It’s an evergreen issue, but one critical to 401k advisors looking to grow their businesses.
Referrals are often an integral part of a firm’s marketing strategy and yet, determining the best way to seek them out can stymie the savviest of advisors.
There are a number of traditional methods that can be effective when asking for and receiving quality referrals from plan sponsors, as well as participants. However, our experts also talk about techniques that can make an impression.
Todd Kading’s career evolved from wealth manager to his current role as president of Austin, Texas-based LeafHouse Financial, a national 3(38) provider, and with that transition, his approach to referrals similarly changed.
“As a wealth manager, it was all about building relationships and having a network of who-knew-who that translated easily into referrals,” Kading notes.
In the retirement space, he said he sees a different approach with plan sponsors and other advisors.
Kading feels that working together successfully is the key to advisor profitability and long-term growth, as well as a way for plan sponsors to manage risk and remain financially viable.
Now, he and his team work closely with advisors, recordkeepers and providers who tend to connect and refer clients through their mutual partnerships, a process he stresses when he coaches advisors.
“Advisors can’t be experts on everything, so it’s important to build a ‘dream team’ of specialists who work together to service the plan sponsor.”
Kading says the advisor is still the primary relationship manager with the client, but each service provider is relied upon to deliver specific expertise. The business relationships expand the reach of one’s practice because the advisor is potentially one introduction away from clients of the 3(38), third-party administrator or recordkeeper.
Kading points out that building the dream team can take time, so advisors should consider other ways to solicit referrals, suggesting the time-honored luncheon speaker.
His firm hosts events in quality restaurants featuring industry experts with solid credentials.
Topics should be timely, he says, citing “how the death of the fiduciary rule affects the industry” as one example. The sessions should be easy to attend (“don’t trap them on a luncheon cruise where they can’t get off the boat!”) and cater to the interests of a particular audience.
“We’ll invite CFOs and they bring their CFO friends and we’ll have someone speak on regulatory changes or the like.”
When Kading is invited to speak at events, he encourages the advisor not to hard sell him as a 3(38)-provider looking for referrals.
“I’d rather have someone approach me, have a conversation and see where it leads.”
The Only Limit to Referrals is Creativity
Count Charlie Epstein as another master of referral-generating events.
The founder of Epstein Financial Services has written books on retirement, bills himself as the “The 401k Coach” and can list off dozens of catchy, themed events that attract potential clients.
Unlike Kading, he won’t center an event around an industry speaker, but he will bring in 401k recordkeepers, money managers or mutual fund companies as co-sponsors.
“We allow them 10 minutes at the start of the program to present to the attendees,” he notes. “We coach them to make sure that what they share about their business provides real value to the group and isn’t a canned sales pitch.”
Epstein’s company and an accounting firm once rented out a theater and held a special movie showing for their collective clients. They shared the cost and the crossover networking worked because there was an implied testimonial of his firm to the accounting clients, and vice versa.
He looks to local celebrities that live close to his Holyoke, Mass. base to headline some of his “must-see” events.
One such get was actor John Ratzenberger of “Cheers” fame who champions a program called “Nuts, Bolts & Thingamajigs” that aims to inspire “the next generation of manufacturers, inventors and entrepreneurs.”
At Epstein’s event, Ratzenberger talked of the initiative’s importance with owners of manufacturing companies and in turn, the guests got photos with him and enjoyed a memorable evening.
Epstein often insists that his events center around an interesting topic but are injected with a bit of fun.
Enter Joseph Michelli, author of The Starbucks Experience, The New Gold Standard and Prescription for Excellence, whose presentation was coupled with Starbucks employees demonstrating roasting and tasting techniques.
When it comes to niche marketing and referrals, Epstein will look at partnering with professional service providers. He paid several thousand dollars to be part of an event where a local doctor was presenting a high-end continuing education session, along with a four-course wine pairing dinner for surgeons.
Epstein was provided with 15 minutes to talk about his firm’s services, and the investment paid off immediately with new clients who recognized the credibility he held by being an invited presenter—and by connecting to the surgeons with retirement information that was important to them.
Epstein’s philosophy centers on “making deposits before you can make withdrawals.”
“People have choices. You need to deposit interesting, unique experiences in their lives. When you do, it tells them how you and your organization want to be perceived. The only limit is your creativity.”
Centers of Influence and the Importance of Being Genuine
With assets of more than $20 billion, Innovest Portfolio Solutions is a powerhouse that specializes in retirement plans in the Rocky Mountain region. Servicing 100-plus plans, its president Wendy Dominguez has a no-nonsense referral system that utilizes centers of influence, specifically CPAs and attorneys.
“We work with clients and ask who they use for legal or accounting representation. We reach out to those contacts who are usually very receptive to connecting since we share a mutual client.”
Again, hard sells take a back seat and the conversations start simply over coffee or lunch.
“We’ll first talk about how we can help them, whether it’s a joint speaking arrangement, or being a resource of information, anything that might build the relationship.”
Eventually, she might ask who else at their firm she should meet, stressing that they are always looking to expand their network of experts.
Dominguez acknowledges that as an established advisor, leveraging relationships for referrals has become easier, and that advisors just starting out won’t necessarily be able to meet with a partner in an accounting firm.
But that shouldn’t stop them, she says, and instead they should focus efforts on making inroads to meeting with managers of audit or new associates.
“When you find a business peer, maintain that relationship as you ‘grow up together,’” Dominguez advises, as they will often become that connection you need in five or 10 years.
Cold calls generally fall flat as referrals need a common ground to start, like a warm introduction or mutual acquaintance.
Dominguez says business groups can be a great starting point.
She recommends that her team members join groups or volunteer as board members, something new advisors can tailor to their own needs by participating in the young professionals arm of key business associations.
Being part of groups such as AICPA, Western Pension Association, National Association of Government Defined Contribution Administrators and the American Society for Public Administration, just to name a few, has provided Dominguez introductions to client referrals over the years.
Dominguez also makes a point of incorporating subtle outreach in yearly client review meetings. She says they may have a central theme they are covering—e.g., fees, governance or recordkeeping—but they will also provide their clients with an update on the firm, including new staff or clients that they have added.
She ends by saying that Innovest’s growth benefits clients by increasing resources and that they are also open to talking with other potential clients.
“We’d rather clients send us any contacts they have, and we will help them if we can. If they aren’t a fit for us, we can refer them to advisors at smaller firms. We will always be a resource for anyone who our clients want to send our way.” And it’s an attitude that has served them well.
“If you genuinely want to help others, it comes through.”
Why Advisors Are Afraid to Ask for Referrals
“The biggest reason that advisors don’t ask for referrals is because they don’t feel confident enough in the subject matter,” LeafHouse’s Kading claims.
He says it’s especially true in the 401k space, because many advisors come from a wealth management background and aren’t as sure of their retirement expertise or bandwidth to handle more clients. He’s observed that many of them don’t even include a section on their website showing that they handle retirement plans.
“Advisors don’t have to be a ‘perfect expert.’ They need to be a conductor of a ‘symphony of experts’ and bring all the moving parts together to create the retirement masterpiece,” again promoting the dream team approach which he says takes the pressure off advisors when they market their services.
Dominguez adds that advisors fear sounding self-serving or that they might be viewed as more interested in new business versus serving existing clients.
She emphasizes that part of a successful “ask” is showing how current clients benefit with an expanding firm that can offer even higher service, resources, tools and, ultimately, hire better people.
Kading’s parting advice to advisors who want to get retirement plan referrals?
“Don’t be hesitant because you don’t think you know enough. You already know more than you realize. Just jump in.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
