Why High-Net-Worth Individuals Should Invest Like Institutional Investors

by | Jun 21, 2019 | Advisor Blog

Home > Advisor Blog > Why High-Net-Worth Individuals Should Invest Like Institutional Investors

Why High-Net-Worth Individuals Should Invest Like Institutional Investors

What does it mean to be a high-net-worth (HNW) individual? If you have investable financial assets between $1 and $30 million, excluding the value of your primary residence, then congratulations, you’ve made it into the HNW club. According to data firm Wealth-X, in their 2019 Global HNW Analysis, the highest population of HNW individuals resides in the U.S., with the highest number of these individuals living in New York. At the same time, Asia is projected to have the greatest growth in the number of HNW individuals, with its high-net-worth population expected to increase over the next five years at a compound annual growth rate of 7.6%.

When considering a successful wealth management plan, it could be beneficial for HNW individuals to start thinking like an institutional investor. Institutional investors include foundations and endowments, non-profits, plan-sponsors, insurance companies, Taft-Hartley Plans, and public and corporate investors.

At first glance, HNW individuals may not seem to have many similarities with institutional investors. However, a closer look reveals that they actually have many qualities in common. These similarities highlight precisely why HNW individuals should also share the same investment strategies as financial institutions.

What HNW individuals and institutional investors have in common

Long-Term Financial Stability
High-net-worth individuals and institutional investors share an exclusive space where they have similar financial goals. One of those goals is to ensure long-term financial stability. In the case of a HNW person, he or she must consider multigenerational needs. Preparing the next generation and setting their children up for success later in life is a major concern, but what happens beyond the second generation? According to a recent report by the Williams Group wealth consultancy, an estimated 70% of families will lose their wealth by the 2nd generation, while 90% will lose it by the 3rd.

There are several reasons why this happens, such as the effects of taxes, inflation, bad investments and the dilution of assets, but perhaps one of the keys to understanding why there is such a loss in wealth over several generations is the fact that the 3rd generation is often unprepared to manage what is handed to them. Their grandparents put in the work to build and nurture the family’s assets, while their parents grew up with the struggles of not having a lot of money. Having experienced none of the work and hardships of their grandparents and parents, the third generation grows up with very little preparation for what it takes to manage their wealth.

Similarly, the backbone of any successful institutional investor is financial longevity. For larger institutions that have been established for a long period of time, there is a specific aim to implement financial strategies that ensure revenue growth. Just as families must consider the best plan to ensure wealth for future generations, so must older, more established institutions think ahead to how they can maintain the financial health of their organizations.

Risk Mitigation
HNW investors also have a broad perspective when it comes to risk. Unlike ordinary investors, HNW individuals have a greater ability to accept financial losses, particularly in the short term. What may seem like a staggering sum to most could be a mere fraction of liquidity for someone with a comfortable nest egg. For example, the short-term market volatility in December 2018 to early January 2019 had little or no effect on HNW investors and institutional investors alike, due to their long glide paths.

While tempting to react to the latest headlines about imposed tariffs, HNW individuals can afford to stick with what works for their financial goals, whether that includes balancing their assets in equities, fixed income and alternative investments. Much in the same way, investment strategies for institutional investors are designed with a long glide path to weather short-term losses. Depending on their mandates and investment guidelines, institutional investors execute investment strategies that balance risk tolerance with a variety of asset classes.

With a wide-ranging perspective on risk, both HNW individuals and institutional investors require complex investment strategies that can factor in short-term losses and gains while remaining focused overall financial growth.

Wealth Stature
A distinctive financial profile and access to investment managers are two additional qualities that HNW individuals and institutional investors share. What makes a person stand out as a HNW individual is the value of their investable assets. Similarly, an institution that has been established for 50 years or more has amassed assets that far surpass the average organization. Both occupy a status that is outside of the financial norm because of their collected wealth. It is this wealth that allows them unique access to investment managers and investment products that are not typically available to retail investors.

