Financial Advisor Blog on Marketing, Lead Generation, Prospecting and Sales

The tremendous benefit that accrues from status as a financial advisor is that you have no agenda, no product to sell, and no objective other than do what’s right for the prospect and the prospect can sense that. Because prospects do sense the difference between a financial sales person and financial advisor (no matter what term you use to describe yourself), financial advisors gather more assets per client and have longer term, far more lucrative client relationships. And, at the end of their career, financial advisors have a practice to sell—their client relationships have value.

Few people make the transition from sales person to advisor. Consider these figures: there are approximately one million people in the US with a securities or insurance license. There are approximately 80,000 people entitled to use either the CFP® or ChFC® credential. That’s not to say that only people with one of these credentials are practicing as true financial advisors (or that some with these credentials are product sales people and not advisors), but those that are serious about their financial advisor status do pursue one of these designations because they know that these designations are the best chance of quickly communicating their status as an advisor to the public. In short, about 8% of people with a license to sell financial or insurance products have made the effort to “brand” themselves as a financial advisor.

So the first step in the transition from sales person to advisor is to get educated—whether by enrolling in one of the recognized designation programs or through self study. You cannot advise if you don’t have adequate knowledge. Does this take a consistent effort to study each week over an 18 month period? Yes. Do most people make the effort? No. Do the people who make the effort get rewarded? Yes—the CFP® Board reports that financial planners with the CFP® designation earn 50% more than non-CFP financial planners. So if you struggle to earn more, knowing more is the first step to your goal.

Once you earn a credential or reach your goal. You’re not done. You need to invest about 200 hours annually in self continuing education. I know that most credentials require 40 or so hours a year of continuing education but this is insufficient. Not only do you forget what you know, and must spend time staying current, you need to continually add to your knowledge base. Since your prospects and clients are getting more knowledgeable in financial matters, the value you add will diminish if they keep growing and you don’t.

The next step in the transition is your presentation. When you sell a product, you typically spend most of the time talking, explaining the features and benefits of your product and convincing your prospect why they need it. As an advisor, you spend most of your time asking questions, because you don’t care what products and services you eventually sell. These are simply tools to accomplish your prospect’s objectives. Your job is clearly defining those objectives and then presenting a course of action, a course which uses products or services as the tools to fulfill the objective. You no longer care about the sale of a $50,000 annuity. Your objective is to be the sole financial advisor and gather all of the client’s assets so that they can be managed appropriately. When you build sufficient value and trust so that the prospect turns over their assets for your stewardship, believe me, the compensation will follow and a true advisor does not need to worry about that.

Third, you need to decide who you want to be as an advisor.What market niche do you want to serve and what market niche will value your service?How do you want to market yourself?What other professionals do you need to align with?What’s your unique selling proposition?What’s your financial philosophy or template in working with a prospect?

Unlike a sales person who just wants the sale or willingly gives the prospect what they want to buy, the most successful advisors don’t give clients what they want. Successful advisors show the prospect their formula, their paradigm for handling money (e.g. asset allocation, marketing timing, use of products that must provide guarantees, asset laddering, etc). If the prospect wants something else, the successful advisor shakes hands and removes himself from the engagement. In other words, prospects will either agree to your model for managing their finances or not. There is no other way to be a successful advisor. After all, does a surgeon ask the patient which technique should be used for the surgery?

Sound like a lot of work? It is, but the time will pass anyway. You’ve got nothing else to do than raise your level of expertise and provide greater value, or simply tread water in your career, doing re same thing day in and day out. You’re wasting time now making small sales and extracting only a small portion of business that is attainable from each client. So the time you invest in your transition from sales person to advisors pays off as a very sound investment. Isn’t life about seeing how much value we can deliver to others? So get on your journey, the clock’s ticking.

Post provided by Javelin Marketing

Survival of Asset Gatherers Threatened

Here’s my conversation with a typical asset gatherer, a type of financial advisor heading toward extinction:

Me: what do you do?
Advisor: I’m an asset gatherer
Me: so you gather assets from clients and then place them with other professionals for micro management?
Advisor: correct
Me: so what value do you add?
Advisor: I select the right professionals, the micro managers—such as mutual fund managers and individual account managers to manage my client assets
Me. So are the managers you select better—did they make your client money in equities in 2008 or can you show me their superior risk adjusted return?
Advisor: well I don’t have these types of statistics but….

This advisor, like so many others, adds no value and simply repeats his firm’s mantra that he is an asset gatherer. Or, he justifies his value with helping to “keep the client from emotional knee-jerk reactions.” But if he cannot pick superior managers or market time better than his client, then the advisor is of no value and is simply extra overhead in the investment process. Why should the client pay two fees, one that adds no value, rather than one fee that has some chance of adding value—the micro managers fee? The client should not and more investors are realizing that.

Large firms tell their advisors to repeat this story: through individually managed accounts, we can give your little clients access to managers that usually only handle accounts of $5 million or more. My question: these managers who handle accounts of $5 million or more, are they any better than mutual fund managers or managers that will take smaller accounts? The evidence please?

The educated baby boomers have no problem using the Internet or the Morningstar subscription at the library to select their own funds. And as the big assets pass to the baby boomers from their older parents, the boomers won’t be handing it to advisors who add no value. The boomers will seek advisors who add value and can show that, on paper, in black and white.

So let’s look at ways to head off extinction and add value.

Comprehensive Financial Manager—if you cannot get superior risk adjusted returns or pick “better” managers than the client, you can at least off load this responsibility for your clients. In other words, get compensated for doing what the clients could do but don’t want to do. If you add value in this fashion, then the service level must be very high:

• You must call at least monthly
• Provide statements that clearly reflect changes, and performance inception to date, year to date and for the current period
• Provide your cell phone number so that clients may reach you anytime
• Provide a monthly communications with “have you thought of this” communication—this can be a newsletter or email
• Add related services like tax return preparation and mortgage brokerage to off load the clients entire financial life (does not need to be done by you)

Be the micro manager—manage portfolios yourself. There are mechanical models like the Dow Dividend Strategy or Value Line or the S&P Stars Portfolios that have beaten most professionals over time, so why not use these models and do the managing yourself? This strategy also sets you apart from all the “asset gatherers” because you can show that you actually do the work. The work is actually done by the model so you won’t need to invest your time with research and an assistant could even make the portfolio changes when necessary.

Be a specialist--get all of your clientele from professional referrals. For example, maybe you specialize in retirement plans. You do nothing else. You have third party administrators, CPAs, insurance agents, attorneys and others send you business. Your marketing is focused on referral sources, not retail clients. Your articles appear in local business newspapers, you speak at the local chapter meetings of the National Association of Insurance and Financial Advisors, you speak at local Estate Planning council meetings and you send a monthly newsletter focusing on retirement plans to your professional referral network. You may get little business now from other [professionals bu8t is amazing what happens you brand yourself as a specialist.

Whatever model you select, transition from being an “asset gatherer.” That model will bring fewer and fewer clients as the baby boomers inherit more and more of the assets and demand real value from their financial advisor.

Post provided by Javelin Marketing

You’ve documented your goals and your activities are aligned with your goals. You’re reaching your weekly call and appointment goals. But still your income is not as large as you desire. So what’s missing?

I have observed thousands of financial advisers and notice that many overlook this critical variable—the failure to isolate ONLY ONE objective for each activity. Let’s take a look at three examples:
When you cold call someone, what’s your objective? Is it to get an appointment, to qualify them, to get them to like you, or to set the stage for a future call? You must pick ONLY ONE objective to be most effective. If you make the call thinking, “Let’s see what becomes of this” your successful calls will be less frequent.

If you want to get an appointment on the call, then get right to it, “Mr. Smith, my name is Jon Doe. I am a local expert in helping business owners cut their personal income taxes in half using welfare benefit plans. If you have interest in reducing your taxes by 50%, I would like to meet with you for 20 minutes next Wednesday.” By getting right to the point, you will be able to make more calls, have shorter conversations and a lot more scheduled appointments!

