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Practice Management

Landing meaningful referrals to grow your business isn’t a matter of luck.

This Practice Management article is intended for financial advisors only (registered representatives of broker dealers or associated persons of Registered Investment Advisors).

Landing meaningful referrals to grow your business isn’t a matter of luck. Every advisor has ample opportunity to increase their chances of attaining referrals if they simply plant the seed early on, regardless of the type of client base with which they are working.

Building the ultimate value proposition—for yourself—is how Bob Cobb, president and CEO of Ultimate Financial Advisor, set about building his own career. Prior to his current role, Cobb spent 20 years in the brokerage business.

Financial advisors face a slew of challenges from outside of the office—dating back to the launch of the web navigation tool Netscape 1.0 back in October 1994 or the “Do Not Call” legislation passed by Congress in 2003. Both impacted how customers access and utilize information, and for financial advisors, created an impact on pitching for clients, Cobb says.

But focusing on macro challenges is a waste of time. That’s where building your own value proposition comes in, and Cobb offers five easy tips to do so.

1) Plant the Seed for Referrals Right Away
There’s little point in waiting to talk to clients about the fact your business grows through referrals, so tell them up front. The topic is sometimes awkward for financial advisors, so break the ice. Simply put, if clients find value in your skill set—your ultimate goal anyway—and you have already made the point you’re interested in the people in their sphere of influence, they’re more likely to spill the beans about you to anyone who will listen.

2) Categorize Your Clients
Cobb personally utilizes five client segments, based upon productivity and how frequently he’s actually in touch with the client. His categories, from least interactive to most interactive, are: Account, Customer, Client, Disciple and Apostle.

“Anytime the subject of investments comes up, the apostle is out there positioning you as to the go-to money person inside of their center of influence. Do you have one or two clients like that? If not, you need to,” Cobb says.

3) Build a Community
A focus on the long term rather than the short term is what a financial advisor needs to keep in mind when it comes to practice management. Build a community that can reap the most value from your level of service rather than spending your time prospecting a message to the masses. An increased level of service increases the likelihood that a client will refer you to someone else.

4) Set the Stage
When a new account is opened, make it a point to contact the new client 10 times during the first 90 days, a strategy Cobb dubbed the “90-Day Dazzle.”

But don’t just call—send a cordial letter, one that expresses what your goals are. Also, send a gift but one that’s appropriate and meaningful, perhaps a book with an overall financial theme that you enjoyed. If you learn more about your new client’s tastes, Cobb suggests something more personal, like gifting them a book-of-the-month club, or a fruit-of-the-month club.

5) Let Your Clients Mingle
How about an Oscar party? Crafting events is the lynchpin to new referrals. Or, if you’re budget isn’t up to speed yet for dinner cruises, there are many other options available, because this is the most creative aspect to running your business, Cobb notes. A monthly teleconference focused on a financial subject is one option, and an event like this can service multiple clients at one time. But at some point, you’ll want to have appreciation events, where a client can bring guests, from golf outings to theater tickets.

Getting new clients all the way through the program can get you to a point where an advisor gets one referral for every two accounts opened up. “The first step is to manage it,” says Cobb. “But don’t forget to include your business cards” in everything you do.


—Colleen O'Connor-Grant



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