Building portfolios that suit HNW investors’ needs

What is the best approach to take then when constructing portfolios for high-net-worth individuals? On the client relations side, having a low and transparent cost structure and generating a return to cover management expenses are basic attributes of HNW portfolios. This builds trust and a good foundation for the advisor-investor relationship. On top of that foundation, a portfolio that is designed to outpace inflation is critical to its longevity. Inflation increases the cost of everyday goods and services, with long-term effects on withdrawal rates, especially when maintaining a certain lifestyle. In the same way, if a portfolio does not address a HNW individual’s lifestyle needs by meeting or exceeding current income requirements, it will run out of funds. Finally, protecting and growing assets for beneficiaries is a long-term goal that all advisors should aim for when building HNW investment portfolios.

Christopher Crawford is the Director of Advisor Relationships for the Buffalo Funds. He has 10 years of experience in the financial services industry, previously holding positions at Invesco, IMA Financial Group, and Arthur J. Gallagher. At the Buffalo Funds, Christopher works with investment consultant relations, key account management, institutional distribution and client service. His main goal is to partner with advisors to bring business building ideas and provide unparalleled customer support to their business, always striving to make it easy and reliable to work with the entire Buffalo Funds investment team. Christopher received an M.B.A. from Washington University in St. Louis and a B.S.F.A. from Southern Methodist University. He also holds licenses for the Series 7, Series 63, and Series 65.

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Christopher Crawford
Director, Advisor Relationships
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Top Components of an Effective Advisor Support System

by | May 13, 2019 | Advisor Blog

Home > Advisor Blog > Top Components of an Effective Advisor Support System

Top Components of an Effective Advisor Support System

No professional operates in a vacuum. There are industry trends, individual client needs, and varied technologies drawing time away from their main focus: giving clients the best advice they can. The goal of an effective advisor support system is to make advisors more efficient, giving them the freedom to offer the high-level financial assistance that they are trained to provide.

These five support factors allow financial advisors to do what they do best, unencumbered by the basic blocking and tackling limits professional housekeeping has on their work.

1. State-of-the-Art Analytical Tools

Technology has come to play a critical role for today’s financial advisors. Financial advisors need software that assists their calculations and projections in as many aspects of their business as possible. They should have access to:

  • Historical data about the performance of investments, including detailed comparisons between multiple investments.
  • Data visualization tools that make complex financial data more digestible for clients in meetings and reports.
  • Easily accessible equity evaluation formulas for stocks.
  • Mobile applications that put financial information at their fingertips for client meetings and calls when they do not have access to a computer.

This is the new standard for financial advice. Technology is giving advisors more power to make insightful predictions while also simplifying the presentation of that data for clients. Ensuring that advisors have access to these technologies and the skills to use them is step #1 in their success.

Examples: Black Diamond, eMoney Advisor, MoneyGuidePro, NaviPlan, RightCapital

2. Coaching and Training

Financial advisors must be armed with the knowledge to grow their skills, but not everyone has time to stay on top of new techniques and strategies. Training and coaching resources help advisors stay on top of the industry’s latest trends. This training can take many different forms, according to the needs of both the individual and the firm. Some new recruits might need to learn about client relations, getting extra help on techniques for appropriate communication and conflict resolution to ease their transition from theoretical education to professional reality. Seasoned veterans might need help adjusting to the tools of the digital age, bringing their technical capabilities in line with their deep knowledge and experience.

A critical addition to individual training is small group meetings with other advisors. These allow advisors new and old to share ideas, give advice, motivate each other, and keep each other accountable. Group meetings can operate as business development, coaching, training, and morale building all at the same time. Encouraging collaboration to keep colleagues accountable and on track can have tremendous overall value for both individuals and teams.

Advisors can also work with a coach on a one-to-one basis in order to help identify the obstacles that are preventing the advisor in the achievement of the successes they seek. A coach can help review the advisor’s business processes and implement changes based on the advisor’s goals, whether they are to find new business faster, develop better referrals, build repeatable processes, or scale their business model. Together, the coach will help you determine the key, core priorities you need to accomplish to get where you want to be and determine an effective process and timeline to get you there.