The business owners who respond to such a call are goal-oriented, want to improve their situation and they make decisions quickly—just the type of client you want. Other business owners you call may find such an approach to be too direct. That’s fine—these people are not the prospects you want to pursue. You are looking for action takers, not procrastinators.
What’s your objective in the first appointment with a prospect? Is it to open an account, to set the stage for the second appointment or to tell them how great you are? Pick ONLY ONE because if you go into the appointment with some vague, open-ended goal, you get poor results. If your objective is to open an account on the first appointment (not a goal I recommend), then you must be clear and have your prospect be clear about that.

Open the appointment with, “Mr. Smith, my objective for us meeting today is to learn about your situation and determine if I can help you. If so, I will explain what I can do for you. I encourage you to ask as many questions as come to mind. At the end of our meeting, if there is a match, I want to open your account with me.” With the above opening, there is no ambiguity about the objective of this meeting. Let’s take another example.

When you give a seminar, what’s your objective? Is it to educate people, to get an appointment right there at the seminar or to set the stage to call them later and beg for an appointment? Your objective should be to have attendees schedule an appointment before they leave the seminar - I get 65% of attendees to do so.

You are NOT there to educate people! Just look at what we pay teachers and you will see that educating people is a fast road to the poor house. You hold a seminar to have attendees make an appointment with you. You do that by showing them you are a better advisor than their current advisor, you explain issues clearly, you answer their questions well, and you are a nice, approachable friendly character. If the attendees get educated in the process, that’s fine, but it’s not why you hold the seminar (more on this can be found at the links below).

Every time you begin an activity, first be clear about the objective of that specific activity. Doing so will focus your attention and make you more efficient and effective. You’ll be a laser rather than a shotgun in reaching your goals.

People invest emotionally. For this reason, the way we structure our recommendations, the form, is often more important than the substance.

Have you ever noticed how many people treat their IRA money more conservatively than their regular money? Except for the tax difference, all dollars are green whether IRA or not and there is no reason to treat these funds differently. Even though the substance is the same (i.e. all the dollars are the same), investors often regard these two pots of money differently. If you have an understanding of how emotion can drive investment decisions, you can use this unfounded emotional circumstance to your advantage by having your clients and prospects segregate money into separate pots that they will treat differently. Here are some examples:

Divide to Conquer
Here’s a way to divide client assets so that they more willingly invest.
For clients desiring to avoid capital gains taxes, set up a charitable trust. Note that I always call this a “capital gains elimination trust” and explain the benefits to the client before explaining the one minor downside—of the assets placed in the trust, after calculating withdrawals and earnings, a projected 10% must be left to charity. Once those assets are segregated, you, of course, will be the manager of that portfolio. The client will be motivated to use this trust for the large tax advantages (avoidance of immediate capital gains tax plus a charitable deduction), but once the funds are segregated, they will most likely ask you “how should we put this money to work?” This is the same money, while previously commingled with their other funds, took your almost arm-breaking efforts to get them to invest. Now that it’s in a separate trust, investors are often more willing to get it working.

Another example is the irrevocable trust. If you have prospects and clients who will potentially have a taxable estate, use the $1 million lifetime exclusion now (most investors think that the estate exclusion is available only at death and have no idea that it is more beneficial to use it during life). Once the money is segregated, you will find it much easier to sell a larger life insurance policy into that trust than you did when the money was part of one big pot. If the client has agreed to segregate the funds, they most likely perceive that as funds they plan to leave to heirs. Therefore, what better opportunity than to place a life policy in this trust?

Pooling funds to gain control
Sometimes, it’s best to aggregate assets for clients that they have mentally segregated.
How many investors believe that “principal” is different than “interest.” If you look at a stack of money totaling $100, can you tell which part is interest and which is principal? I can’t. But your clients will certainly act as if they can and treat the principal sacredly (i.e. “I can’t spend my principal”) yet be willing to take their interest on a fun vacation to Las Vegas. Therefore, investors prefer principal-protecting investments over those that provide a higher total cash flow, yet appear to erode principal. The classic example is bonds at a premium. Investors will resist paying 105 for a bond that can be called in 10 years at 100 because they can lose the premium paid. Even when you show them that the premium bonds provides a higher cash return over time (because of the higher coupon), they prefer a bond purchased at par which returns 100% of principal at maturity. They willingly take the lesser opportunity to serve a notion in their head that their money comprises principal and interest and the principal must be protected at all costs.

Because of the preference to keep principal intact, it’s in the advisor's benefit to take the time and explode the principal/interest myth (and therefore open up many great opportunities to clients). You will be more effective if you can do this at a seminar or public presentation. People are better able to grasp concepts when they see someone else being irrational. At a seminar, ask any attendee to stand up, reach in the pocket and pull out the money they find. Ask them which part is principal and which is interest. No matter what they say, ask them to hold up the money for the other attendees and ask the audience if anyone in the room can tell which part of the money is principal and which is interest. Then proceed to explain how this distinction keeps them from making correct investment decisions, such as:
• The purchase of premium bonds
• The purchase of natural resource sticks/partnerships that mine and erode their asset base (yet might pay several times the original investment in cash flow over the years)
• Spending non-IRA principal before taking money in excess of minimum distributions from an IRA, which may help them pay lower taxes

Next time you make a presentation to a client or prospect and notice that they have arbitrary or irrational reasons for their actions, stop and ask yourself if they are mentally segregating or aggregating their money. If so, you now have some insight into addressing their irrationality and hopefully helping them make more profitable choices and to help you gather assets more easily.

Note that this post is not for the purpose of manipulating clients for the intention of earning commissions or fees unless the recommendations are in the clients' interest.

Post provided by Javelin Marketing

The most widespread yet ignored problem shared by most financial advisors is the lack of focus. Interestingly, most advisors fail to see that this problem is at the root of all of their other problems.

For example, most advisors will tell you there are not enough hours in the day. They believe this time shortage is due to a deficiency in their time management skills or the nature of a business where there’s simply too much to do. In fact, the shortage of time has to do with lack of focus in their business, attempting to deal with too many products and services and attempting to deal with too many different types of clients.

Let’s take an example. Joe Advisor meets with Mrs. Jones, age 68. He constructs a portfolio of blue chip stocks and bonds. This is the same portfolio he has constructed for another 25 clients, so it was highly efficient for him to do the same thing for one more client. The other 25 clients are also in the same age range as Mrs. Jones—between ages 65 and 78. By having the homogeneous subgroup of clients, Joe is able to take the same approach, use the same products, provide the same service and is able to maintain the portfolios as if they were one portfolio.
At the end of the meeting, Mrs. Jones asked Joe if he can help her son Harry, age 49, who started a new construction business, set up a retirement plan. Hungry for a new client and eager to do more business, Joe agrees to call the son.

In a 30 minute phone conversation with the son, Joe answered a lot of minute questions regarding retirement plans and accommodated the son’s need to be educated about the difference between an IRA, profit sharing, a money purchase plan and a defined benefit plan. The son also mentioned that he was interested in the most aggressive growth funds available because he had a long investing time horizon.

Joe quickly went to work to find information on a profit sharing plan as he had not set one of these up for two years, given that many of his clients were retired. He also spent 55 minutes doing research using Morningstar in order to find two or three good aggressive growth funds since he was unfamiliar with those types of funds which he typically doesn’t use. Joe invested almost 90 minutes for what will be a $10,000 investment for the son to start his profit sharing plan.

Joe will earn gross commission of $400 from this transaction with a minimum investment of three hours. Compare this to the meeting had with Mrs. Jones. The first and second meetings were total of two hours and Mrs. Jones invested $250,000.00 from which Joe will earn $2,500 per year. Dealing with the son has caused Joe to take on business which is highly time inefficient, a digression from his normal business and has forced him to spend more time than he should with the new client.

Joe will also need to keep his eye on the performance of this aggressive growth fund for this one client, his only client that owns this fund. If this sounds familiar, here’s the immediate action you must take:

1. Decide on one niche of clients that you choose to prospect
2. Determine what products and services are most desired and most beneficial for this group of clients
3. Build all marketing and sales functions around this one niche of clients
4. Gain mastery in the few products and services that will serve these clients

Assume momentarily that the three products for this market are fixed annuities, bonds, and blue chip stocks. Pick, at most, your two favorite annuity companies to deal with, one blue chip stocks strategy such as the Dow dividend strategy, and find a newsletter that recommends fixed income instruments so that you know which bonds to select monthly without having to do research. Use the same building blocks with every client so you can finally have the life you dreamed.

