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

Incredible as it may sound, most financial advisors or other sales professionals
do not understand the business they are in. Here’s my evidence.

Have you noticed that many financial advisors enroll in the CFP(r) program, the CFA program or other programs to improve their knowledge of the finance arena? When they have time, they read books like “One Up on Wall Street” or “Stocks for the Long Run” or other books about gaining some mastery in the market. While all of this education is useful (and your competence is essential), devoting large amounts of effort and time to improving your financial knowledge won’t significantly increase your business. Most financial advisors know most of what they need in order to serve most clients well (if they don't they shouldn't be in the business). I'm not saying that technical competence is not important but technical competence should be a given and is a misplaced focus of business growth.

The critical aspect of our business is managing clients, not managing portfolios. The person who told you that financial advising was about managing investments played a cruel joke on you. That college advisor who urged you to major in finance to best prepare for financial advising was off the mark. You would have been far better off with a degree in psychology or communications. Because the determinant of your success is your facility in managing clients and their expectations (psychology) and powerfully attracting new clients through seminars, mail, advertising, etc. (communication) and enrolling them in their vision (sales). In a moment I will define what I mean by psychology and communication.

Now that I’ve brightened your day with the notion you’re efforts have been misplaced, how can you change focus? Rather than spending time with any more finance books or pursuing finance credentials, divert that effort to the arena of psychology and communication. For our purposes, let’s define psychology as the investigation of what makes people buy. You won’t find this topic covered in college. You will find this topic covered in a number of sales classes and books on sales. Yet the number of financial advisors and other professionals who sell and have been through formal sales training is incredibly small (formal sales training is not the training received at securities firms). So, either enroll in the Dale Carnegie Sales training, Sandler Institute or other formal sales class in your town or get a copy of “Spin Selling” and the “Spin Selling Fieldbook.” Either of these endeavors will provide a very significant increase in your ability and success in opening new accounts.

As to communication, they also do not teach in college the type of communication you want to master. You need to write letters that make people call, to write ads that make the phone ring and to write mail pieces that fill your mail box with response cards. Thus, you need a quick education in writing copy. You can get it from any of these books (the more you study, the better):

The Ultimate Sales Letter by Dan Kennedy
Cash Copy by Jeffery Lant
Words That Bring You Riches by Ted Nicholas

The content of these books will violate everything you know about using English but the application will get you results. You will learn to communicate in a manner so that more prospects come to you.

If you’re skeptical about my recommendations, let me share the following with you.

I know a very well educated and well trained financial advisor (advanced business degrees) who knows a LOT about the financial markets. Yet the most significant element in his becoming a million-dollar producer was the sales training he took at the beginning of my career. He realized he knew nothing about selling and that having lots of knowledge about financial markets would not pay his bills. The sales training taught him to have effective sales conversations, which he learned were very different than a typical conversation.

Here’s another example. Do you know someone in the business and you feel that you know three times what they know about managing portfolios? Yet their gross commissions and fees are three times what you earn? That’s likely because he is a better communicator than you. That person has mastered the sales conversation and mastered the communication of prospecting.

Put those finance books on the back shelf and devote your professional improvement to those areas that will quickly impact your business growth.

Some financial advisors and insurance agents use prospecting methods that produce the wrong prospects. I define a wrong prospect as someone who is not really interested, not qualified or hard to deal with. In essence, someone who wastes your precious time and if they do become a client, they consume so much of your time that you wish they weren’t a client.

You generate these types of annuity prospects by using unfocused mass marketing models. For example, if you cold call a list of people over age 65 attempting to obtain annuity leads, you are generating the wrong prospects. You have no idea if these people are interested or qualified. So you waste a lot of time cold calling and then meeting people who are not qualified or interested. Wouldn’t it be smarter if you only met with the interested qualified annuity buyers?

If you have been cold calling, please face the truth--cold calling is a substitution of your labor for capital. In other words, you got into the financial services business undercapitalized (you came in with no money to invest) so instead, you trade your time for capital. This is purely insane. You cannot grow a business without capital. Did Microsoft? Did Intel? You must not devalue your time or you will settle into that rut and struggle your entire career, always cold calling. If you work for a large firm, they are happy to have you do this as they pay you commissions. Having you waste your time is okay with them.

The central focus in efficient prospecting is this: you offer something of value to masses so that the few people who are interested identify themselves. Then, you only talk to the interested and qualified prospects. There's not problem if you want to use the phone for prospecting, but get a $10/hour telemarketer to do it, not you! Then, when the telemarketer makes 100 calls and finally finds one interested person, you get on the phone and close the appointment or make the sale. If you want to be closing sales all day, get 5 telemarketers.