3. Client Relationship Management (CRM)

Financial advisors should be able to spend their time analyzing markets and creating advantages for their clients. It is understandable that many have not had the time to learn the variety of technologies that help manage relationships with their clients. CRM software has arisen to combat the manual management of prospective and current client needs and relationships. CRM is a critical tool that streamlines basic tasks for financial advisors, which may include everything from organizing client meetings to fielding interviews with potential clients. Less time can be spent writing emails or poring over calendars, and more time can be focused on providing expert advice.

Examples: Hubspot, Insightly, Salesforce, Zoho

4. Marketing Automation

In the same vein, social media and email marketing automation tools minimize the time advisors need to spend promoting themselves and maximize their ability to be the most successful and effective advisors that they can be. Getting the word out about your practice can be incredibly time-consuming, and it is an activity with an entirely different skill set from the one that clients rely on. Tools that manage these tasks can therefore have an enormous impact on an advisor’s ability to focus on his or her business and grow an advantage over their competition. Look into social media management applications, marketing managers, and networking services to broaden the reach of your practice without wasting valuable time.

Examples: ActiveCampaign, HootSuite, Hubspot, Net-Results

5. Education and Inspiration

People, especially millennials, want to understand the significance of their job and its capacity to create value for their clients. Financial advisors help clients to achieve their goals, offering them financial security and eliminating the stress of money management. This can be communicated in a variety of ways, from formal meetings with guest speakers to topics introduced in advisor group meetings. The point is to remind advisors about the value that they are providing, something that can infuse the work of first-year and veteran advisors alike with fresh purpose and energy.

If possible, use volunteering or charitable programs to reinforce this message. No matter what professionals are doing, the ability to give back to their community financially or with their time is a critical part of both building morale and sustaining long-term career contentment.

 
 
Comprehensive Support Leads to Comprehensive Success

An effective advisor support system bolsters every area of the business while maintaining accountability of each advisor to their clients and colleagues. Advisors cannot work to their full potential without access to the technologies transforming the business. Their outlook and sense of value also contribute greatly to understanding their purpose. These factors promote efficiency, drive productivity, and foster success.

Christopher Crawford is the Director of Advisor Relationships for the Buffalo Funds. He has 10 years of experience in the financial services industry, previously holding positions at Invesco, IMA Financial Group, and Arthur J. Gallagher. At the Buffalo Funds, Christopher works with investment consultant relations, key account management, institutional distribution and client service. His main goal is to partner with advisors to bring business building ideas and provide unparalleled customer support to their business, always striving to make it easy and reliable to work with the entire Buffalo Funds investment team. Christopher received an M.B.A. from Washington University in St. Louis and a B.S.F.A. from Southern Methodist University. He also holds licenses for the Series 7, Series 63, and Series 65.

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Christopher Crawford
Director, Advisor Relationships
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Top 5 Questions Advisors Should Ask Fund Managers

by | Apr 17, 2019 | Advisor Blog

Home > Advisor Blog > Top 5 Questions Advisors Should Ask Fund Managers

Top 5 Questions Advisors Should Ask Fund Managers

Asset management is a business governed by a thousand disparate philosophies. Depending on who you talk to, it can be a hard science, abstract art, or anything in between. When financial advisors reach out to mutual fund managers to help their clients reach their financial goals, they’re putting a lot of trust in the fund managers’ personal investment philosophy. That means it’s the advisor’s responsibility to learn as much as possible about that philosophy before giving them control over client assets. When talking to a fund manager, it’s important to cut through marketing speak to decide whether they represent a lucrative investment or a costly money-pit. Here are five questions you need to ask fund managers.

1. What’s your experience and how well is that experience documented?

Documentation should always be the first item you check off your list when making any decisions about fund management. Collect any documentation you can about previous fund experience, and actively listen when they talk about those experiences. How do they describe getting started, and how did they deal with any notable successes or failures? Is there anything in the documentation that they ignore or refuse to mention in their account? If so, explore why. This can be a great opportunity to understand how they feel about their approach and their personal history in the industry. Some managers have had easy success in their careers, and you can hear it when they talk about their experience. Listen for overconfidence, arrogance, or other related red flags that might tell you they have an inflated sense of control over the assets entrusted to them.