Your job is not to cater to the desires of every prospect but rather find prospects that fit the model you use.

If you focus, you can leave the office at 4:00 P.M., you can train assistants to do much of your work for you, you can treat the portfolios of all your clients as though they were one portfolio to be watched. You have far less work to do when you have greater focus and you gain greater expertise in your client niche and in the products and services they desire.

This is the key to having a sane life as a financial advisor. The longer you continue to deal with everybody, give them whatever they like and spend more hours than you should at the office, the longer you delay having the life you want and investing time building a practice that will have no terminal value.

If you hesitate to turn business away so that you can focus on a target niche, consider this recommendation that the marriage counselor gave to an unhappy husband: your marriage will improve when you stop dating.

We’ve all heard of “mob” lynchings and “mob” psychology. These terms describe the behavior of crowds because crowd behavior is distinctly different than the additive behavior of the individuals. You can use this difference to get clients. Specifically, the fact that people are followers and a few leaders can influence them, allows you to build your business faster.
Psychologists more informally term mob psychology, “crowd theory.” Here’s how one writer describes it:

Crowds do not respond to information in the same way as individuals. Communication with respect to crowds is primitive compared to that between individuals. One can even postulate an inverse correlation between the intellectual level of communication taking place within a group and the size of the group—the bigger the group the lower the intellectual level of communication…..Crowds have very small attention spans and memories, therefore, constant repetition is necessary in order to pound the message into the collective psyche. Yet another powerful technique used in order to persuade the masses is the coupling of an image to the message. Coupling an image to the message allows further simplification of the message, while simultaneously reinforcing the sentiment underlying the message itself.

There is actually a science, using the above principals, of how to make presentations that insight mob behavior and you can apply this science to get clients. It’s called “platform sales” and you may recognize some of the most able names at this practice—Ron LeGrand, Dan Kennedy, Chet Holmes. These people get a crowd together at a conference and get the attendees so foamed up, they rush to the back of the room, credit cards in hand, to buy tapes and books and manuals by the hundreds. In your case, you don’t want to sell tapes and books, you want to get clients, you want the attendees to set an appointment to meet with you individually and eventually give you their money.

Now before I continue, there is at least one reader that must be addressed that feels getting a crowd “foamed up” is a bad thing and has no place in proper business procedures. Let's address that. Franklin Roosevelt needed to get Americans foamed up at the start of World War II which is why you now have the freedom to read this or whatever you choose to read. So the knowledge of crowd theory can be used, like anything, for positive or negative purposes. In this context, this education is offered to financial advisors who have the intention of getting clients AND serving as many people as possible and want every available tool to do so.

In our writer’s description above, he mentions four issues which have direct impact for financial advisors who want to get clients:

1. The larger the group, the less individual thinking occurs. In other words, you get more people acting as followers in a seminar of 50 people than in a seminar with 8 attendees. I have personally noticed that like many natural phenomena, there are diminishing returns. Once the crowd gets beyond 70 people, you begin to lose influence as additional attendees are physically further and further away from you and less influenced and the ability to get clients diminishes.

2. Constant repetition. Take a lesson from infomercial producers. In a thirty-minute show, they say the same things four times. In fact, it’s actually 7 minutes of tape that gets replayed four times in various orders. The lesson for you? If you want to get clients, don’t give so much information when you give a talk as people get overloaded. Pick three “themes” and repeat them.

3. Use images. That does not mean PowerPoint necessarily, but it means that you should have something that will burn a picture in the crowd’s mind. This could be a magic trick, you playing a humorous song on your guitar that you composed about insurance companies, a cartoon, etc.

4. Use sentiment. People buy emotionally and justify rationally. So why are your presentations so darn rational and logical? Logic does not move people to action, emotions do. If you want to get clients, fill your presentations with emotional reasons to act (love of family, fear of being destitute, physical discomfort in the Medicaid ward, the joy of taking the grandkids on the Disney Cruise, etc).

Seminars of course, allow you to influence people as a group rather than one to one. Not only do seminars allow you to make a presentation to many people simultaneously and thereby gain time efficiency, when most attendees laugh at a joke, so do the others (even if they don’t get it). And when followers see others nod in agreement with your point, they also agree. And most importantly, when they see others set an appointment at the seminar, they do also. Therefore, you gain an advantage working with groups that you cannot gain when communicating with individuals.

Group presentations can take several forms

The public seminar is the most common for financial advisors and the most lucrative way to get clients. People receive an invitation and attend because they have interest. With a full room, crowd theory takes hold to your advantage. By having an appointment-setting process where every attendee can observe the others making an appointment, your appointment ratio can often double because of the herd psychology of crowds.

Similar to the public seminar, is the private seminar—where the group is already gathered and affiliated—e.g. Rotary meeting, church group meeting, etc. While crowd psychology will operate in this venue, remember that the attendees did not choose to hear you speak. They simply attend their group meeting on the 3rd Tuesday each month and today, you happen to be the presenter. So don’t expect the same results in gaining clients like you obtain at a public seminar where attendees come specifically for your talk.

What about a more informal setting—like an afternoon tea for eight at a client’s home? You not only gain the momentum of the mob (albeit a small mob), you also gain the tacit (or explicit) endorsement of your host. And we know that referrals, recommendations and testimonials are important because people like to follow others and get comfort in doing so. Referrals are also the easiest way to get clients. So make sure to give your host an introduction to read or speech that is in fact a testimonial or endorsement for you. (The same technique can be used at a public seminar. Have a client introduce you and tell how you changed his life and let him know its okay to get emotional).

Your next step? If you don’t speak to groups, learn to so. Join toastmasters and get a speech coach (call your local National Speakers Association chapter for a recommendation). Pull out your normal presentation and determine how you can incorporate the elements of crowd theory to improve your results and get clients.

Post provided by Javelin Marketing

Odds are that from the day you started out in this business, you heard the adage “this business is built on referrals.” Referrals may be your best source for new clients but how do you get more high quality referrals than your existing clients can provide?

The best way to gain additional high quality referrals is to form “host-beneficiary” relationships. The “host” is an entity or professional that has clients that you desire. You will show the host why it is in his interest to refer their clients to you. You become “the beneficiary.”

The benefits of these types of relationships include:
• Prospects will be “warm” since someone whom they trust will have recommended you. They already know about you, your service, and how you are paid.
• Once you establish these relationships, it doesn’t take much time to maintain them. Therefore you can focus your efforts on meeting with prospects and clients, instead of on the phone begging for appointments.

Strategic Alliances
The most common type of host-beneficiary relationship would be strategic alliances that you develop with other professionals, such as accountants or lawyers who serve the type clients you want to target. Your goal should be to develop a network that will refer business to you, and you will reciprocate by sending your clients to other members of your strategic alliance. But you need to start thinking outside the box.

For example, life agents long ago started calling on P&C agents as P&C agents make the perfect hosts. In return, the life agent can provide referrals or compensation (depending on State law).
Perhaps your specialty is money management. In this case, you need to work with professionals who see money in transition ands can send you clients. This is money that has just been acquired and needs to be invested. It could come from a business sale, lawsuit, divorce, property sale, lottery wining, or death benefit. Sources who would know about this money in transition include not only attorneys and accountants but also real estate brokers, business brokers and funeral directors. How many relationships do you have with these types of professionals?

In each case, you can refer business to them or compensate them if legal in your state.

Give First to Receive
Call the professionals whom you want to meet. Tell them that you have clients who you think may be able to use their services. Offer to take them to lunch. What professional would turn you down? At lunch, find out about them, their practices, and what types of clients they want. Position yourself as a resource for those types of clients. You must establish your value to this professional as a means of building his practice. Offer them referrals first, as a show of good faith.

You can also discuss mutual marketing techniques that can help you both build your practices. Attempt to leave the lunch with a joint marketing commitment, such as, mailing to each other’s client lists, a jointly presented seminar, or a mention in each other’s newsletters.

Another good way to find professionals to align yourself with is to ask your family and existing clients. Your top clients likely work with accountants or lawyers you may be able to partner with. An introduction from a mutual client serves to give you instant credibility with these possible partners.

