Best in business

It’s easy to understand how they get referrals from customers. If you provide an excellent service, and have the confidence to ask for referrals, most people will pass on your details when a family member or friend is in need.

Professional partnerships aren’t always as simple. Some businesses might seem like the ideal partner – in theory – but if they’re not providing your business with any tangible benefits, then you may need to seek alternatives.

The Adviser recently surveyed our Elite Business Writers, as well as some of the star performers from our Young Broker of the Year ranking, to find out who they work with and how they succeed.

THE RESULTS

More than 50 per cent of the surveyed brokers have five to 10 professional referral relationships, and this number looks set to grow. Indeed, 79.2 per cent said they intend to build more referral relationships this financial year.

The figures also show a majority of top brokers have a symbiotic relationship with their referral partners – 91.3 per cent of them refer business back to their partners.

Despite the dominance of reciprocal relationships, it seems brokers have the odds stacked in their favour. Over 60 per cent of those surveyed admitted that ‘My referral partners give me more business than I give them’.

Only 12.5 per cent gave more business to their referral partners than they received in return, and the remaining 25 per cent said it was an even split.

Australia’s Elite Business Writers and standout young performers also clearly have their referral partners working hard. More than 25 per cent said they receive over 20 referrals from their professional network each month. A further 43.5 per cent said they receive between six and 10 referrals.

Indeed, the results of the survey indicate that many top brokers rely on their referral partners to maintain their impressive volumes. Over one quarter of respondents said 51 to 75 per cent of their business written in the 2012/2013 financial year was generated through business referral partnerships. A further 30.4 per cent generated between 26 and 50 per cent of their business this way.

The survey also revealed you don’t need to have an additional financial incentive in place to succeed with your referral partners.

More than 65 per cent of the surveyed brokers do not have any form of financial arrangement with their referral partners. Fewer than five per cent give or receive payment for referrals, and the remaining 29.2 per cent have a financial arrangement with ‘some’ of their partners.

BEST OF THE BEST

So, who makes the best referral partner?

Accountants, real estate agents and financial planners were the most popular choices. An impressive 79.2 per cent of the surveyed brokers said they currently work with accountants and real estate agents. More than 65 per cent have a professional partnership with a financial planner.

Not surprisingly, these professions were also cited as the ‘best’ referral partners.

Mortgage Choice’s Ben Herden says accountants make the best referral partners because “their clients trust what they say, so they just do it”.

The Adviser’s Young Broker of the Year, My Mortgage Freedom’s Anthony Alabakov, has similar sentiments.

He says that of all his referral partners – which include accountants, insurance advisers, financial planners and real estate agents – clients trust their accountants most. The conversion rate from these referrals is exceptionally high, Mr Alabakov says.

“Clients trust their accountant,” adds Amie Tennant, also of My Mortgage Freedom. “You generally find clients have the same accountant for 10-plus years. Therefore, if you build a strong relationship with an accountant, you can expect referral and repeat business from them.”

Both Mr Alabakov and Ms Tennant generate more than 50 per cent of their business from professional partners – so they need to have effective arrangements in place.

Tiffen & Co’s David Friend also cites accountants as the most lucrative referral partnership for brokers.

“Accountants qualify clients before sending them through,” he says. “It’s generally not a single transaction for them but a relationship building exercise to help their clients. We are treated as a value-add service to their clients, which costs the client nothing.”

Real estate agents are also great for increasing your volumes and finding new clients, according to Shore Financial’s Theo Chambers.

“Real estate agents make the best referral partners because you’re at the point where the actual purchase is being made and finance will be required,” Mr Chambers says. “There is also a large volume of buyers going through open homes, which is a great marketing opportunity.

“Real estate agents are by far the most rewarding referral partner based purely on volume potential.”

Real estate agents can also help make the loan and purchasing experience smoother, according to Home Loan Experts’ Hank (Hoa) Hong.

“Real estate agents earn an income from the transaction, so they have a vested interest in seeing the transaction go through to settlement,” he says. “They are the conduit to speak to both the vendor and buyer as well and can help buy more time with the vendor if we require it.”

Mortgage Choice’s Kim Narayan says there are multiple professions with which brokers could benefit from being associated.

“Based on my own experience, I would say buyer’s agents, real estate agents and financial planners have all proved to be my best referral partners,” she says. “If you spend time and effort developing the relationships and earning the trust of your referral partners, they are more likely to keep you top of mind.

“As an investor myself, I also find it very easy to relate to buyer’s agents and real estate agents because we all understand each other’s role in the process and we are all working in the customers’ best interests to help them achieve their goals.

“Having a referral relationship with a quality financial planner and/or accountant who can provide financial advice is also very helpful, as I want to ensure my customers have the best method for achieving their goals.”

Despite recent debate about whether or not financial planners and mortgage brokers could effectively work together without stepping on each other’s toes, Choice Capital’s Joshua Durrant says it is entirely possible.

Financial planners, he says, make the best referral partners because “they are looking at a client’s overall financial situation and their home loan is a huge part of that”.

Niche Financial’s Moshe Moses agrees and says that financial planners and accountants have a more in-depth understanding of the client’s financial needs than other business partners.

THE OVERALL WINNER

So, while accountants, financial planners and real estate agents all have their own benefits, according to Australia’s Elite Business Writers and top young brokers, it is accountants who are far and away the best referral partners.

Almost 40 per cent of the surveyed respondents said accountants led the way when it came to partnering with mortgage brokers.

They were followed by financial planners, who received just over 26 per cent of the vote and real estate agents, who came a close third with 21.7 per cent.

In many cases, however, Australia’s top brokers weren’t solely concerned with their business; much of their focus was on the benefits to the client.

For Ms Narayan, professional partnerships need to be about ensuring your customer has the best experience.

“I’m always looking for professional referral partners who have my customers’ best interests in mind,” she says.

“To ensure that my clients receive the same level of customer service they have come to expect from me, I only work with business partners who I have personally dealt with.

“As a broker, I want to create a ‘wow’ experience for my customers and be the first point of call for all their needs.”

Mortgage Choice’s Leteisha Pileggi says for referral partnerships to go the distance, brokers need to know exactly what they’re offering their partners.

“There has to be a mutual benefit for both sides,” she says. “To make it work, you need to find out what they want from the arrangement. There are a lot of brokers that may pay for leads, so if that is the only offering, referral partners will switch to a broker that pays more if the opportunity arises.

“Service is the key – if they are endorsing you, it is a reflection on them and their business so you need to know how they operate and what they want.”