Here's another alternative. Rather than cold call, send a well written mailer (more on writing great direct mail in another article). Even if you get a 1% response to 1,000 mailed, that’s 10 interested annuity leads who took action. When you call them, you qualify them and eliminate half. You get five appointments. These are the same five appointments you would have gotten with the cold calling, but look how much easier this was. Instead of talking with 1,000 people, you talked to 10 people. Instead of meeting with 10 people, you met with five. You saved maybe 25 hours of your time and spent $500 on postage and mailing. (In other words, had you cold called, you valued your time at $20 an hour for the mailing cost you saved–is that all you’re worth?).

Or what if you ran an advertisement in the local senior magazine “Annuity Owner Mistakes” You then have a few annuity leads to call who are interested and motivated. You have saved your time and limited the annuity prospects you deal with to those who take initiative. These are the types of people you want as clients. You do not want people who must always be convinced, which is the type of prospect that is generated with unfocused, mass marketing.

Or what about inserting a flyer in the daily newspaper for your next annuity seminar “How to Reduce Retirement Income Taxes.” In our tests, 20,000 inserted flyers (for about $1,000) generates about 50 annuity prospects to an annuity seminar. You give a presentation to 50 motivated people at one time and then have individual appointments. Annuity seminars make super efficient and super effective use of your time (you are speaking to motivated annuity prospects).

If you’re tired of prospecting, feel burned out and feel that good prospects are scarce, shift your prospecting methods to have qualified prospects contact you and renew your career.

How would you like to control your prospect’s thoughts?

You can control their thoughts and have your prospects to see solutions for themselves with appropriate questions. And you’ll make more sales. Before you learn how to do that, would you take two seconds and think about how your mother looked the last time you saw her?

With this simple question, I can make you form a mental picture. I can control your thoughts and that illustrates the power of questions as a mind control tool. You can consistently direct your prospect’s mental activity in the same way and have him reach the right conclusions on his own. This technique works only when the solution is in the prospect’s best interest so it won’t work as a manipulative process.

In a minute, I’ll show you an example. But first, consider the benefits:

• No more convincing or persuading
• No more objections (people can’t object to their own solutions)
• No more resistance to your recommendations

Let’s take an example of an insurance agent selling long term care insurance. Assume the insurance agent has already completed basic fact finding questions and has decided that long term care insurance would be beneficial and important for the prospect. Here’s how to get your prospect to see that solution himself:

Agent: What are your plans when your health changes?

Prospect: What do you mean?

Agent: 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 I assume that’s adequate preparation.

Agent: 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

Agent: 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

Agent: What other solutions do you think are available to you?

Prospect: There’s insurance, isn’t there?

Agent: Do you think you should consider that is one of the alternatives?

Prospect: Yes, but I don’t know anything about and I’m sure it’s expensive and I couldn’t afford it.

Agent: How much do you think it costs?

Prospect: Jeez, I have no idea, what, maybe $500 a month?

Agent: What if you could get insurance to allow you to stay in your home and have help come and assist you and could get that for $250 a month--would that seem to be reasonable solution?

Prospect: Is that really available?

Agent: If it were, would you want to know about it?

Prospect: Sure. I don’t want my children to take care of me and if I can’t take care of myself, what other choice do I have?

Agent: How would you pay for that?

Prospect: I have some investments from which I don’t take all the income.

Agent: For example?

Prospect: I have an annuity and I reinvest and I also have a mutual fund that I reinvest.

Agent: How much a month are you reinvesting?

Prospect: It’s over $1000 a month.

Agent: 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

In the above conversation, the insurance agent did nothing but ask questions and the sale is about complete. Most salespeople talk too much and that makes selling hard. In fact, the more you tell, the less you sell. Selling is easy when you succumb to the new definition of selling: “The asking of appropriate questions so that your prospect sees the solutions for themselves.”
The payoffs to selling by asking questions are enormous. Questions increase your sales in five ways:

1. They 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 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 (the person asking the question controls the conversation, while the person answering has lost control).

You were taught to sell by some product-crazed insurance company and to talk about the features and benefits of the product but American’s hate to be talked at. In fact, we have an aversion to being told, or worse, being “told what to do.” Prospects become naturally resistant when being told. We self-reliant Americans find it preferable to discover things in our own. So why not allow your prospects to do that and help more people have what they want? And in the process, make more sales and get rich. That would be great, wouldn’t it?

Get Lazy and Get Rich? Sounds like a paradox?

Most of the financial advisors I observe work too hard, work too many hours and sweat too much over getting new clients. It’s time you get lazy and get rich. You do this by establishing your marketing so that people contact you and your job is to react. You also do this by delegating and have others do the work.