Creative Possibilities
A little creativity can go a long way in your search for good “hosts” you can partner with. I knew one long term care insurance producer who contacted the local hospital’s senior services coordinator. As you may know, hospitals have very active departments for courting the seniors in the local area. They provide free blood tests, cholesterol screening, exercise classes, etc.
This agent offered to teach a monthly class on long-term care insurance. The hospital viewed his classes as an added service they could offer the seniors.

Each class he taught introduced him to the attendees and established him as a trusted expert. He spends the days after each class meeting with seniors, in an office that the hospital provides, writing applications for LTC insurance. He found the perfect host and now he’s a rich beneficiary.This approach was so successful that this is now his sole marketing method. He travels his state giving classes on long-term care insurance, and writing policies after them. He is a top LTC producer in the US.

Other creative possibilities could include:

o Local professional associations. You can join the local realtor’s
association as an associate member. Develop relationships and let them
know you are seeking for example, senior clients who are trading down and will
have a wad of cash to invest. Or young families with income over $100,000
and three children for a significant life sale.
o What about people who
sell office furniture? Do you think they can introduce you to business
owners with expanding businesses who might need insurance, estate planning and
investment advice?
o If college funding is your thing, do you think
teachers might be a good source of referrals to parents? Virtually every
county has one or two teachers associations you can probably join.

Summary
It takes some creative thinking to establish good host-beneficiary relationships, but once in place, most take little maintenance. By offering a winning solution to a complementary professional seeking to grow their business (or seeking extra income), you can effectively create a stream of additional business for yourself.

Post provided by Javelin Marketing

Sales professionals perform only professional activities and no clerical or administrative activities. In the financial advising business, there are three professional activities:

a) Communicate with prospects about having them become clients;

i) You should not be doing the work of prospecting.You are to get involved with
a prospect only when a prospect has indicated interest and the financial
resources to work with you. Big producers do not waste time like most advisors
do-- identifying prospects from the sea of suspects. They have an
assistant or a system to do that. More on this later in the chapter on
marketing.

b) Communicate with clients to retain them, or about doing additional business; studies show that the larger producers have more contacts a year with clients while smaller producers have fewer contacts

c) Design procedures for others to follow. You’re the business owner, so it will always be your job to tell others what to do and lay out their work for them.

Think through these above3 three activities carefully and you will see that everything else you do during the day is unimportant and can be delegated. If you see that, you're on your way to being a million dollar producer.

If you have been in McDonald's recently, you may have noticed that they are the employer of last resort. They seem to hire the people that no other employer wants—people who cannot think and cannot listen. I order a Big Mac with no cheese and two seconds later the cashier asks, “do you want cheese with that?” Brain Dead. Yet, no matter where you go in the world, the McDonald’s product is amazingly consistent. That’s because McDonald's has systematized and documented everything. There is an entire manual on how to make fries. The genius behind McDonald's is that the company has taken something as simple as making fries and removed every ambiguity.

Here is what you and I see to making fries:
Open the bag
Dump the fries into the bin
Put it in oil for 2 minutes
Dump it out
Sprinkle with salt

But these instructions are totally inadequate. Look how many questions are unanswered:

Where do I get the bag of fries?
Do I tear it open or use a scissors?
Do I dump the entire bag into the bin at one time or just part?
How do I know when it’s been 2 minutes—I don’t own a watch
Does the oil ever need to be changed?
How will I know?Etc, etc.

If you want to be a million dollar producer and have a business that runs on auto-pilot you will need to document every little process in your office so that someone other than you can do it. You need to think about every little question or exception that can arise and document the handling of that issue just like in the McDonald's example above.

This has tremendous benefits:
1. It is the first step to becoming a million dollar producer without needing to work more than six hours a day
2. When an assistant quits, you’re business does not come to a halt as everything for the new person is documented
3. You have a way to make continual incremental improvements to your business by knowing the current procedure to compare to a potential new procedure

Before we proceed, let’s take a look at your local doctor’s office so you can see these three activities in action. When you call your doctor’s office, does the doctor answer the phone? No, he has a receptionist (in the financial services business, we call this person a service assistant).
When you arrive for the appointment, does your doctor take your temperature and blood pressure? No, he has a nurse do that (in the financial services, we call this person as ales assistant).

The doctor sees you ONLY when it’s time to generate revenue. He gets involved in none of the non-revenue-generating activities of his practice (as you do in yours). As a result, he earns a lot more than you do. He is a professional, he is a million dollar producer because he pays someone else to do the non-professional activities.

And do you see the doctor’s staff constantly asking him questions or do they seem to know exactly what to do? They each have their procedures and they do their business efficiently thereby allowing the doctor to generate income

Why would any rational person (you?) not hire some one for $20 per hour when your time is worth $200 an hour?The next time you are about to make some crack about the financial knowledge of physicians, think twice, since it seems they know a lot more than you do about making money, hiring help, systematizing their business and being a million dollar producer.

This post contributed by Javelin Marketing

Few people in the financial services industry ever become seven-digit earners but there are thousands that attain this sales success, which means it is possible for all. In fact, the financial services industry offers more opportunity for large earnings than possibly any other industry. So why do so few get there?

It’s the same reason that there are very few Albert Einsteins or Thomas Edisons. The folklore is that Edison made 10,000 attempts to invent the light bulb. Most advisors will not attempt something even a second time if they don’t get instant sales success. And therein lays the difference between those that earn more than the rest can imagine and the rest.

Really large producers know a secret about life. If you keep knocking at the door, it eventually opens. It’s a matter of how long one is willing to stand in front of “no success” that determines if you achieve sales success. But in a culture of “instant gratification,” it’s hard to stay with something that doesn’t work. And so, most people in financial services move from one idea to the next, one product to the next, one marketing system to the next, always in search of the Holy Grail but never finding it, never realizing that the big producers create their own grail through sheer commitment to stay the course.

Big producers simply have a commitment to an idea (usually not how much they earn), but of making something work, or of proving a point or of doing something better than anyone else. They continue to experiment, stumbling along in a zigzag fashion toward the target, making changes here and there to their approach, allowing their problem to continuously simmer in their thoughts. And by having the tenacity to hold the problem, the solution often comes coincidentally, like Newton being hit on the head by a falling apple and realizing the structure and formula describing gravity and mass.

How does this apply to you on Monday morning and your sales success? If that seminar you did was not successful, don’t give up and try something else. If you’ve been soliciting CPAs for 3 months with no referrals, don’t give up and try something else. If you’ve been running an ad that was not instantly successful, don’t give up and try something else. Stay with your problem and find the solution. Be willing to stand in the place called “I don’t know what I’m doing” because then you take steps to learn and find out what you don’t know (or find the person that has already solved your dilemma). In the Internet age, all knowledge is at your fingertips so you only need seek out the information or the person who can help you.

I get solicited every month to help people with their ideas (which are usually not in my area of expertise) and I wonder how many of these we will ever see:

• A nationwide financial planning firm for women

•A training to teach financial advisors to manage family business succession from one generation to another and building a network of such advisors

• A training to teach advisors to integrate the investment plan with the estate plan

• A plan for financial advisors to enroll their clients in a medical identification program, so that if injured anywhere in the world, the medical facility can instantly access the client’s medical background

• A training program sold through financial advisors that helps people be better investors

I meet many advisors with the same story of broken dreams, “I started in the business selling product X. But then the market went down so I shifted to Y. And then you know what happened to interest rates, so I shifted to Z. And then….

The sad fact of this recount is that had the advisor stayed with product X and not abandoned the original plan so quickly, that advisor may now be the best known provider of X in their town with wild sales success to their credit. Everyone else would have exited that business leaving the last man standing to win the spoils.

On Monday morning, take list the ideas and approaches you have abandoned in the last year or are ready to abandon and stop.

--Make three phone calls to people who you think can help you or refer you to others that can (you will likely find an expert through a zigzag network of referrals from one person to another).

--Do several Internet searches using various key phrases related to your problem (which will probably take you on a zigzag course to insight). It’s likely by the end of the week, you will have made a leap in solving your current dilemma or abandoned opportunities by zigzagging and stumbling along.

