Credentials Essential: Advisors with Extra Letters Get More Referrals

Most advisors want more referrals to high-net-worth clients. A new survey finds there’s a surefire strategy to get them. 

More than two-thirds of investors (68%) who work with a financial advisor and have over $500,000 in investable assets say they are more likely to refer friends or family because their advisor holds advanced professional certifications, according to a survey from the Investments & Wealth Institute. That rises to 74% among those with $5 million. 

Nearly a dozen advisors said those findings match their experience. But the bigger takeaway may be the dynamic connection between awareness of an advisor’s credentials, client confidence and referrals. The research shows that confidence is a good proxy for whether clients feel like they have a good plan in place and that their advisors have the expertise to execute on it. 

“For firms trying to strengthen relationships and grow organically, that is an important measure to understand,” said Sean Walters, IWI CEO. 

Warm Introductions

“Almost everyone said they are satisfied with their financial advisor, but one-third still report low or moderate confidence in their financial future,” Walters noted. “It’s striking that clients with higher confidence were about five times more likely to make referrals than those with low confidence.”

Some additional findings:

• Among clients who made referrals, 87% knew whether their advisor held advanced certifications, compared with 59% among those who haven’t. 
• Among clients with high financial confidence, 75% knew whether their advisor held advanced certifications, compared with 49% of clients with low confidence.

What do advisors make of those results? “They ring true,” said Eileen Olson, founder at Emerald Wealth. “That’s one reason I love this profession. We’re expected to stay sharp in a world that keeps changing, and clients notice.”

Most advisors said they don’t lead with the letters after their names, but they’re glad to explain them, because each one tells a client something specific about how they can help. A few were insistent that credentials don’t make a meaningful impression on clients, but James Malatos, founder of Harbor View Private Wealth, disagreed. 

“Credentials rarely come up in conversation, but they quietly signal competence and accountability, and the client’s confidence is what drives the referral,” he said. “The credential supports that trust in the background, but the experience of working together is what people talk about.”

Tell Your Story. For his part, Walters said advisors should be more proactive about sharing their credentials, putting the focus less on the letters and instead emphasizing what they have studied and how they stay abreast of evolving financial planning theory and practice.

“The letters after an advisor’s name can serve as a useful proof point, but their value becomes much clearer when clients understand what stands behind them and how that expertise is being applied to their own situation,” Walters said.