Most of us resist some simple truths about ourselves that could make us a lot more money:

1. We are lazy. Wouldn’t you rather be laying on a beach right now? There’s big money in admitting laziness as I explain in a minute
2. We are reactive rather than proactive. Would you rather answer the phone and open an account or cold call to open an account? We are great at reacting. We are very good at answering the phone, responding to inquiries and taking orders. We are lousy at proacting as evidenced by the dozens of books teaching brokers how to overcome the fear and drudgery of cold calling. There are many great order takers and few great (proactive) salespeople.
3. We are good at doing the same things over and over. Notice that in companies, 5% of the people have jobs in management—the people who need to create their own day and determine on their own where to focus for results. The other 95% of the employees are people who are told what to do and then do it over and over, day after day—the bank teller, the customer service person, the auto laborer. Most of the population can do these repetitive routine tasks well but few can invent their own daily work activities without direction.

Most likely, you have set up your business to require all of the actions that you do not do well or don’t want to do: work hard, proact, and do different things everyday. In other words, you require yourself to fight the above list of inclinations and that makes each day hard. You have established a significant headwind and each day is a struggle. But it can be different. Let's see how to plan each day to make it easy.

Here’s how to make a lot of money by capitalizing on being lazy, being reactive and doing the same things over and over.

You must set up all of your marketing to react. You get people to call you by:

1. Send a lot of the right mail to the right people. Yes, direct mail works but not for most financial advisors. It’s because their firm and the financial advisors have taken zero time to study what makes direct mail work. Advertising firms are of no help here. Direct mail is a science. Invest 40 hours of study and you can get a 2% response whenever you mail. Send 1000 pieces a week and have 20 targeted, qualified people contacting you. I know financial advisors that use direct mail to get responses and fill up seminar rooms year after year or fill their appointment calendars.
2. Advertising works. You can earn $10,000 toi $20,000 monthly from small ads costing you less than $1000 per month. The ads have people contact you and you just respond (thet trick is writing compelling ads and that means you need to study copy writing).
3. Have your clients send you referrals. You do that by telling the new client that you will work hard for them and fulfill what they demand of you, but in return, they must refer people to you. You then, after proving yourself, have them introduce you to referrals by either them calling the referral, introducing you in person or sending a letter. If you leave out the above two steps, asking for referrals won’t work
4. Getting and giving referrals to your peers. Financial advisors are the most nearsighted group of professionals when it comes to getting business from their peers. Notice that doctors refer to each other like crazy. And the smart ones are money machines from doing so. Yet brokers will meet a client interested in establishing a 401k for their business and then scurry around to learn what they can so they can put together a half-baked proposal. Rather, they should find the person in their firm who is the 401k master and split the business! Let others do the work for you. Refer like crazy and spend your time on the few items at which you are expert. If you refer, you will be referred to (if you are known for an area of expertise).

Time to get lazy, react and do business.

Professionals in financial services often make the sales part harder than it need be. I have seen the following occurrence many times. You may recognize it:

A financial advisor tries a new system of generating business. Everything works well and they capture a few easy and profitable sales. The financial advisor thinks that he has found the holy grail so he does more of the same, but soon the results stop coming. So he abandons that holy grail and moves on in search of the next holy grail. Such financial advisors move from product to product, system to system, broker dealer to broker dealer, etc. They are always looking for the one activity that will turn them into a top producer.

This model of searching for the next greatest thing is the road to permanently low production or inconsistent flash-in-the–pan results.

Take a lesson from marriage relationships. If you want a marriage that works, you make a commitment and you stick with it. You work out the kinks, get professional counseling if you need it, do some soul searching but you commit to making the marriage work. You do not change spouses every year or two like you do your business activity. If you treated your business with the same commitment, you’d be rich and retired by now.

You say you’ll get committed as soon as you find a system that’s worth getting committed to? You’ve got it backwards. The system that works is the one you commit to.

Let’s say you start doing financial seminars. The attendance is great at first and you open a lot of new accounts and gather new financial clients. But then the attendance starts falling, appointments drop off and it’s costing you the same amount to hold the financial seminars for reduced results. Right at this point when you are ready to chuck the system, stop!

There is nothing wrong with the system! Rather, there are variables affecting your results that you do not yet understand or identify. Your job at this point is not to chuck the system and start your searching, but to dig in your heals and commit to finding the key variables which cause the best results.

I think there’s “simplistic thinking disease” we catch from being in the financial services business. The “gurus” reduce everything to a few simplistic variables such as rising interest rates, a falling dollar or the employment report. So we begin thinking that there are only a few variables that matter with any financial services marketing system that we select for generating business. We get the “simplistic thinking disease” and stop trying to figure out what causes our results.We adopt this simplistic thinking when in reality, there are thousands of variables that affect the market. Similarly, there can be thousands of variables that can affect any business approach you take. The key is to find the “key success factors” and control these to maximize your outcomes.

