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10 Success Factors to Boost Client Referrals in Financial Services

By Benjamin P. Seesel | December 06, 2022 | 0 Comments

Financial ServicesFinancial Services Client Experience and Journey TransformationFinancial Services Go-To-Market Strategy and Execution

Financial services leaders are actively working to build the referrals pipeline in order to boost sales performance. Referrals – from one client or frontline associate to another – are a key source of new business. Consider for example that:

  • 67% of new client acquisition at wealth management firms comes from referrals from another line of business or existing clients.
  • For wealth management advisors with more than 10 years of experience, the percentage of new business from referrals jumps even higher, to 72.5% of new client acquisition on average.
  • In commercial banking, 68% of new client acquisition comes from referrals from existing clients, other lines of business, or centers of influence.

And yet many industry leaders struggle to unlock the full growth potential of referrals. A significant majority of respondents to a recent Gartner survey of senior financial services leaders rated “building a sales pipeline optimized for growth” as a high priority in the next 6-12 months. But only half of respondents are confident in their ability to achieve that same priority.

Given the power of referrals to boost sales, financial services leaders are keen to understand success factors to unlock this valuable source of new business. In November 2022, Gartner hosted two virtual roundtables in which banking leaders gathered to discuss this critical topic. Here’s what we learned from banking executives in attendance:

Current State of Referral Volume

Referral volume is currently light. Executives at both roundtables shared that referral volume between business lines is currently not meeting expectations. Reasons include lack of trust between business lines. There are client-related concerns too. Some frontline associates are reluctant to upset existing client relationships, while clients themselves can hesitate to refer other prospective clients due to worries that the firm will have less time for them. Additionally, the level of focus on referrals waxes and wanes depending on whether a firm is more focused on new client acquisition or cross-sell to existing customers.

Building Trust to Encourage Referrals

Roundtable participants discussed the importance of education and addressing client concerns in order to build the trust necessary to facilitate cross-business unit referrals. To develop high levels of trust, firms must:

  • Have a structured approach – standing up a referrals culture cannot be done informally off the side of the desk, particularly at firms without a strong history in this area. Firms need structured plans to boost referrals and accountability to execute and refine the plan over time.
  • Define “referrals” – it’s important to clarify what counts as a valid referral, and therefore what actions frontline staff should take and standards to which they will be held. Defining a referral means that the activity can then be properly tracked and measured.
  • Proactively address client concerns – there are a number of reasons why clients might not refer friends, families, and associates, among them clients worrying that their banker or adviser might now have less time for them. These concerns must be addressed directly with clients to minimize their concerns.
  • Streamline education – associates need to understand other lines of business to feel confident making referrals across business lines. But intensive classroom training sessions can be ineffective. Associates need a high-level understanding of products and services offered by other lines of business. But wealth management advisors do not need to understand the details of commercial bank credit risk assessment, while commercial bankers need not grasp the inner workings of wealth management asset allocation. It is more important to train associates on basic concepts such as referral incentives and how to navigate the hand-off process.
  • Celebrate successes – business and sales leaders should use opportunities such as townhalls, all-hands meetings, and mass communications to celebrate the impact of referrals and recognize associates who have embraced the process.

Simplifying the Referrals Process

Referring clients across lines of business must be easy enough that busy associates engage in the process. Imperatives include making it easy to find relevant points of contact, developing equitable incentives, and leveraging data and AI. To be successful, firms should:

  • Improve cross-silo visibility – firms should provide easy desktop access to the name and contact details of the individual or location to whom the associate should send the referral.
  • Boost data compliance – leaders must encourage overall CRM system compliance across the firm to ensure that relevant client details are accessible across business lines when necessary.
  • Align incentives – firms must balance referral credit and incentives across all relevant frontline associates. For example, a high-net-worth individual is served not only by the advisor but also by trust, brokerage, life insurance, etc. In some cases those parties should all receive referral credit, not just the advisor.
  • Invest in technology – executives should explore AI and other data solutions to reduce manual work associated with the handoff process and better identify referral candidates.
  • Create accountability – firms should consider a dedicated team that stretches across business lines to help identify and qualify referrals to save time for bankers and advisors.

For more strategies to boost sales effectiveness in financial services, please click here and here. To better connect your associates across business lines, please navigate here for Three Ways to Break Down Business Unit Siloes in Financial Services. You can also listen to Gartner experts discuss how to build the referral pipeline in this webinar replay. For more support to boost client referrals, please schedule an inquiry with our experts to discuss how Gartner can help.


Sophia Palmstedt, Kristy Hoffman, and Van To contributed to this blog.

The Gartner Blog Network provides an opportunity for Gartner analysts to test ideas and move research forward. Because the content posted by Gartner analysts on this site does not undergo our standard editorial review, all comments or opinions expressed hereunder are those of the individual contributors and do not represent the views of Gartner, Inc. or its management.

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