One question many financial advisors will ask is “How do I get more referrals from my centers of influence (COIs)?” or “How do I go about finding a good center of influence relationship?” It is enticing for financial advisors to expand their network but many soon realize setting up a strategic alliance or a professional COI relationship does not automatically turn on the flow of referrals. There needs to be a marketing and business development strategy in place, clear expectations, and proper due diligence.

Getting Started

The first step in cultivating a good center of influence relationship is taking initiative. If you have an existing relationship in place, the COI is often waiting for you to initiate the first steps. You need to take the lead in outlining a series of protocols and marketing strategies to help the relationship move forward. Most COIs are not marketing experts; they may rely on you to set a good direction for your work together. If you do not take the lead, you could be delaying opportunities to grow your practice and attract mutually beneficial clients. There are a set of actions needed to establish value with COIs; mainly, you need to understand what constitutes an ideal COI and how to help the relationship move forward.

What Makes a Good Center of Influence?

Not all professionals you meet will be a good COI or referral source, even if you are in a position to bring significant value to them and vice-versa. Some COIs already have long-standing relationships with other advisors. Some may be building their practice and do not have enough clients for mutual referrals. Some COIs will not refer a client until they understand your value; yet, you need to work on a client scenario together for them to truly understand your value. Some simply may not have a clientele that is a fit for your practice.

You may not want to work with someone who operates in a lower net worth market when you are focusing on an affluent clientele. You also need to make sure they have good ethics, a good advisory process, and a lack of client or regulatory complaints. If the COI does not have a client relationship management system in place – at the very least a client database for communications and marketing – you could be limited in terms of the marketing your COI is able to do with you.

The Ideal Center of Influence Profile

Finding a good center of influence means finding an ideal match. What constitutes a good COI for your practice? This will be different based on each individual advisor; however, we suggest going through the following set of criteria to help you narrow down potential candidates:

• How long have they been in business or in their industry?
• Do they share your core business values and the deep level of service you bring to clients?
• Do they have the expertise that the bulk of your clients need?
• Do you have the specific expertise needed for their clients?
• Is the COI in the same niche market as you or working in lower-tier markets?
• Do they have client complaints, regulatory issues, or financial liens on record?
• Are they looking to share revenue or just looking to refer clients to you? In many relationships, sharing revenue is often less important than providing value-added services to help retain clients and enhance their client experience.
• Does your firm want or allow revenue sharing models? Revenue sharing with a COI can often create more headaches than opportunities.
• Do you have enough clients you can refer back to them for mutual value?
• Is their social media presence, website, or brand the type of image you would feel comfortable referring or aligning with?

Capacity Issues

When establishing COI relationships, there is a finite number of COIs you can personally handle. You may be a financial advisor who wants to build relationships with 5 to 10 tax specialists or estate planning attorneys. The problem with that model is you may not have enough clients to regularly refer back to each COI – or it may be difficult to manage a proper marketing strategy for each relationship. A referral relationship should be mutually beneficial, and the COI will most likely expect referrals from you in the process.

Assess your existing COIs who have not sent you referrals in the last year or two. Is this due to a lack of marketing, the pandemic, or is there a misfit? It may be time to stop focusing on these relationships and start looking for new COIs.

Traditional vs. Non-Traditional COIs

Many financial advisors build a network of COIs that includes other non-competing financial professionals (i.e., professionals who focus on a different, but compatible discipline – such as life insurance, property and casualty insurance, etc.). Other traditional COIs may include tax and legal specialists. Traditional COIs are an important part of an advisor’s network; however, there are other service providers that may fit your niche market – these are often considered non-traditional COIs. For instance, if you are working in the special needs market, you may want to build relationships with advocacy groups and other legal and educational support providers. If you are working with divorcees, you may want to include single parent group leaders, private investigators, child psychologists, and other emotional advisors in the divorce process as your COIs.

Communicating Your Unique Value

As you prepare to connect and schedule meetings with potential COIs, you should be ready to provide the COI with a clear understanding of what makes you distinct. This does not mean a pitch about your services. This is about sharing the outcomes and benefits you provide to clients and why clients do business with you. Share the specific niche market(s) you focus on. Make sure your social media, website, company brochure, and bio are up-to-date and of exceptional quality. Again, your marketing materials should not just provide a list of your products and services.

Share the outcomes you provide for clients, the markets you work in, and your personal and professional values. You should make an investment in your brand and in your practice to make the right impression. Lastly, you want to be curious about them. Ask potential COIs open-ended questions about their philosophies, niche markets, and what makes them distinct.

The Marketing Action Plan

The marketing action plan is another critical step in the process. If you are the person initiating a COI relationship, the other party is most likely expecting you to lead the process. This means setting the marketing strategy, preparing an action plan, proposing how clients could be introduced, and managing through applicable compliance and regulatory protocols. You need to have an action plan that outlines what each party will focus on as you begin working together.

Each party should have action steps and due dates to keep the process moving effectively. Even if you are not the person who initiated the relationship, it is still a best practice to have an action plan in place to properly position yourself and help advance the process. This will allow you to mutually steer and manage the results of the relationship.

Protocols and Agreements

In addition to a marketing strategy, you need to make sure there are clear protocols and written agreements in place. This should include who owns the client relationship, what are the client privacy protocols, what is the dissolution or termination strategy, non-disclosure agreements, compensation agreements, and protection of intellectual and proprietary materials. These types of agreements must be formally documented, reviewed by legal counsel, and signed.

Prospecting for COIs

If you are just getting started with building your center of influence network, a recommended strategy is to create a list of the top 25 prospective COIs you would like to meet or discuss a potential relationship with. If you do not have 25 names then consider the following steps below to expand your network:

• Ask your “A” clients who they are working with for legal, tax, home and auto insurance, banking, or other professional advice. Then ask them to rate these advisers on a scale of “Poor,” “Fair,” “Good,” or “Excellent.” Let your clients know you are looking to establish professional networks for your practice and would like their feedback on who they feel does an excellent job. For any name that receives a less than “Good” rating, you should not reach out to those COIs.
• Think about other professional advisors you have connected with on social media or met through your community networking or target marketing.
• Visit the “Find an Advisor” directories found on professional industry associations that serve CPAs, attorneys, etc. These websites often have a search feature to locate and rate advisors across various disciplines.

Call each prospective COI or reach out to them on social media. During your phone conversation or in your email say, “We met at last month’s golf outing, virtual conference, or charitable event [whichever interaction you had], and I enjoyed learning about your business. I would like to meet again over a virtual coffee or lunch to learn more about you. I am specifically looking to expand my referral network to bring value to my clients.”

When you are able to secure a meeting with the COI, conduct a deep discovery on their practice using the following open-ended questions:

• Tell me more about your practice and business model…what 3 things make your firm distinct from others?
• What is your philosophy in serving clients?
• What types of clients do you primarily work with? Are they in specific industries, niche markets, or stages of life?
• Describe your average client.
• Describe your “A” client.
• What services do you focus on with your clients?
• Do you have relationships with other advisors like myself? Are your current relationships exclusive?
• What do you look for in a professional COI relationship?
• What marketing successes have you had in the past year?

It is important to remember that for every 10 potential COIs you meet, only 1 or 2 might be the right fit for you and your practice. Finding a good center of influence relationship takes time, but the process has a better chance of success if you do the upfront work to select the right COI and develop a marketing strategy and mutual action plan.