With seminars, you can experiment with several factors:

• Change the day
• Change the time of day
• Change the location
• Invite people from different zip codes or with different demographic criteria
• Change the seminar title
• Add a picture to your invitation
• Remove the return address from the envelope

There are dozens of factors you could change. Use your intuition and your gut to select the key factors you should change first and make only one change. You can only carry on a scientific experiment and measure the results of changing a factor if you change one factor at a time. This is the type of tenacious research that had Edison invent the light bulb or is responsible for almost any drug you can buy. Trial and error based on educated guesses. Those who are most committed get the extraordinary results.

The process is never done. I know top producers that have done seminars for 20 years, and these top producers are still experimenting. These seminars have been very profitable during and those most committed know they can always achieve better results.

I once had a teacher who told me, “Don’t expect to get heat from the fireplace until you put the wood in.” Great results follow from committed action, not from a continual search for the next idea you hope works better. Identify the last approach you employed that initially gave good results and then you stopped using the system. Return to it, commit to it and master it.

I see financial advisors who lose accounts and these losses are avoidable in most cases.
Even if you lose 5 accounts a year which could be avoided, that’s an additional 50 accounts you would have at the end of 10 years plus their referrals and their kids accounts, etc. In other words, knowing how to stop exiting clients can be very profitable. Client retention is easy with the proper steps in place--it can even be automated.

Client Retention Starts When You Meet The Prospect

Let’s face it. The main reason clients leave is because their expectations are not met. They think you do not call enough, or they don’t trust you, or they do not understand when you answer a technical question, etc. Studies show that rarely do clients leave because of poor investment return. Therefore, the major reasons they leave are due to something amiss in the communication or your follow through.

If you are not sure what each client wants, ASK THEM. In fact, every time you open an account, you must ask a client, “What are your expectations of me? What would you consider a very good result of our relationship? There’s no need to guess at what your clients want--just ask.
You may want to ask subsidiary questions:How often would you like me to call? To meet?Do you like phone, fax, email or mail contact best?When you call me, how quickly do you think I should be able to return your call? What do expect from your portfolio? Answers to the above question will also help you decide if you should take this client. If their expectations are unreasonable, say goodbye to them now. Client retention is somewhat a matter of selecting reasonable clients in the beginning.

Last, do not assume that because the client gets a portfolio statement every month, they know what’s going on with their account. Call after the first statement for a statement review meeting. Many clients cannot understand the statements and they get confused (and may be embarrassed to say anything because they feel they may be stupid). So 6 months later, the client tells his friend, “I closed my account because the financial advisor never let me know how I was doing.” This is especially important--statement reviews, during a bear market when the news will unsettle your clients.

Client Retention is Solidified by Your Actions

1. Do not use jargon. When you answer a question, use plain English. Ask yourself if a third –grader would understand your answer. Jargon = misunderstanding = lack of trust = lost accounts.

2. Respond fast. (a) If you cannot return the call within an hour, have your assistant return the call and tell the prospect that you are tied up until (time) and that you will call back by (time). Then do not be late with this scheduled call.(b) Block out times during the day when you’ll return calls. When a call comes in, your assistant can set a phone appointment at a specific time. (My assistant also sets an alarm for me on my computer.) That way, you can manage the prospect’s expectation. It’s okay if you don’t call back in an hour, as long as your client doesn’t expect you to do so and knows you will serve them at a specific time later that day. Client retention is partially illustrating to your clients how important they are to you.

3. Never depend on your firm to follow through. It’s your responsibility to make sure client requests get handled. Remember, the people that work in the processing area of your firm are not highly paid. When a processor takes a week vacation, their work probably just sits on their desk getting old. When they return, they lose a week just getting re-organized. Your client has now been waiting 2 weeks with no response. Do you think they may be irritated?

Therefore, you must have contact management software with an alarm function. Set yourself an alarm to follow up in 3 days with a specific person in your firm. Similarly, if you are waiting for an outside transfer firm to handle an issue or another company to transfer funds, it’s your responsibility to follow up (of course, an assistant can do the follow-up, but it’s your job to have a well-trained reliable assistant who understands that their income is paid by your clients).

Place Complaints At The Top Of Your Priority List

Not only will a tardy response to a complaint result in a lost client, you may be tempting a legal confrontation. You must handle complaints immediately. Drop everything. In my observation, most arbitrations are the result of the complaints not be handled quickly and properly in the beginning by the producer.

When you call the client in response to their complaint, before they have a chance to say anything, you say “Mr. Smith, I understand you are not happy about (item). I want to assure you, I will do everything possible and as quickly as possible to fix this. Tell me what I can do.”
It amazes me that some brokers will argue with the client, tell the client they are wrong or worse, ignore the complaint thinking it will go away. The client may go away only to be replaced by their lawyer.

If you already have good client retention practices, learn how to automate client retention here.