Referrals key to client acquisition: Dimensional
Over half of financial advice clients say they have found their adviser via a referral from an existing client, according to Dimensional.
The firm’s Global Investor Study has surveyed over 110,000 participants globally since 2021 – including Australia – and found 53 per cent of clients came via a referral from a friend or family member, increasing to 60 per cent for clients aged under 40.
Only 20 per cent of respondents said they had found the adviser through their own research.
Clients who made a referral said they averaged 1.8 introductions per year, prompted by a desire to share a positive advice experience with others or because they believed the adviser could solve a problem for the person.
As for those who were yet to make a referral, a third said they had not been asked for one, and 23 per cent said their friends and family already had a relationship with an adviser.
Dimensional recommended that advisers show their previous experiences with case studies and target-specific information, as well as educate clients on how and why they should refer to new clients.
Adviser Ratings research in its Australian Financial Advice Landscape Report earlier this year found that 81 per cent of practices cite existing clients as their most valuable source of new business, up from 71 per cent a year ago. This was particularly the case at specialised firms where the practice was targeting a specific client base or demographic.
“Practices are also becoming more specialised in their approach to client acquisition,” the report said. “Data shows that larger practices, with five or more advisers, are particularly focused on strategic growth, with 80 per cent targeting specific client types, compared to 54 per cent of solo practices.”
Earlier this year, Money Management spoke with Finchley & Kent managing director Sam El Shammaa, who said 90 per cent of its adviser appointments had come via word of mouth.
“We predominantly work off word of mouth. Very rarely do we onboard an adviser that just calls us out of the blue. It’s all by other people in the industry or other advisers with other dealer groups that refer their colleagues or their friends to us also because they like what we do,” Shammaa said.
“[Our referral network] is really strong because when someone refers someone to you in whatever field, whether it’s a doctor or your accountant or your plumber, the person referring is also putting their reputation on the line too.”
AUTHOR
Laura Dew
Recommended for you
Two advisers say M&A is becoming a “contact sport” as competition heats up to acquire attractive advice firms, while a lack of new entrants creates roadblocks in organic growth opportunities.
Perth advice firm Integro Private Wealth has appointed a head of advice to spearhead a major business development initiative to expand nationwide.
AZ NGA has taken a larger stake in ex-AMP advice firm Geographe Financial Group, triggering leadership changes as it prepares for future M&A growth opportunities.
As private markets garner mainstream attention, a panel of experts believe access to the asset class through managed accounts will become more widely available, providing opportunities for advisers to diversify portfolios.