"Genius is 1% inspiration and 99% perspiration."Thomas Edison

Post provided by Javelin Marketing

Perhaps you’ve been in the business for a few years and you’re doing okay, but you can’t seem to find that magical formula that will make you a million-dollar producer? If you only had more clients, that would do it, right? However, time is a precious commodity; there is a limit to how many clients you can effectively serve. In truth, acquiring more clients isn’t as much the answer as getting the right clients in the door is.

This is the first of a series of three articles that will help you focus your practice so that you can reach the million-dollar sales level.

You Must Have Homogeneous Clients
The homogeneous mass market, which has dictated the offerings of U.S. producers since the dawn of the industrial revolution, is coming to an end. Think about what has happened to the automobile industry. Henry Ford sold his Model Ts in any color the customer wanted, as long as it was black. And the same holds true with the fast-food restaurants. Today, you can get it “your way.” Hardly the case a few years ago when all that was available was a one-way-suits-all burger.

The mass market is splintering into market niches and the niches are growing smaller. Therefore, the shotgun approach to reach those niches will not be as effective as they were in the past. You must breakaway from the heard and focus your marketing efforts on a narrower and more specialized group in order to become a million-dollar producer.

Tomorrow’s clients will be more demanding and vocal and will expect you to fulfill their requirements. So rather than trying to increase your number of clients, think about narrowly targeting your market to increase the quality of the products and services your offer to fewer clients.

Tapping into a specific niche can help you stand out from the crowd—differentiate yourself in ways that are important to your prospects and clients. And the most efficient way to do this is by working with groups who have similar “mind sets” so you can become the expert on solving their problems. Examples of niche markets include small business owners, early retirees from the same company, individuals who recently lost a spouse, and newly divorced women. Take a look at your current client base. Most reps say that 80% of their revenues come from 20% of their clients. What characteristics do your top 20% have? Do you know their preferences, goals, and lifestyles? What do they have in common? Is it their age, net worth, geographic area, or perhaps religious or ethnic background? And equally important, which group do you enjoy working with the most?

Do your homework. Identify common problems; create solutions. Become an expert on the sociology of this group, what motives them, and their inclination to plan for financial security. Find out what this group expects from a financial professional and how they want to receive your message.

One of the best ways to really get to know your clients is to interview them. Ask 20 of your clients who best represent the market you wish to target to meet with you. Take some of your better clients to lunch and ask them what they like and dislike about your products, your services, and the presentations you made to them. The answers will give you some ideas on how to market and sell to this niche. Then you can use the same profile early in a prospect relationship to find out if this is the type of person that you want as a client.

Have a list of 10 open-ended questions you really want answered to gain insight to the mind-set of this group. For a few hundred dollars, you’ll have marketing information that few other planners or even financial services firms have ever obtained.

Reorganize your marketing efforts, such as seminars and direct mail campaigns, around these common needs and carve yourself a homogeneous market. This will allow you to better monitor your results and make changes as needed. Don’t forget to ask for referrals; “do you have other friends who are like you that may be interested in my services?”

Niche marketing requires a thought process in that you cannot be all things to all people; don’t be afraid to turn away business that isn’t in your niche. Once you get into the mind-set of this group, you can better define your practice’s image and product offerings to meet their needs. The payoff will be that you will become better at the services you offer, you will realize more sales per client, and your practice will become more profitable.

This post provided by Javelin Marketing

Good luck. The new financial advisor will need to be MUCH smarter than the advisor from 10 or 20 years ago and will need to be a MUCH better marketer.

The financial advising business will get tougher. Why?Because your prospects are getting smarter. Are you getting smarter, too? Fifteen years ago, stockbrokers had an edge in that people had to call them for midday stock quotes. Financial professionals also had an edge, as they had product information and the prospect did not. That’s all changed. If all you’ve got is product information, your days are numbered. The new financial advisor will soon be the ex-financial advisor.

The broader your knowledge base, the more you stay one step ahead of your prospects. As they get smarter, so must you. If you stay wedded to selling only one product, don’t be surprised if it gets harder to do business. People want advice. Not product advice, but rather, financial advice. Start giving it and start charging for it! (Addressed in a future post - subscribe to this blog.)

This is the millennium of self-learning. Those new financial advisor who continually expands his knowledge base and apply what he has learned will win. Sadly, those who tread in one place will lose. The most important word in this paragraph is "apply" as in a future post, we will address the fallacy that "knowledge is power" and uncover the truth that "applied knowledge is power."

If you think that tax issues are for CPAs and legal issues are for lawyers, you’re mistaken. Some of the top financial advisors I know have far more expertise in their field than the average CPA or attorney. And they use that knowledge to attract business. After all, anything that anyone knows can be found in book or on the Internet. The resources to learn anything are at your fingertips and at your prospect's fingertips. Therefore, they don't need the new financial advisor for information because they can get information for free anytime.

If you have been lazy in seeking out experts, then I guess you have some work to do. No one will call you up to give you the answers. The answers are there, however, for the taking. Million-dollar producers are self-learners. And any new financial advisor that does not continually expand his knowledge of personal finance, his sales skills, communication and psychology, will die in this business. If a big producer wants to be an expert in direct mail, he reads books on direct mail and consults with an expert. In a short time, he too is an expert. And he makes profit with direct mail. Are you willing to "seek" so you shall "find?"

As an example, one new financial advisor wanted to become an expert speaker. He saw that speaking was a way to reach a lot of prospects and quickly build his business with seminars and presentations. He had no speaking experience so he called the National Speakers Association and asked them to recommend their best coach. He called the coach and was told she charged $7,500 for two-and-a-half days of coaching. Most new financial advisors would have been intimidated by the cost. But here’s how big producers think: “I invest $7,500. I can earn an extra $10,000 per seminar. This is a great investment. Let’s proceed.”

But learning by itself is not enough. The fallacy in our culture is that knowledge is power. Not true. Applied knowledge is power. More accurately: Applied knowledge = money.

Let me share an example. Plenty of CPAs know more than you do about IRA distribution rules. But in the last few months, one new financial advisor took what he knew, arranged it into a system to fill a seminar room and has so far earned over $100,000 by "applying" his knowledge of IRA distribution rules. The knowledge by itself was worthless until he packaged into something other people valued and marketed it.

New financial advisors--welcome!

This post provided by Javelin Marketing.

The title of this article is bad. It emphasizes what you want, but if you want to win specific new clients and win at business development, the focus needs to be on them. While this sounds simple enough, most professionals conduct their marketing without an understanding of their potential clients. We assume we know what they want but the assumption is often incorrect. So the first step is to know exactly what your potential clients, your prospects, value.

Take this simple example. What do business owners want? We assume they desire more profits, better cash flow, higher value for their business, and better quality employees. But top on their list may be to spend more time with their families. If you assume rather than KNOW what your target market desires, your business development efforts will flounder. Once you know what they really want, your marketing can be so much more effective because you can market a solution for what they really desire, not what you believe they desire.

To make your business development laser sharp, you have two ways to learn what prospects really want. You can contact ten potential clients and have a one-on-one interview with each. So that they will be open to you, decide to write an article for your State society or local chapter so that when you call your interview candidate, you frame the meeting correctly: “Stan, My name is Bob Richards. I am a financial planner here in town and I am writing an article for the local Financial Planning Association about the professional and personal challenges faced by CFOs of manufacturing firms. For my article, could I interview you and get your ideas over lunch on Friday?” This approach opens the prospect to truthful answers rather than leaves them guarded that their responses will come back to them in a business pitch.

You must conduct ten of these interviews to get a solid profile of your prospects as the foundation for your business development plan. Alternatively, you can conduct a focus group. To do this correctly, you want to read books on conducting focus groups or possibly hire a local market researcher with experience (elance.com and guru.com are excellent sources of this type of specialized help for projects).

Now you know what your prospects desire. There are several ways to reach them so that you have the opportunity to explain how you can assist them to get what they want. The following recommendations may seem unconventional and that’s why they have value. Many people with financial planning backgrounds market passively and don't have the business development results desired (i.e. they rely on referrals). If you use the same passive and reactive tactics as everyone else, you won’t stand out as special and you won’t win business.

