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Create a Referral Strategy With Social Media

LinkedIn can be invaluable for financial advisors looking for clients.

Helen Modly, 12/09/2010

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Social media sites are a valuable resource for developing a strategic referral plan. Use them to improve upon the classic "feed a name" referral strategy to increase your business and your reputation in the business community.   

You remember the old "feed a name" strategy. You went to a client's office or the office of his attorney. In the lobby, you look at the building directory and select a name off the wall. At the end of your meeting, you do your best Colombo impersonation and say, "Oh, by the way, how well do you know (the name)"? Hopefully, this led to a conversation about the person and you could end with, "Would you mind introducing me?" or "Mind if I drop your name with him?" I always found this much more comfortable than sheepishly asking if they could think of anyone that might want to work with me.

Finding Better Names
The downside to this strategy was always the chance that your contact didn't know the name or didn't feel he had enough of a relationship to endorse your contact of the name. We used to spend hours trying to determine who someone was likely to know based upon professional affiliations, social memberships, third parties, etc. Now, your contacts have done all that work for you. Even more conveniently, they have posted it on the Web and have invited you to browse through it.

Don't believe me? If you haven't already, go to www.linkedin.com and build a profile. The fastest way to see who you already know with a LinkedIn profile is to select the Add Connections link. This gives you the ability to quickly search your entire e-mail address book for those contacts already on LinkedIn. 

Starting with your friends and colleagues, begin sending invitations to join your network. Once someone accepts, you can see all of their contacts by going to their profile page. This used to feel sneaky to me, like browsing through someone's Rolodex when they stepped out of the office. Now, I am very comfortable knowing that everyone on LinkedIn is there to increase their professional presence.

When you get comfortable with the whole idea, start sending invitations to the CPAs, attorneys, bankers, real estate agents, insurance agents, and other professionals that you consider to be part of your professional network. You'll find that almost all of them have a LinkedIn presence and are receptive to joining networks with you.

You can browse through your CPA contacts and find estate planning attorneys that they know well but you don't. A quick phone call to the CPA with a request to use their name to introduce yourself to the attorney will rarely be denied. One you have a phone call or better yet a meeting with the attorney, send a LinkedIn invitation to join networks with them. Now go through the attorney's contacts and find other CPAs that they know but you don't . . . beginning to get the idea? Could it be any easier to find appropriate names to feed your contacts than people they definitely know well enough to allow their networks to merge? By the way, this works just as easily with your clients and their networks.  Don't forget to return the favor. Be generous in introducing the professionals in your networks to each other. This can lead to the situation where several professionals find themselves together and your name comes up and they all know you or of you. It just doesn't get any better than that.

Two Degrees
The real power of LinkedIn is the idea of connectedness. Supposedly, we are all just six degrees of separation from any other person on the planet. Three degrees of separation will still connect you to trillions of people with a much stronger connection than six degrees. Two degrees is almost an introduction.

What LinkedIn does is match your contacts to the other 80 million users and their contacts and will create a list of "people you may know" for you. It will tell you whether you have a direct connection with them (1st) such as they are in your contact list or you are in theirs. Or, it will tell you that you have an indirect connection (2nd) meaning that someone in your contact list has that person in their list. You can request a virtual introduction from the person you know.

Another use is to search for a person that you want to connect with. LinkedIn will tell you whether anyone you know is a 1st or 2nd contact with that person. Let's say you want to gain a foothold in a certain company, but you don't know anyone who works there. Search the company name and LinkedIn will provide the names of people there who you have 1st or 2nd connections to. Again, a quick phone call or virtual introduction request is usually all it takes to begin a conversation with someone working at that company.

Maybe you know that a certain company has been offering generous severance packages to senior executives. Searching for the company gives the option to search for people just joining or just leaving that company. LinkedIn will tell you who can help you to quickly form a connection to a senior executive in need of financial planning services.

Bigger Is Better
The larger your network, the more 1st degree contacts you have, but the number of your 2nd degree contacts begins to expand exponentially.  Just 10 minutes every Monday morning browsing through existing and new contacts should give you an awesome weekly prospect list of names you can feed to your ever-growing network. And they will not be just names--most people on LinkedIn have well-developed profiles sharing their education, employment, and other information.

Compliance folks consider social media sites to be advertising. Be sure that whatever you post about yourself or your firm has been vetted by them first. Never allow anyone to post a recommendation for you; that would be treated as an endorsement by regulators. To watch a quick video on LinkedIn and how to use it, follow this link.

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