May is Disability Awareness Month

Sharing the D.I. Story

The Power of Referrals from Other Advisors

by Kevin Quinn, CLU®

Mr. Quinn is Disability Income Regional Vice President with the Principal Financial Group®. He has been in the insurance industry for over twenty five years, is a LUTCF instructor and member of several industry organizations, such as the Society of Financial Services Professionals, the International DI Society and Columbus Association of Insurance and Financial Advisors. Connect with him by e-mail:

We’re all used to networking to expand our universe of contacts and find new potential clients as insurance professionals. The question is how far do you take your networking? Have you already expanded your horizons to work with other types of advisors, such as attorneys, CPAs and bankers? If not, you might be missing out on a prime referral source. Never underestimate the importance of referral relationships with these other advisors in developing your block of business. These advisors are highly influential and frequently interact with affluent individuals and business owners.

How a referral arrangement works and the benefits it offers

First of all, meeting individuals’ and business owners’ financial needs require many specialties. Most clients need more than just insurance or investment help. They need legal, accounting and banking advice too – and vice versa. In addition, many needs may overlap, which can blur the line on which professional handles what.

Second, in a referral relationship, reciprocity is key. To be successful, referrals must go both ways – the advisor refers clients to you and you refer clients to them. Most importantly, a good referral relationship needs to be a win for everyone involved:

  • You benefit. Doors are opened to additional sources for lead generation and referrals. Also, clients see you adding value when you recommend advisors as trusted resources.
  • Advisors benefit. They can still be involved in the insurance discussions as an unbiased third party, but don’t need to be the expert – allowing them to focus on their area of specialty.
  • Clients benefit. With an established team recommended by trusted advisors, clients save time and benefit from expertise.

Getting started

If you haven’t explored building a team of advisors, there are a few things to do first:

  • Make sure you have the proper credentials. An insurance professional with a CLU®, CHFC, LUTCF or CFP designation has immediate credibility. These designations say, “I have solid expertise.”
  • Establish expertise in a niche market (e.g. occupation, industry, etc.). Working closely with a particular group helps you gain a better understanding of their financial situations, needs and goals. Then, when you establish an advisor referral relationship, you can offer valuable expertise specific to that group, adding know-how beyond the insurance realm. Essentially, anything that gives you deeper knowledge than others gives you a leg up on the competition.

New insurance professionals often ask me about the best way to establish relationships with other advisors. One of the most effective avenues to get connected is by joining professional associations. I encourage joining the Society of Financial Services Professionals (SFSP), an association that includes a variety of financial advisors. It offers great networking opportunities and great ideas. Another organization to consider is National Association of Insurance and Financial Advisors (NAIFA). Both groups reinforce the thinking that we’re all financial services professionals, regardless of our specialty.

... the best way to get referrals is to make referrals

In my experience, the best way to get referrals is to make referrals. For instance, you may be working with a business owner and he needs help establishing a buy-sell agreement. You can help with the funding of the agreement with insurance recommendations, but he needs legal assistance in drafting the document. Or perhaps, he’s looking for a CPA to value the business. These are opportunities to give your clients the “I’ve got a person” recommendation to the attorney or CPA you work with. More often than not, after you provide a referral to that advisor, he or she will want to reciprocate. It may not be tomorrow or next week, but it will happen. And that, as they say, could be the start of something big.

If you want to get a “jump-start” on networking, consider:

  • Using LinkedIn as a referral source and a source of preliminary research – use your connections to identify advisors that you could work with and learn all you can about their business and clientele.
  • Work with your mutual connections to get an endorsement and initial “informal” meeting (e.g. coffee break, quick lunch, etc.).
  • Be open and upfront during the meeting and discuss the mutual benefits of the referral arrangement and how you can work together. Be patient. Developing a referral arrangement takes time.

Potential referral situations at work

Now that you have a good idea of how to start a referral relationship, let’s talk about some of the opportunities you’ll find. Business owners and other professionals often present situations that are great opportunities for referrals, particularly for risk protection solutions, such as disability insurance:

  • Business continuation/exit planning discussions. If a business owner has a buy-sell agreement in place, it may not be properly funded, especially for disability. In disability insurance sales, I’ve found that the insurance professionals who are successful selling buy-out insurance usually have a good relationship with both the business owner and the owner’s attorney.
  • Tapping into CPAs’ insights. CPAs know a lot about their clients through their finances. Often the CPA is the first person to know when a client is starting a new business, changing employers, etc. They are ideal resources for identifying key needs, such as income protection.
  • Business loan protection. The purchase of a business or equipment usually requires a loan. Many lenders require life insurance to provide a safeguard against the loan defaulting due to the owner’s death. But, what if the business owner becomes disabled? Creating a network with staff from a local community bank or financial institution could be especially rewarding.

Referral relationship challenges

Some advisors have the perception that insurance professionals are mainly concerned about “selling product.” That’s why it’s so important to present yourself as a fellow advisor/consultant, not just a sales person. To do that, show the advisor the broader nature of your role. I’ve seen people present themselves as the quarterback of the financial services team who can help bring everyone together to address all the client’s needs and goals.

Some attorneys and CPAs are choosing to become licensed to offer insurance and investment services. Because this is time-consuming and can open up those advisors to additional regulations, many CPAs are turning towards building a trusted team of financial services professionals to rely on for their clients.

Plus, as you establish and grow these relationships, you may uncover the advisors’ own needs for risk protection solutions. They are after all, highly trained individuals who often times own their own small business and need solutions to protect themselves, their business and employees.

An unparalleled advantage to your business

Referrals are indeed a powerful tool in building your business – no matter what type of financial services you offer. When you work with a team of advisors, opportunities can expand with each connection.