Building a network of business allies and contacts can serve your practice well.
This monthly series of articles describes the many steps and occasional missteps we have taken in building our financial advisory business, Garnet Group LLC. Currently, Garnet has eight staff members, more than 90 clients, more than $300 million in client net worth under advisement, and offices in Bethesda, Md., and Boston. Veena Kutler, CFA, and Annette Simon, CFP, are the managing principals in the Garnet office in Bethesda.
We attend many conferences and workshops and over the years have listened to dozens of sessions on client development. Still, we continue to attend these marketing sessions in search of helpful hints and strategies from others who have built thriving businesses. One frequently mentioned idea is that planners should build circles of influence--develop a pool of experts around themselves to create cross-referral opportunities.
Referrals: the Road to Growth (or Not)
We took this concept to heart some six years ago when we first launched our business and over the years have developed strong relationships with a variety of professionals including CPAs, estate attorneys, insurance agents, bookkeepers, pension specialists, therapists, and mortgage bankers. We've had (and paid for) countless lunches and told our story of ongoing, high-touch, fee-only service over and over again.
Have we received referrals as a result of this effort and expense? Some clients have come to us through these centers of influence--most after we had known the referrer for several years and previously sent multiple referrals their way. In fact, we've found that we refer out many more clients to our centers of influence than they refer to us. And some allied professionals whom we have known and enjoyed working with for years have never referred a single person who has become a client of Garnet.
In 2000, when Veena first left the institutional investment world to begin working with individuals she reached out to two professionals in her home town. One was a CPA she had known for many years; the other an estate attorney to whom she was referred by some friends. The CPA expressed interest in Veena's practice, and a day after they spoke referred a very nice couple who are clients to this day. Interestingly though, it was five years before another client came to us from this particular referral source.
The estate attorney invited Veena to lunch and vetted her thoroughly, asking a series of questions related to fees, experience and strategy. The attorney was satisfied with Veena's answers and said that she was looking for an experienced, fee-only professional whose client minimums were low. She had existing referral relationships with planners who had higher minimums, but had no one to refer clients with fewer resources for help with investment and financial issues. Within a few weeks the estate attorney referred a client to Veena. The client was a good fit and that relationship continues to this day.
The attorney continued to send occasional referrals to us, but more often than not they were not a good fit for our practice. (In part this was due to a rapid increase in our minimum fees, which left our friend the attorney once again on the lookout for good advisors with low minimums) In the almost eight years we have known her, only two more referrals have become clients. In that time we have sent more than half a dozen of our clients to this attorney for estate planning work.
During her pre-Mosaic and Garnet years Annette struck up a friendship with a local insurance agent who is very knowledgeable and committed to strong client service. We refer clients to this agent time and again for long-term care, disability and life insurance quotes, and have purchased our own policies--both personal and practice-related--from her. With the exception of a one-time client project referred to Annette back in the late 1990s the agent has never once sent us a client referral--even though she has a very strong network of wealthy and influential friends and contacts in the Washington, D.C. area.