2. How would you describe your investment strategy?

Investment strategies are the core of a fund manager’s work and can often mean the difference between the success and failure of a fund. Do they view the process of investing as a science, a series of mathematical equations that they’re obeying? Or do they see themselves as artists, listening to their gut and recognizing patterns that their peers or competitors don’t see? This is important when comparing peer investment strategies. However, it really boils down to a fund’s performance. Therefore, when reviewing a fund’s performance from the year-to-date to the 3-year, 5-year and 10-year timeframe, ask the fund manager if their investment strategy has altered at all. If so, what changed? Any new fund mandates? How does this impact new investments in the fund?

3. What are some investments you’ve removed from your portfolio, and why?

Pruning a portfolio is a natural part of the investment process, but it’s also a process governed by a fund manager’s discretion. Managers can use diverse sets of information to form their impressions about a company or asset, including gut impulses and rules of thumb. Sometimes the reasons aren’t even financial. Some funds cut investments for unethical practices, aiming to build a portfolio that supports green technologies or to avoid those damaging to human life. You might agree with their decisions, and your clients might support them as well. Most portfolio managers sell a particular holding based on share valuation and risk tolerance. There’s no substitute for an informed decision, and this question can help you get the information you need.

4. How often do you report to clients?

Communication is essential in any industry, but in fund management it’s especially valuable. Managers are given control of sizable assets, and your clients deserve consistent and clear updates about how those investments are proceeding. It’s essential that the line of communication between everyone with a vested interest in those assets is open and available. Ask for copies of previous investor communications, including memos and regular updates. How long does it take them to communicate to investors that there is a problem or that a major change has been made to the portfolio? This information is an important baseline for establishing your ongoing professional relationship and determining how much transparency you can expect to experience.

5. When has your process failed?

In case you haven’t already received a clear answer about this, the most important piece of information you can gather from a potential fund manager is how they approach failure. Even if fund managers avoid major mistakes, occasional failure is an unavoidable part of interacting with the complexities of financial markets. Any fund manager you’re considering has failed at one point in his or her career, and the way in which that struggle is explained will give you key insight into the way client assets will be managed. How are failures framed? Are they impossible to predict, forces of nature? Are they deeply personal sources of shame? Are they taboo topics to be ignored? How did they bounce back? A manager’s answers here could predict the response to the next big financial crisis or the next mistaken investment. Mistakes and failures will happen, and knowing that you’re dealing with a manager who responds well to these investment setbacks with a level head will make the assets of your clients that much safer.

Bonus Question: Do they have strong risk-management capabilities?

As the decade-long bull market continues, there’s always the question about when the run-up in the market will end and a recession set in. Many fund managers look to limit downside losses, especially those in actively-managed funds, by focusing on how their strategies perform during down market years. For example, a good question to ask is “How long did it take your fund to recover from the bear market of 2007 to 2009?” Missing out on any compounding returns can be a hindrance to overall fund performance, and those fund managers who are able to mitigate risk in very volatile market downturns tend to lead their fund peer groups.

It’s not only fair but necessary to get a complete picture of the person entrusted with valuable assets. These questions can offer some guidelines when interacting with a mutual fund manager. The information you glean from the answers will give you a better understanding of what you can expect from your fund manager. It will help define the terms of your relationship and the likelihood that your client’s assets will be well guarded. As you know, that is information you can’t afford not to have.

Here at the Buffalo Funds, we provide advisors the rare opportunity to speak one-on-one with our fund managers and hear their investment philosophy first-hand. Just another added benefit of working with a boutique asset manager.

