Q&A with a referral partner

Previously I ran and managed an independently owned, boutique financial advice business that had a team of 16. We developed cross-referral relationships with brokers and then I built an actual mortgage business within this practice. In 2016 I started my own residential and commercial mortgage and business finance practice.

So, I have been either directly or indirectly involved in working with brokers and in broking practices for around four to five years.

Have there been any drawbacks in establishing referral relationships with brokers?

With my background in financial advice businesses, I've seen how referral relationships have worked, and I've also seen how referral relationships haven't worked.

Referral relationships are generally established out of a need to service a client, thus often driven reactively through needing a solution to a problem rather than proactively through building a deeper relationship with your referral partners.

As a result, you find that professional services such as advice, accounting and broking will have a documented and comprehensive engagement, onboarding and ongoing relationship process established for their clients, however, not have one established for their referral partners – which is why referral relationships often don’t deliver on their potential.

What can brokers be doing to improve their referral relationships with other financial services professionals?

A lot of people wonder why referral relationships don't work. They meet up with someone and they get some referrals and they think ‘this went really well’ and then the referrals dry up, so I guess in terms of a referral relationship that works, it's about building yourself into their process, it's about them having a full understanding of what you actually do, and the value that you can add. It's also about actually understanding how the target markets align and what's the best way to make the introductions, so it's about building a more in-depth relationship with the practices you're working with.

How does a strong referral relationship benefit clients?

Ultimately it benefits the client because of the trust established with your referral partner that is in effect transferred to the client upon being referred. And as a broker it means you get a much better understanding of the referral that's coming through, you've got a much better process around communicating the client's situation between the referral partners so that ultimately the solution that the mortgage broker is recommending is aligned to any pre-existing strategy and advice in place from the accounting practice, financial adviser or real estate agent.

So the client on the whole gets a more comprehensive outcome and a deeper relationship is established with the client – rather than just a transactional-based experience.

What advice would you give to brokers who may not yet have a referral relationship with a financial adviser?

I think, the first step is to build a more clearly defined strategy and process around how you're going to approach and then engage your referral partners. So, invest in building a strategy around engaging the referral partner as well as around the ongoing relationship with the referral partner.

You want to have an internal process within your business around how you approach your referral partners, and part of that will be your initial engagement with the actual practice principal or partner of the practice that you're dealing with and then working together to establish the parameters of the referral relationship - ultimately to ensure the best outcome for the client as well as a more effective relationship between the practices.