The majority of clients are very satisfied with their advice relationships, but only 6 in 10 will actually refer others to their financial adviser, according to research launched by the Association of Financial Advisers (AFA).
The ‘New Frontiers’ research, which was commissioned by the AFA and co-authored by Business Health and AIA Australia, assessed the views of over 12,000 financial advice clients over four years. It found that 87% of clients said they were willing to refer their friends or family to their financial adviser. However, only 61% of clients said they had actually referred someone.
One of the reasons for this disparity, said Business Health’s Terry Bell, was that advisers were afraid to ask for referrals.
“There are a number of reasons (for the drop) but one is not being asked in the proper way,” Mr Bell said. “For an adviser to be successful at getting referrals they have to be referable. The client has to know they want referrals, and they’ve got to know how to go about the process of passing on that referral.”
The client has to know you want referrals
Part of the issue, said AFA CEO, Brad Fox, is that clients are not always aware of the range of services offered by their adviser. According to the research, ‘range of services’ was ranked second last in terms of client satisfaction KPIs, indicating that many clients felt their adviser operated in a fairly limited scope.
“In some cases, it’s not that they don’t offer the range of services, it’s that they haven’t made their clients aware of the range of support they can provide,” Mr Fox said.
“Unless the adviser changes that mindset, that person is always being pigeon-holed against that one need,” added Mr Bell, who said it was important for advisers to continually reiterate to their clients what they do and the value they provide.
“For example, claims management is a big issue, but no one talks about it. If I was buying protection from an adviser, then claims management is a good value add. I’d pay for that. I’d be very comfortable knowing my adviser will look after that process. But no one promotes that.”
It’s a fantastic market for advice
Advisers can also unconsciously give their clients the wrong impression about needing new business. “If a client walks into your office, and the office is cluttered and there are files everywhere, or you say to them ‘How you going? I’m so busy, there’s so much going on…’ the client will be thinking: ‘There’s no way in the world that you need any more business’, and so they won’t refer others to you,” Mr Bell explained.
“It’s not rocket science, but there are opportunities abounding there. It’s a fantastic market for advice.”