Christopher Crawford is the Director of Advisor Relationships for the Buffalo Funds. He has 10 years of experience in the financial services industry, previously holding positions at Invesco, IMA Financial Group, and Arthur J. Gallagher. At the Buffalo Funds, Christopher works with investment consultant relations, key account management, institutional distribution and client service. His main goal is to partner with advisors to bring business building ideas and provide unparalleled customer support to their business, always striving to make it easy and reliable to work with the entire Buffalo Funds investment team. Christopher received an M.B.A. from Washington University in St. Louis and a B.S.F.A. from Southern Methodist University. He also holds licenses for the Series 7, Series 63, and Series 65.
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Christopher Crawford
Director, Advisor Relationships
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4 Strategies for Impactful Networking

by | Mar 21, 2019 | Advisor Blog

Home > Advisor Blog > 4 Strategies for Impactful Networking

4 Strategies for Impactful Networking

“Networking is the glue that binds the business world together.”

We’ve all heard this or something like it a hundred times in a hundred different ways, but it remains true even as technology transforms the ways we communicate and do business. Advising people on financial matters is a uniquely personal profession because it involves handling some of the most valuable assets in our client’s lives. That means we have to meet people in order to establish the trust clients need if they’re going to ask our advice about what to do with those assets.

The vast majority of professionals agree that networking is one of the major keys to securing new prospective clients, sharing knowledge, and growing your business. So why does the practice get such a bad rap?

A lot of people think that they just don’t like the act of networking in general – we’ve all heard friends or colleagues say that networking is just an uncomfortable means to an end. But the truth is that networking done correctly is as enjoyable and impactful as it is useful for your career. Advisors simply need to look a little more closely at the events they’re attending and integrate the best parts of networking philosophy into their daily lives, so they can find contacts and customers in places they might never have expected. Here are a few tips aimed at delivering that experience and finding the networks you really need to be a part of.

1. Networking activities should be on-brand.

A lot of networking events end up being aimless meetings, not really delivering on business development or network building at all. Everyone’s been to at least one lunch or mixer that was boring and yielded absolutely no useful contacts. Casual meetings or mixers run into this issue more often, despite seeming like the most relaxed way to engage with networking. In fact, people in these casual settings tend to gravitate towards people they already know in order to avoid any awkward encounters or conversations with strangers. It’s vital that you make sure you’re spending networking time with groups or in places that will cater to your career development as a financial advisor.

Additionally, take the time beforehand to understand the values and preferences of the groups you’re looking to meet before you go. What values drive their work ethic? What needs define their business? Use these questions to generate a fruitful conversation once you’ve been introduced to someone you need to know.

2. Networking is more than just networking events.

Networking is far more than the events you attend. Meetings and conferences can certainly be helpful, but they’re not where the majority of your prospective clients are going to be. Opportunities to network in a way that grows your business are more likely to appear in your community, especially if you approach them in an authentic way. Be open to conversations with local business owners and neighbors. These are potentially valuable contacts you might never have access to at a traditional networking event. You don’t know who might be at your gym, at the bar you’re going to, or at a PTA meeting at your child’s school. The best recommendation for your services is the way those people see you interacting with your community.

Additionally, be on the lookout for opportunities to help that community in a visible way. Most towns and cities have local sports teams or school events to sponsor, both of which can create an organic gathering of business leaders and other people you need to know.

3. Remember, networking is a two-way street.

One important part of networking that can get lost in conversations about tactics and growth is the opportunity it offers to help other people expand their professional and social networks and drive more business for themselves as well. If you treat networking interactions as opportunities for you to help others without any expectation of getting something in return, you will grow your network and your business much more quickly.

Help other people expand their networks and they will remember you. Help people get new clients and they will thank you. Help other people grow their business and you will be growing yours as well.

This attitude makes networking feel far less artificial and self-interested than it is portrayed by critics, and takes the process back to its roots in simply meeting people and sharing knowledge. This is doubly true when you’re engaging with members of your local community who might be uncomfortable with dry, transactional conversations that end in the exchange of business cards. Networking can be an authentic, enjoyable process if you engage with it as a way to bring your professional and social networks to someone new who might — but is not obligated to — help you in turn.