The Best Business Development-WIN Client Referrals—don’t wait for them

Identify current clients that are either part of the group you desire as clients or can introduce you. Once you do, call them and ask them for help. “Tom, I am always working to improve the quality of my services and determine what people really want. Can I ask you what you like working about me best? (Write down everything your client says). I appreciate those comments. Would you be willing to join me for lunch and help me with my business development process?”

At lunch, you explain to Tom, your client, that you believe he can help you with your business development program. You show him the following letter that you typed up that repeats the comments he made to you on the phone just a few days earlier when he told you what he liked best about working with you. Here’s a sample letter:

Dear ,
Bob Richards has been my financial advisor for many months. As busy as he is, Bob returns my calls the same day I phone him. Additionally, Bob is the only advisor I have ever had to walk me through my investment statements, insurance policies and tax returns so that I really understand what’s going on. As a result, I have felt more comfortable about my financial situation with Bob than at any other time. He also keeps in touch with me every couple months so I know he is always looking out for my interests. I highly recommend you call Larry at 800-xxx-xxxx if you want a top quality financial advisor or please call me and I can answer any questions.

You ask, “Tom—is this accurate? Would you be okay signing these letters as a way of introducing me to other CFOs, business associates and friends and helping me with my business development?” You then proceed to get a list of appropriate people to mail and use Tom’s letter as the first part of a drip marketing campaign to this select list.

Professional Referrals—what can you do for them?

Other professionals may send you business just because you’re a nice and competent person, but it works better if you seek the referrals proactively. Here’s the fundamental element of success if you want referrals from other professionals: what can you do for them? Even if you are new in the business, you could open the phone book, call another professional and say, “I am a financial advisor here in town and my clients often have need for (legal work, business brokerage services, business financing, etc). I may be able to refer some of these people to you but I wanted to learn about your business and determine if my clients would be suitable for you. Can I take you to lunch on Friday?”

Here’s the point—think about what you can provide another professional if you want them to send you business. And once they see you can be of value to them (because you send them business), tell them the types of people you seek to meet and this will give a big boost your your business development efforts.

Seminars

Seminars are a super powerful business development tool and you control the results. You can be a total stranger in town and if you send an invitation for a compelling presentation to your target market (lists are easily purchased—see the SRDS Direct Mail List Source at the main library), you can have 25 to 100 of the right people in a room to listen to your wisdom. While the structure of successful seminars could take up a book you can obtain a number of articles at http://www.financial-seminar.net/.

Telemarketing

Many professionals don’t use telemarketing but it is inexpensive and effective. Of course, you won’t be doing the calling because you will hire someone to do this for you, paid largely on a success basis. You can have people telemarket to:

1) Fill seminars
2) Identify qualified prospects with a survey

Here’s an example. You could have a telemarketer call and do research. Assume that your target market is people with $500,000 or more in an IRA because your specialty is IRA distribution planning. Your telemarketer calls with a survey and two of the questions are: does anyone in your household own an IRA? Is it under $100,000, between $100,000 and $500,000 or over $500,000? You’d be surprised at how many consumers answer such questions especially if they get something (e.g., $50 of coupons at the supermarket which you can print from dozens of websites).

Once your qualified prospects are identified, you can mail them a specific item of interest and then have the telemarketer call again and set appointments.

Direct Mail & Advertising

Hire a copywriter so that you get good results. Writing copy is a science that most professionals do not take the time to study and consequently, don’t get good results from direct marketing efforts of mistakenly conclude this is a low-end type of marketing. However, the following process gains you inquiries from exactly the type of people you want to meet.

You send a postcard or run ads in local publications offering a booklet. Let’s say your target market is CFOs. You run your ad in the local business journal and send your postcard to a list of CFOs offering your booklet, “New Profit Strategies for Corporate Cash Management.” By targeting your target market and offering an item of specific interest to one of their concerns, you gain responses from the right people. After you send your booklet, you can follow up with a call and set appointments.

Summary

The key point of business development and getting the clients you want--get ACTIVE. You don’t wait for the business you want to come your way or pursue low impact tactics as networking. If you take active steps to identify the people you want as new clients, learn what motivates them, and offer them what they want, they are happy to choose you as their financial advisor.

This post provided by Javelin Marketing

Why Your Prospects and Clients Resist Estate Panning

Insurance professionals are often unsuccessful in having their clients take action on estate planning. For insurance professionals, estate planning is about the narrow issue of selling a life policy to pay estate taxes. For the prospect, estate planning is about the broader issue of protecting their assets. So many prospects are not interested in buying insurance which addresses only a small portion of their estate preservation concerns.

There are four reasons that a conversation about estate taxes is not a good way to start an estate planning conversation:

1. People don’t want to talk about their mortality

2. If you show your prospects how to save estate taxes, you have failed to answer the most basic question of every red-blooded American, “What’s in it for me?” It’s the kids who save the tax, not your prospects.

3. Many people erroneously believe they won’t pay estate taxes so a conversation about saving what they don’t think they will pay is an uphill battle (general rule of successful sales and marketing—don’t fight uphill battles—rather—find the hill that slopes downward and roll with it).

4. You bring up the issue of insurance too early. People have interest in their agenda, not your agenda.

So how can you help people with estate planning issues? Start with helping them with the issues that concern them rather than your insurance sale. You should of course charge fees for your time, advice and assistance. Check to see if there is any regulation in your State about charging fees for estate planning advice. I know of none.

There are four non-insurance estate planning issues that your prospects do want to talk about. Help the prospect with each of these issues and you will move toward an easy insurance sale, if appropriate. These are:

1. Your prospect wants to pay less income tax. Each time your prospect withdraws from their retirement plan, they pay tax. There are two ways to potentially reduce the overall tax bite. First, have them “fill up” the lower tax brackets. Let’s say your clients are a married couple, age 68 with a taxable income of $45,000. Tell them to make withdrawals from their retirement even though they are below the age of mandatory distribution. Why? Because they will pay only 15% tax on $14,400 of distributions, based on 2008 tax tables. If they wait, they may need to take much larger distributions later at potentially 25% federal tax rate or higher. Alternatively, conversion to a Roth IRA could be a significant savings and the Roth conversion calculators on any mutual fund web site can help you.

2. Your prospect wants to be in control. They want physical and financial independence. Therefore, they want to have advance directives: a living will (called by different names in various states) and a medical power of attorney. These documents allow your prospect to have as much say as possible during their lifetimes over their own health issues. In many states, these are legislature-approved documents available in any stationery store. Simply helping prospects complete these important documents goes a long way toward saying you really care (check that this does not amount to “practicing law” in your state). This is an easy way to start the estate planning discussion.

3. Your prospect wants to rid themselves of “hassle assets.” As people grow older, they want fewer problems in life yet they often own hassle assets such as residential rental real estate or an operating business. Often, these assets are held because the owners believe that a sale will lead to a large capital gains tax. There are at least four ways to eliminate or defer the capital gains tax:

a. Charitable remainder trust
b. Charitable gift annuity
c. Borrowing 90% against stock positions with a non-recourse loan
d. 1031 exchange in the case of real estate or trading a concentrated stock position in exchange for “exchange fund” shares

Help your client use one of these tools to eliminate their hassle assets (in each case, you generate income for the prospect or potential liquidity to buy insurance later).

4. Your prospect wants reduced liability. Many people are confused with ownership and control. One can give up ownership of an asset (and then have no liability for it) yet maintain control. For example, your prospect can transfer one million dollars of assets to an irrevocable trust or family partnership. That asset is now out of reach of creditors. Any attorney can include clauses in the documents that establish these entities so that your clients can tap these assets if later needed. So your client removes an asset from their estate, gains asset protection, yet still has control. Once the asset is segregated, you will find that prospects are much more likely to use it for insurance than if premiums had to be spent from their own checking account.

Notice that in each case above, you have focused on an estate planning issue where the payoff is for mom and dad, not the kids. Your prospect clearly sees “what’s in it for me.” Once you show people a personal payoff, its amazing how willing they are to take your advice or discuss how insurance can be a useful tool to offset the erosion of their estate to income taxes or estate taxes.

