Distraction-Proof® Advisor Ideas

What do you do when a client refers a friend to you, but after your first meeting with them, you realize it’s just not a great fit?
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This is a question I had the other day from an advisor, and it’s a tricky one. You have to navigate this journey very carefully. On the one hand, you’re thankful you’ve received a referral from, possibly, an A client. Yet on the other hand, you don’t want to risk damaging the relationship because the person they’ve referred to you is not an appropriate fit for you. They might be mired in debt, they might have a second mortgage on their home, they might be leasing three vehicles, they might be spending way more than they should be. You know their financial situation is a house of cards if one of the couple happens to lose their job. This referral isn’t going to be a great fit for you. What’s worse is often the people you’re talking to in these situations have no idea that the situation is as dire as it is; they want to keep spending and keep the wheels going around. You’ve got to give yourself a way to back out of this.

That is all set up by referral language that we’ve covered several times before. You want to say to your existing clients, “If you have friends or family who have questions or concerns…,” and then go down that process. But don’t forget to add, “We don’t promise we’ll bring them on as a client because it’s got to be a great fit. But I’m more than happy to spend 15 or 20 minutes learning about what they’re looking for and see how we might be able to help.”

That specific language is key for a couple of reasons. Letting your existing client know that you don’t promise to bring their friend or family member on as a client gives you a back door. Also, mentioning that you are going to take the time to see what their friends need and what’s most important to them means that what you provide might not necessarily fit what they need most. That’s great because if they are that type of person who is oblivious to their debt situation and just wants to keep on keeping up appearances, you don’t want them as a client.

To do this effectively, you need someone to refer them to. So, take the time to have resources: talk to/interview two or three people who specifically focus on working with people regarding budgeting, or who are professionals at helping people get out of debt so that you can have those resources at hand. We custodied at Schwab. Schwab has a retail outlet, and so, we took our time getting to know one or two private bankers within our closest Schwab office, where we knew we could hand off that person to these bankers by personally introducing them to each other, knowing this prospect would be looked after.

We took this very seriously because while we weren’t too concerned about what the prospect might think about us, we certainly wanted to preserve the relationship they had with their close friend. Don’t overthink this and be concerned about what you will say to your top A client if you don’t bring their friend on as a client. You can simply let them know, “Thanks for the introduction to Doug and Heather! We had a wonderful conversation. I can totally see why you all get on like a house on fire! What they needed was something a little different from what we provide. So, fortunately, we were able to introduce them to a couple of other professionals we are familiar with and have referred others to in the past.” And you just leave it at that.

So, to do this effectively,

1. Be ready for those introductions that, after sitting down with them for 25 to 30 minutes, you can see are not going to be an ideal fit.


2. Add the resources. Take time to interview two or three people in different areas—such as debt management, or any kind of debt servicing, banking, etc.—who could be helpful to introduce these people to so they can receive what they need and, likely, give their friend (your referring client) a positive report about their time with you.


3. Keep asking for more referrals, but do it in a way where you’re always offering to help, to be of service to your existing clients by helping people they care about.

Remember, you’ve given yourself a backdoor: “I don’t promise to bring them on as a client—it’s got to be an ideal fit.” By saying that, not only do you provide a way out, but you also let your existing clients know, “You and I are a great fit!”

I look forward to bringing you another Distraction-Proof Advisor Idea next week.