Philip Palaveev & Mark Schoenbeck THE BIG PICTURE
known marketing consultant and expert in our industry , has offered similar statistics with the same insight — that referrals are critical , but they don ’ t come from asking . In 2021 , Mark participated in a “ Becoming Referable ” podcast with Stephen and Julie on this topic . It is still a relevant listen today .
Firm founders may not be perfect players in the referral game either ( even though they give themselves a perfect score ). Our “ 2022 Financial Performance Survey ” shows that firms across the industry generate three to five referrals for every 100 clients ( the “ gold standard ” is seven to 10 , a number we adopted from Littlechild ’ s white paper , “ The Rules of Engagement ,” published in 2013 ).
We also found that large firms , which benefit from safety , stability and brand name , may have an easier time than small ones getting client referrals . The takeaway is this : Firms should not be teaching advisors how to ask for referrals but how to impress clients .
Lack Of Accountability And Process
Oddly enough , even though founders are dissatisfied with the business development efforts of their younger colleagues , they are doing very little themselves to create a process or discipline for business development . Consider this data from our financial performance survey :
• Fifty-seven percent of advisory firms do not track their leads and do not manage their lead pipeline . There is no excuse for this , and founders have the power to improve on the process .
• Only 18 % of firms set targets for business development for their professionals . The rest of the firms rely on a “ best efforts ” approach .
• Of the very few firms that set targets , more firms set targets for employee advisors than for partners . What happened to leading by example ?
• Partners spent 25 % of their time on business development but rarely afforded the same amount of time to their younger colleagues .
At the end of the day , all these statistics speak to a culture that neglects and perhaps frowns upon business development . Advisory firms seem very reluctant to put any focus on growth
Fifty-seven percent of advisory firms do not track their leads and do not manage their lead pipeline . There is no excuse for this , and founders have the power to improve on the process .
MAY 2023 | FINANCIAL ADVISOR MAGAZINE | 17