Post Provided by Javelin Marketing

You have a slow month and you feel bad. Your manager indicates that if you did this or that, you would have done better. These reactions are misplaced because they assume that you can control your sales results. You cannot. You can only control your sales activities.

You cannot make a client buy, you cannot make interest rates go down, you cannot make your clients’ mutual funds go up 20%. You cannot control your sales results.

You cannot control client procrastination, you cannot control terrorism, you cannot control that fact that a rich prospect’s brother-in-law is in the business and has his account. You cannot control your sales results.

You can control your sales activities and when you let that sink in, you will have fewer disappointments and you will have more energy. When things don’t go well, there’s nothing you can do about that. The only thing you can do is control your sales activities.

You can make 25 contacts a day, you can study for the CFP® credential, you can join a study group, you can read a book on portfolio construction, you can have lunch with a million dollar producer, you can set your minimum account at $250,000 but you cannot control your sales results this week or this month.

However, in the long run, there are activities that generate extraordinary results.

Unfortunately, most financial advisers will never wait for the payoff and will have changed their sales activities seeking an instant payoff, believing that they can control their sales results. When the sales results they want are not immediately forthcoming, they change their sales activities again, never realizing the payoff from the previous activities.

I’m reminded of Peter Lynch the great fund manager who had a simple outlook. He knew that in the long run, stock prices follow earnings. He invested in companies with growing earnings. Did he make money every year? Of course not. Yet he did not have any notion that he could control his fund’s results. All he could do was to research companies, do a through job, find companies with growing earnings and stick to all he could control—his activities. All he could do is sit with the knowledge that the right activities eventually bring extraordinary results. He of course, had extraordinary long run results managing Magellan Fund.

Next time you have some ridiculous notion that you could have done something to avoid a bad week or bad month or bear market, let it go. Just get in gear because in the long run, your sales activities are what you can control and the universe rewards appropriate activities.

There’s a ridiculous notion in the advisor community that keeping your clients happy is the way to get referrals. While happy clients are a necessary condition to get referrals, it is not a sufficient condition. Sure, your clients must be satisfied with your advice and service, but that’s not enough to have them send you the quantity of referrals you would like.

It’s an absurd assumption to believe your clients walk through life thinking as follows: “I love my financial advisor. My day won’t be complete until I do something nice for my financial advisor. What could that be? I know! I’ll get him a referral!” Your clients have more pressing things to think about like their own welfare. And most of them are not clear how they can help you because you have not made it clear.

Of course, you will get an occasional referral from a happy client. But any advisor that is in a growth mode should be growing their assets by at least a million dollars a month. If your referrals generate that amount of new assets, then you must be a super individual. But I’ll bet you get maybe three or four unsolicited referrals a year and the new assets are insignificant. Being a nice guy or gal and waiting for your phone to ring is not a formula for success.

Most financial advisors realize that this passive referral method does not work and many attempt another method to get referrals. They don’t sit back and wait, they ask. But the way they ask is unproductive. They use the “ambush method.” Here’s what that looks like. In the middle of a conversation with a client, you verbally ambush them, “Say Bob, who do you know, someone like yourself that also wants tax free income from conservative investing?” Taken off guard, your client begins to stammer, “uh, uh, geez, I’m not sure. I can’t think of anyone. Give me a couple of your cards and if I think of anyone, I will pass them out.”

This unstructured way of getting referrals lacks any system or structure. It's ad hoc—you forget to ask half of the time and the other half of the time you get the stammering response from your client. If you want great results—in referrals, in portfolio performance, in your business—you must have a structured process.

Here is the process.

Step 1: At the beginning of the relationship, you ask your new client, “What do I need to do during the next ninety days so that you would feel comfortable introducing me to your friends and associates?” If you have reasonable clients, they will say things like

• Call me back the same day I call you
• Let me hear from you every two months so that I know you are looking out for my interest
• Explain my statements and insurance policies to me so that I understand them

Step 2: You write down what your clients tells you and over the next ninety days you do what your client has requested.

Step 3: You contact your client after ninety days, review what they asked of you and have them confirm that you have done it. Now that they are clear about the quality of you and your service, you then ask them for a favor. You ask them to join you for lunch and for their help with your business development program (ask them to bring their address book).

Step 4: At lunch, you have them sign letters introducing you to their friends and associates (which you take back to your office and mail). The read sound something like this:

“Over the last few months, Stu Jones has been my financial advisor and he’s been the best advisor I have had. As busy as he is, he calls me back the same day I call him. He stays in touch with me regularly so I know he is looking out for my best interest. He is also the only professional that has taken the time to explain my insurance and investments to me so that I really understand what’s going on. I highly recommend Stu. Feel free to call me at xxx-xxxx or call Stu directly and meet with him at xxx-xxxx.

There you have it. It’s what most advisors lack: a structured process that prepares your client from day one to assist you. They tell you the conditions of satisfaction to meet in exchange for their help. You simply fulfill their conditions. So far, the record is 150 referrals from one client using this approach. Many advisors receive from 5 to 20 signed letters from one client. Overall, 40% of these clients who receive a letter of introduction become clients of the advisor within a year.

So if you want to sit back and wait, you may get what you deserve. The meek may inherent the earth but those with a structured active process will get referrals.

Post provided by Javelin Marketing

If you're honest with yourself, you know that of everyone you present to, less than 50% buy. The poor close ratio is due top your sales presentation not "clicking" with the prospect. You are committed to making your clients’ futures better, but if you present that benefit, you will lose sales.

Americans do not relate well to the threat or benefit of future occurrences. Here’s my evidence: Do you know people who smoke cigarettes? Can they read the warning on the package and have they heard that smoking leads to lung disease, heart disease and a potentially nasty death? Then why do they still smoke? Because they get pleasure today, right now, and they willingly trade a few seconds of present pleasure for an ugly and early death in the future.

Need more evidence about behavior? The Center for Disease Control tells us that 61% of Americans are overweight. I’ll wager that most of them know that cheesecake is high in fat, leads to increased weight gain, high cholesterol, potential hardening of the arteries, heart disease and an uncomfortable and early death. Yet we consume thousands of tons of cheesecake annually because we readily trade a few minutes of pleasure right now, for a potentially debilitating future (heart disease, diabetes, arteriosclerosis, etc).

What does this have to do with selling financial products? Because when you understand how people behave, you make more sales. Sales is all about human psychology, not your products or your firm.

You sell insurance or investments that provide a benefit in the future or helps avoid a future detriment. But I just proved to you that the future is a weak motivator. Americans want to know, “What can you do for me that feels good NOW!” Is it any wonder that your prospects say, “I’ll think about it,” or decline very important coverage when you offer a payoff that will not occur for many years? You walk away with no sale thinking that your prospect doesn’t get it. No-- it’s you who doesn't get it. Your prospect is not logical - your prospect is a present tense, pain-avoiding, pleasure-seeking homing device. Show them how they can avoid discomfort or have pleasure today and you have a sale.

This may seem difficult for you because your life insurance, your long term care policy, your annuity your investment products are all for protection of some future occurrence. How can you possibly frame the benefit of these products in the present?

Here’s the idea:

“Mr. Smith. Are you ever concerned that if something should happen to you, how your family will fair?
How often do you have that thought?
How does it make you feel?
Do you need one more thing to worry about?
Would spending 15 minutes to eliminate that worry be a worthwhile investment of your time?”

In this scenario, I do not sell financial protection against his death; I sell the end of his worry right now. He gets an immediate payoff from the policy - peace of mind. That’s a benefit your prospect can digest because it’s now. In fact, it’s more important than a benefit, I offer the avoidance of current discomfort. All of us are highly motivated to avoid current discomfort and we will take action and make purchases to avoid it.

If you think I may be off the mark, consider why you got out of bed this morning. Did you do it because of dreaming you would earn $100,000 today and the excitement of that conquest had you hop out of bed at 5 am rarin’ to go? Be honest. If you look closely, you see that you got out of bed for one or more of these reasons:

To avoid the discomfort and worry of having your house foreclosed on if you don’t pay the mortgage
You don’t want to be viewed as an irresponsible person
You set some appointments and people will be upset with you if you don’t show up today
It’s what your parents told you to do and they would be dissatisfied with you and that would make you feel bad
Your spouse is depending on you and you’ll feel like a heel if you don’t bring home some cash

You got out of bed today strongly motivated to avoid discomfort in the present. To avoid present discomfort is the most powerful yet subtle motivator. It is responsible for most daily human activity.

