Make The Most Of Your Referrals While Getting More Of Them

Support, educate, and compensate to jump start referrals for investment and insurance services across the institution.


When it comes to new-client acquisition, internal referrals are the not-so-secret competitive advantage for investment and insurance programs within financial institutions. The financial institution already has a relationship with the client, so for the cost of a well-delivered query from a member of the branch staff to a prospect, a new client could be put on an advisor’s books.

But the referral environment is challenging. Branch staff must manage a diverse and growing menu of products and services. Institutions have encouraged clients to use remote banking — reducing traffic in branches — and have cut back on branch staffing. Cyclical loan demand can increase the importance of focusing on gathering or retaining deposits instead of investment and insurance services. And Regulation R has put constraints on the incentives that can be paid to branch staff that do not have securities licenses.

It’s no wonder that the average institution successfully refers only 1.36 percent of its client households to financial advisors.

So then what are the referral secrets of the best-practices institutions where advisors are not only referring 36% more households than their peers, but producing 50% more per advisor than their bottom quartile counterparts?

The Value of Referrals, a new white paper from Cetera Financial Institutions that draws on research from the 2010 Kehrer-LIMRA Financial Institution Investment Program Benchmarking Survey, explores what factors contribute to making a referral program a success.

Creating A Referral Culture And Valuing The Referrer

Maintaining a strong flow of referrals to the investment and insurance program within the institution is critical. But in the wake of Regulation R, many institutions shied away from using incentives to encourage branch staff to support the investment and insurance services business. However, one of the key findings in the paper is that how referrers are supported and compensated can have a significant impact on the success of the investment program.

Support for investment and insurance services needs to go beyond referral training and referral incentive payments. Best-practices institutions integrate investment and insurance services referrals into their mission statement and the fabric of the day-to-day activity of branch staff. This, of course, includes how branch staff and management are hired, trained, deployed, focused, and evaluated — and especially how they are compensated.

As The Value of Referrals points out, institutions that incorporate incentives for the performance of investment and insurance services in the overall branch incentive plan compared to institutions that have only nominal referral fees:

  • Generate 64% more referrals, relative to the opportunity
  • Have 38% higher advisor sales productivity
  • Generate 17% greater profit contribution to the overall banking enterprise

Of course, successful integration of the investment and insurance services into the branch requires more than compensation incentives. Training to identify prospects, effective sales management, and recognition for referral excellence all contribute to making investments and insurance a core service at the institution.

Strengthening your financial institution's referral program’s potential doesn't have to be the result of trial and error. For well over a quarter century, Cetera Financial Institutions has focused exclusively on serving the needs of banks and credit unions and their clients, and is a leader in helping them and their advisors grow their revenue stream and services. For more information about how Cetera Financial Institutions can help you utilize best practices to grow your program revenue effectively, visit

Cetera Financial Institutions is a marketing name of Cetera Investment Services LLC. Securities and insurance products offered through Cetera Investment Services LLC (doing insurance business in CA as CFGIS Insurance Agency), member FINRA/SIPC. Cetera is not affiliated with the financial institution where investment services are offered. Investments are: • Not FDIC/NCUSIF insured  • May lose value  • Not financial institution guaranteed  • Not a deposit  • Not insured by any federal government agency.


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