Growing a financial planning business through referrals has long been accepted as the top strategy for building a practice, and in recent years one study after another has validated the approach by showing that the majority of advisors generate the majority of their growth through referrals.
Yet an increasing number of studies are showing that a significant portion of growth-by-referrals is not really through any proactive referral marketing strategy, but instead is merely the result of passive referrals that show up on their own.
Which in turn means that if passive referrals are actually how a majority of advisors are generating growth, it may be more a testimonial to the ineffectiveness of advisors as marketers at all, rather than the benefits of a referral strategy implemented on a purely passive basis.
This doesn't necessarily mean a proactive referral marketing approach cannot be used to generate new clients... but it does raise the question: have we overstated how effective referrals really are in growing a business? Is referral marketing really a best practice, or simply the only result that's left in the absence of any other marketing best practice?