Younger Clients Turn What We Know About Referrals Upside Down  |

Younger Clients Turn What We Know About Referrals Upside Down

In the words of the eighties musical ‘sensation’ C+C Music Factory, there are “things that make you go hmmmm.”

Today, I put the spotlight on some research that brings those words to mind. (And if my cheesy musical reference gets you in the mood for some of the questionable music we heard in 1990, click here.)

Every year we study investors and their relationships with financial advisors, to understand what they need, want and expect. In 2017, we made some adjustments to the study to focus in on high net worth clients, with a third of clients having $500k – $999k in total investable assets and two thirds with $1m+.

As a result of the shift in focus to high net worth clients, we saw exactly the kinds of differences you might expect. While clients are generally satisfied with their relationships with their advisors, high net worth clients are more satisfied, more loyal and more likely to refer.

What wasn’t expected was the connection between satisfaction, referrals and age. Specifically, I examined the data for clients who are under 50 years of age (a largely Gen X sample) and they surprised me.

In a nutshell, younger clients break the connection between satisfaction and referral activity.

For years I’ve highlighted the fact that satisfied clients don’t necessarily refer. That’s still true. I’ve also noted (more than once) that being comfortable referring doesn’t mean you will refer. That’s also still true. However, despite being an imperfect relationship, it has always been true that more satisfied clients are more likely to refer. Unless, it’s seems, if you’re younger.

Here’s the good news.

Clients who are 50 and under refer more often. So if you have been discounting the value of your younger clients, you may be missing out on an extraordinary opportunity.

It’s a fact. Younger clients refer more often

Because the sample in this study is all high net worth clients, the overall referral rate is higher than you might typically see. In our last study about a third of clients reported having provided a referral and we know, of course, that advisors don’t meet most of those prospective clients. When we look at clients with $500k or more in total investable assets, that number jumps to 50% so keep that in mind as a starting point.

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DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to:


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