft a message for the client to send to their friend, so they don’t have to think about what to say. Make sure the message sounds conversational and like the member wrote it.
  • Optimize your program for mobile devices, as people often share things they love with their friends via mobile platforms.
Referral Rock’s One Click Access links make sharing even easier. They let your clients start sharing right away, without needing to fill out an enrollment form. Include these links in all your program promotion emails.

refer and earn questrade

Promote your program in lots of places

 Brands with the most successful referral programs promote their programs consistently, on multiple channels. The more clients know about your program, the more chances you have to bring in new clients and bring in more revenue. So, promote your referral program extensively, on various channels:

  • On your website: Place a prominent hero image or banner that clearly highlights your referral program. Consider adding buttons to the top and bottom menus for easy access.
  • Conversations with clients: Whenever you have a satisfied client, personally mention your referral program as an opportunity for them to share their positive experiences.
  • Personal referral emails: Send individual referral emails to your most satisfied clients, emphasizing how their recommendations can benefit others.
  • Mass emails: Send targeted emails focusing on your referral program to all clients at regular intervals. We recommend sending these emails monthly to quarterly. This will keep the program fresh in clients’ minds.
  • News/update emails: Include information about your referral program in various types of emails, including confirmation emails, invoices, and other communications unrelated to the program’s specific purpose.
  • Social media posts: Regularly promote your referral program on social media platforms like LinkedIn, Facebook, or Twitter to reach a broader audience. Include a link to your landing page for your program.
  • Email signatures and social media bios: Add a brief and captivating description of your referral program in your email signatures and social media bios, so it’s visible to anyone interacting with you.

Track your referrals with software

To effectively monitor the success of your referral program, tracking referrals is essential. You must set measurable client acquisition goals and continuously track your progress. This task is nearly impossible to accomplish manually.

That’s where Referral Rock referral software plays a vital role. It streamlines the program creation process and simplifies referral tracking and management. With Referral Rock, you can:

  • Create a customized referral experience: Tailor the referral program to align with your brand, and select any reward type and structure you wish.
  • Track referral sources: Unique referral links for each client let you track exactly where each referral came from.
  • Instantly issue rewards: Automated reward payouts send incentives right when they’re earned to keep clients happy.
  • Automate promotions: Strategic, automated promotional emails keep clients engaged, and the passwordless links inside make sharing even easier. 
  • Collect program data: Measure your program’s success at a glance, and make informed adjustments and improvements.
  • Rely on expert support: Onboarding specialists build your program with you, and offer expert guidance at every step.

Thank customers for referrals

Expressing gratitude for referrals acknowledges your clients’ support and encourages them to continue referring others. Whenever a referral results in a new client, go the extra mile to thank the referring client. Consider sending a personal, preferably handwritten, thank-you note to the referrer to show your appreciation. 

Additionally, publicly acknowledge the referral on your social media page, giving the referring client a shout-out and expressing gratitude for their support. Such a public display of appreciation strengthens your relationship with the referring client and encourages others to refer their clients to your services.

The bottom line

A financial advisor referral program lets you leverage the trust and influence of personal recommendations to attract new clients. The benefits of a referral program include easy tracking of referrals, increased awareness of your services, the acquisition of loyal clients, cost-effectiveness, and low risk.  

By implementing a well-designed financial advisor referral program and following these best practices, you can harness the power of referrals to drive business growth, attract loyal clients, and establish yourself as a trusted and sought-after financial advisor in your industry.

Find out more about how Referral Rock can help you build the best customer referral program >