4. Maintain your network.

Most networking fails due to lack of follow up. None of the networking events you go to or conversations you strike up will be worthwhile if you don’t follow up and strengthen that connection. Maintenance is the difference between a collection of conversations and a professional network.

Follow up later that day or the next day at the latest. Phone calls, emails, texts, even LinkedIn profiles can be convenient tools for starting the conversations that turn an introduction into a network. The right mixture of mediums is vital if you get and keep the attention of potential customers and contacts. If you’re not sure what the best way to contact someone is, then ask them when you’re getting their contact information. They’ll will be glad to share their preference with you. It’s in their interest as much as it is in yours to continue the introduction and network with you.

Another good way to maintain your network is to ensure you are posting frequent updates on the social media account(s) you maintain for business purposes. This helps keep you top-of-mind with your contacts. In addition, liking and commenting on connection’s posts will go a long way in keeping your relationship active with that person.

Networking effectively is incredibly important for financial advisors because you need to build close relationships with the potential clients you meet in order for them to put their trust in you. Putting in the work to develop your networks will help build your business with a pipeline of prospective clients and referral sources. If all goes well they’ll be asking you what to do with their most valuable assets, and how your expertise can support their financial security and make their lives (and possibly their network of friends’ lives) more comfortable.

Christopher Crawford is the Director of Advisor Relationships for the Buffalo Funds. He has 10 years of experience in the financial services industry, previously holding positions at Invesco, IMA Financial Group, and Arthur J. Gallagher. At the Buffalo Funds, Christopher works with investment consultant relations, key account management, institutional distribution and client service. His main goal is to partner with advisors to bring business building ideas and provide unparalleled customer support to their business, always striving to make it easy and reliable to work with the entire Buffalo Funds investment team. Christopher received an M.B.A. from Washington University in St. Louis and a B.S.F.A. from Southern Methodist University. He also holds licenses for the Series 7, Series 63, and Series 65.
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Christopher Crawford
Director, Advisor Relationships
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How to Ask for Referrals the Right Way

by | Mar 11, 2019 | Advisor Blog

Home > Advisor Blog > How to Ask for Referrals the Right Way

HOW TO ASK FOR REFERRALS THE RIGHT WAY

Referrals may be the most basic form of growth marketing, but they’re anything but simple.

The idea of asking your customers to tell their friends and family about your goods or services is presumably as old as commerce itself. But the transactional nature of business relationships can make asking for favors that fall outside the scope of traditional compensation awkward, to say the least. From a client’s perspective, they’ve already paid you for your work, why should they take time out of their busy life and put their personal reputation on the line recommending you when they get nothing out of it? In fact many people might even think, if they bring you more business (more clients), will that negatively affect their relationship with you by decreasing the amount of time available to work on their accounts.

The desire to avoid burdening or alienating clients is the single biggest reason why advisors do not ask for referrals. Indeed, surveys show that only 1 in 10 advisors are proactively asking for referrals. However, those who do reach out for referrals tend to reap major rewards – referrals are the #1 source of new business for financial advisors. Simply making your clients aware you are looking to grow your business is often the easiest way to put clients in the referral-making mindset.

The key to making referrals work is to ask the right way. Here are some suggestions to help you optimize your approach to this important driver of business growth.

Make sure your clients are satisfied.

If you’re worried that asking clients to refer you might damage your relationship with them, ask yourself whether it might be because they’re not so impressed with your service that they can in good faith tell their peers to do business with you. This is possibly the biggest risk of asking for referrals, as it can bring to a head a situation that’s been simmering until now. It can cause clients to take a hard look at not only do they feel comfortable referring you, but do they themselves really need your services either.

So before you start asking anyone for a referral, take an honest look at your current practice. If you’re not getting outstanding results, hold off on the growth strategy for now, and instead work on improving your current service. One way you can do this is by gathering feedback. Asking for feedback during mid-year reviews, for instance, can help you gauge your clients’ opinions about your services.

On the plus side, improving service alone, even without actively asking for referrals, can help build word of mouth (i.e., the organic chitchat that occurs naturally between friends, family and colleagues that can influence your reputation and drive – or drive away – business.)

