Documented RIA referral plans: Boost your growth strategy

Referrals are one of the most common ways for financial advisors to grow their client base, so it makes sense that registered investment advisor (RIA) firms continue to look for new ways to increase referrals. What's surprising, though, is that many firms overlook one of most important steps in developing a successful referral strategy: Creating a documented plan.

Schwab's 2024 RIA Benchmarking Study found that referrals from clients and centers of influence (COI) remain the leading driver of organic growth, accounting for 67% of new clients and new client assets in 2023.¹

A documented plan offers a simple way to focus on your referral efforts and keep your firm organized so that it can make the most of each opportunity. Here's how to get started creating your own documented referral plan.

The basics of a documented referral plan

Your referral plan should be part of an integrated marketing plan that supports your firm's overall marketing strategy. An effective plan clarifies your firm's referral goals as well as each team member's responsibilities, allowing you to organize a range of referral tactics into a comprehensive strategy tailored for your client base.

The key elements of a documented referral plan include:

• Current referral volume and conversion rates. First, quantify how many referrals you're generating from different sources right now, as well as how many become clients. Starting with an accurate baseline for your referral efforts allows you to set goals and measure your progress. 
• Your firm's ideal client profile and value proposition. The process of developing an ideal client profile and value proposition can help you clarify the kinds of clients you want to target. This can then make it easier to explain to existing clients and centers of influence the kinds of referrals you want and what your firm can offer.
• Growth goals. A documented referral plan can include specific goals for number of referrals, number of new clients generated, or increase in assets under management. Having clear referral goals based on your firm's overall growth objectives focuses your attention and helps you track progress so that you know when it’s time to change up your approach.
• Individual responsibilities. Each team member should have a clear understanding of their role in the firm's referral plan. For example, advisors may be tasked with asking specific clients for referrals, while client service associates are charged with conducting preliminary vetting of those leads. Creating individual referral goals and guidelines for person-hours per week spent on referral-generating activities provides accountability, and can be used to create incentive structures.
• Individual responsibilities. Each team member should have a clear understanding of their role in helping your firm win referrals. For example, advisors may be tasked with asking specific clients for referrals, while client service associates start vetting those leads. Also, creating individual referral goals and guidelines for hours spent per week on referral-generating activities provides accountability and can be used to create incentive structures.
• Recommended activities. Detail the tactics your team uses to generate referrals. Some may be proven, such as requesting referrals from specific clients during annual meetings. Others may be ideas you want to test, such as hosting virtual events for existing clients to bring a friend or family member. When appropriate, provide support materials, such as talking points for referral conversations with clients. Also consider mapping a referral workflow diagram to help illustrate specific steps to take before and after each type of referral-generating activity.

Reviewing and updating your plan

While the first iteration of a documented plan can do a lot to boost a referral strategy, it becomes even more powerful when you review and improve it regularly. You can use the data generated from ongoing referral efforts to evaluate the success of specific tactics, set new goals, and gauge what kind of new approaches to try next.

For example, your firm may have increased the number of clients it's asking for referrals, but after six months you find that asking more clients for referrals isn't generating many more leads. As you dig deeper, you find that asks are only effective in certain circumstances or with certain clients. With this information, you can amend your referral plan to include fewer, more-targeted requests to a specific client profile, minimizing client annoyance and maximizing effectiveness.

Alternatively, you may find that you're generating plenty of leads but aren't converting enough of them into clients. In that case, you can investigate why your current referral tactics aren't producing prospects who are a good fit for your firm or whether you need to review your value proposition. This kind of diligent, methodical approach to refining your referral strategy becomes much easier with a documented plan.

A plan of action

A strong plan is about action. It can help you focus your time and resources on activities that are most likely to deliver the growth your firm needs to succeed. Taking the time to create and document a plan (that includes inspiration and accountability), can help you gain referrals that lead to long-term growth for your firm.

What you can do next

• If you custody with Schwab:
  • Enroll in our Virtual Practice Management series, Forming Your Foundation, to help you identify and reach your ideal clients by developing a strong ideal client persona and client value proposition.
  • Already know your ideal client? Learn how to create a consistent approach to drive more client referrals in our Optimizing Your Growth Strategy program course. Get started.
• If you don't yet work with Schwab, consider a custodian that is invested in your success. Contact us to learn more about the potential benefits of a custodial relationship with Schwab.