Now you know what motivates your prospect to act. Stop talking to them about the future. Give up explaining how that group of mutual funds will give him a more comfortable retirement or that he really needs LTC protection because 43% of everyone over age 65 spends time in a nursing home. While these are interesting logical appeals, he doesn’t really care. He wants to know how you will make him feel good today, or more importantly, take away current discomfort.

So your challenge is to take 30 minutes right now. List each of the products and services you sell and list what pain those products and services can help your prospect avoid or what pleasure they bring, TODAY! Then develop new sales scripts around those current payoffs and make sure that the word “will” is never used again in a sales presentation. The word “will” precedes a future payoff and from now on, you sell only current payoffs. Every time you have the urge to say, “will,” say, “does.”

If you cannot figure out how to speak about your products as a current benefit or detriment-avoidance tool, you better give your prospect some cheesecake or a smoke.

Post provided by Javelin Marketing

Eighty years ago Henry Ford uncovered the efficiency of product standardization and the assembly line. The product was so standardized it gave rise to the joke that a customer could have a car in any color—so long as it was black. Even though this winning formula for efficiency and profitability is decades old, most financial advisers ignore it and have organized their businesses inefficiently.

Many financial advisers treat each individual financial client as a custom, individualized project. Unless you have financial clients that will pay you a lot (i.e. you earn at least $15,000 annually per client), you will never have a good business with this approach.

Your business must be set up as a process. Every new financial client gets the same services and products. Sure, they may get them in different proportions, but every client who gets the "moderate portfolio" had better own the same stocks or funds or you are setting yourself up by spending excessive time on each account, providing personalized service when it’s not necessary and you’re not being paid enough to do so. You do it because you are desperate to gain and retain financial clients as you have an inadequate marketing system.

A really good business is a cookie cutter approach to dealing with clients. That does not mean clients get some impersonal program. It means they get a great program because you have honed the creation of your services and products that you offer to the exact needs of the finely focused homogeneous market you service. If you cannot treat each client in a similar fashion, then you have not adequately focused your target market and you will forever be spending 12-hour days at the office.

Does Intel design a new chip for each customer? No, they do not do projects. Their business is a process, producing millions of the same chips per month.

Should every business be designed as a process? No. Estate planning does not often lend itself to a process and each client may need an individualized program. Just make sure that when you work on a project basis like this, you get paid a lot.

Let’s take examples to make this clear. Do you think attorneys charge a lot? They must because it's difficult to make a process out of the work they do. Each client is a separate consulting project with new research and investigation required. But notice that family doctors set themselves up as a process. The doctor offers a very narrow set of products and services.

He can advise on these issues:
Joint pain
Soft tissue maladies
Head ache
Cold and flu

He uses the same prescription drug whenever he sees the same situation (i.e. he recommends the Merck drug for joint pain every time, rather than what many financial planners do—recommend the ABC growth fund one month and the XYZ growth fund next month). If a doctor is confronted with a need outside of the narrow products and services he offers, he sends you to the specialist.

Each patient gets 20 minutes:

· 4 minutes asking questions
· 8 minutes observation of patient
· 8 minutes to administer a treatment, prescribe a drug or refer to a specialist

NEXT PATIENT, NURSE!

Family physicians are the ultimate example of professional efficiency.

Once you define your target market, let’s take retirees for example, you select the products that are appropriate for people who are retired: fixed income investments, conservative equities, health insurance products. And while each client is an individual with individual circumstances, they all have a need for some degree of these products.

Of course, Mr. Smith may get 100% fixed income products with the funds he brings you because he has a large net worth and no need to tolerate equity volatility nor does he need equity growth. He has adequate health insurance and no need for long term care insurance. Mrs. Jones, with a more modest portfolio, gets a portfolio of 60% fixed income, 40% equities and she also needs more affordable health insurance and a long term care policy. While each financial client is different, they all get the same building blocks in different proportions.

Through this standardization of clients and the products and services you provide, you get very efficient. Assistants can handle much of the grunt work and you get to leave the office at 3 pm for golf.

Take a lesson from Henry Ford. For efficiency and profit, standardize what you offer.

Post provided by Javelin Marketing

Many financial advisers feel it’s important to educate their prospect. There’s an idea that if you educate your prospects, they can make good financial decisions. I disagree.

And advisor I know well has 18 years of education, 20 years of experience and various credentials. His prospects will never know a fraction of what he knows, no matter how many hours he spends educating them. It’s his job to know what choices the prospect should make and tell them so. The professional is responsible for the client taking the correct action (and is held to that standard in the securities industry). If his client wants to buy stock options and that’s not suitable for them, the financial adviser will be held liable if he allows the client to make that investment. Therefore, it becomes the adviser's judgment to know what they should do.

Of course, you still need your prospect’s agreement for your recommendations. So rather than educate them by telling them (the usual mode of education in this country), please educate them by asking questions. They already know the answers and you can have them educate themselves.

Here’s what educating (and selling) by asking questions sounds like:

Professional: What are your plans when your health changes?
Prospect: What do you mean?
Professional: You know that as people age their health declines. So as you age, what are your plans when your health changes?
Prospect: I never really thought about that seriously. I have good health insurance, and always assumed that was adequate preparation.
Professional: Health insurance, of course, provides for you when you have an illness that they can cure in a few days in the hospital, but what happens if your health changes such that you can’t go shopping, you can’t take care of the house, and you can’t walk up stairs?
Prospect: Well I certainly don’t want my children to have to take care of me.
Professional: So what solutions do you think are available to you?
Prospect: I’m not really sure. I know people go to nursing homes, but I could barely afford that.
Professional: What other solutions do you think are available to you?
Prospect: There’s insurance, isn’t there?
Professional: Do you think you should consider that as one of the alternatives?
Prospect: Yes, but I don’t know anything about it. I’m sure it’s expensive and I couldn’t afford it.
Professional: How much do you think it costs?
Prospect: Jeez, I have no idea, what, maybe $500 a month?
Professional: What if you could get insurance to allow you to stay in your home, have help come and assist you, and could get that for $250 a month—would that seem to be a reasonable solution?
Prospect: Is that really available?
Professional: If it were, would you want to know about it?
Prospect: Sure. I don’t want my children to have to take care of me and if I can’t take care of myself, what other choice do I have?
Professional: How would you pay for that?
Prospect: I have some investments from which I don’t take all the income.
Professional: For example?
Prospect: I have an annuity that I reinvest and I also have a mutual fund that I reinvest.
Professional: How much a month are you reinvesting?
Prospect: It’s over $1,000 a month.
Professional: So if the insurance turned out to be a good solution, you know you can pay for it?
Prospect:—Yes, if it’s about $250 a month.

Just by asking questions, this “sale” and the prospect’s education is mostly complete. Notice how much more efficient this is than “telling,” handling lots of questions and potential objections. When prospects see the solutions for themselves, they cannot object to their own insights.

The payoffs to educating selling by asking questions are enormous. They increase your sales success in five ways:

1. Questions direct your prospect’s thoughts. When you speak, your prospect’s mind wanders, he thinks up objections, he questions the validity of your facts, he questions your credibility and he may even think about what to have for dinner. But when you ask a question, you get laser-focused attention. We have been continuously trained to answer questions as accurately and completely as possible, starting from the first grade. Correctly answering questions is even the basis for most television game shows. So when you ask questions, you take advantage of your prospect’s cultural training to provide their full attention and best answer.

2. Questions allow you to find out the necessary facts (ethically important for any advisor and legally important for securities licensees to comply with the “know your client” rule).

3. Emotional questions allow you to determine the “emotional facts” (your prospect’s likes/dislikes). If you don’t know how your prospect feels, you cannot make a recommendation that feels “right.”

4. Questions increase your stature and credibility in the prospect’s eyes. The fastest indicator of a person’s intelligence and caring are the questions they ask.

5. Questions allow you to maintain control of the conversation because the person asking the question controls the conversation, while the person answering has lost control.

Post provided by Javelin Marketing