Be selective with whom you ask.

Not everyone has the time or the desire to be your advocate. But an advocate is what you need if you want people to share your information with their community. That’s why retail brands enlist advocates or “influencers” to drive business. These people love the brand and are connected with many other people that might like the brand, so it makes sense for brands to center their marketing efforts around these individuals.

While the business may be different, the principle of honing in on those most likely to promote your services is just as applicable for investment advisors. The key is uncovering who among your current clients fit that description.

When identifying which clients to ask for referrals, you must also consider which client is most connected, and in turn, how far their good word will take you. In most cases, your biggest, wealthiest clients – the small percent that make up an outsized proportion of your business – are going to be the most connected. These people are extremely busy and very picky, to be sure, but given their position, it is worth the time and effort of asking them to help you drive your business’s growth.

Ask the right way.

Once you’re sure you are providing the best quality service to your clients, and you have selected the best potential advocates for your business, you now have to begin the delicate process of the referral conversation. There’s a major but subtle distinction between a conversation and a “pitch”. Most people do not like to be pitched to, but having a conversation about needs and goals is much easier to transition into asking for a referral.

  • Understand the psychology: Clients have people they care about in regards to their financial situation. Communicate that you value the people who are important to your clients by asking if they know people who could be helped with what you have talked about in that day’s meeting. Ask them to have their friends give you a call if you think they would be helped by having a short conversation about their questions or concerns. Mentioning that you won’t bring the referral on as a client unless your services fit with their needs shows you are selective in who you work with and provides you a non-offensive way out if the referral isn’t a good fit.
  • Ask at the right time: This is important in at least two senses: scheduling a time to bring up referrals with clients, and bringing it up at the right point during the conversation. It’s important to write it down on your calendar when you plan to bring the question of referrals so that you have adequate time to cover it in your meeting. In many cases, the best time to ask is right after you finish reviewing their accounts and highlighting the outstanding results you have provided, but before you wrap up the business discussion.
  • Keep it casual: As investment advisor coach Paul Kingsman puts it, keeping the referral request casual and comfortable shapes the request as a generous offer to help, rather than a hurdle your clients have to jump before they can leave their meeting with you. “You want to help your clients make the connection between how you help and conversations they have with their friends and family. And, you want to do that using effective language that sounds authentic, leaves everyone feeling good, and can be repeated over and over.”
  • Make it easy to refer you: Gone are the days of handing out business cards for clients to share with their friends. In this digital age, consumers are empowered with a variety of data sources to do their own research before even contacting you. They expect you to have a modern website before even considering a call to your firm. According to marketing consultant Dan Allison, president of Feedback Marketing Group, advisors lose out on 80% of potential referrals because their clients can’t properly articulate the services their advisors offer. Your website should clearly outline your value proposition and all the products and services you offer, making that first call or meeting with a prospective client more beneficial to both parties.

The best thing about referrals is that they’re free. Unlike paying for ads or conference booths or speaking opportunities, referrals give you the opportunity to grow your business by catering to the people that are most likely to actually need your service and trust that you can meet their needs. If you feel that your business is ready to grow and you’re evaluating various growth strategies, there’s no question that referrals will give you the best bang for your buck. Just be sure to ask the right way.

Christopher Crawford is the Director of Advisor Relationships for the Buffalo Funds. He has 10 years of experience in the financial services industry, previously holding positions at Invesco, IMA Financial Group, and Arthur J. Gallagher. At the Buffalo Funds, Christopher works with investment consultant relations, key account management, institutional distribution and client service. His main goal is to partner with advisors to bring business building ideas and provide unparalleled customer support to their business, always striving to make it easy and reliable to work with the entire Buffalo Funds investment team. Christopher received an M.B.A. from Washington University in St. Louis and a B.S.F.A. from Southern Methodist University. He also holds licenses for the Series 7, Series 63, and Series 65.

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Christopher Crawford
Director, Advisor Relationships
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