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The Disappearing Prospect

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Apr 16, 2008 2:52 am

Anabuhabkuss,   Let's use your 401(k) guy as a classic example.   Let's assume that we both thought that UITs inside of an IRA were the best move for this client. 

You spent your time educating him on how UITs worked and how they were a better option for him.  When you were done, he ultimately didn't like UITs or didn't understand them, so he didn't move the money.

I would have spent the time explaining the advantages of an IRA over a 401(k).   Getting someone to see this advantage is very easy, thus the money gets transferred.  This money will get transferred even if he wants to keep his investments the same.  However, once the money gets transferred, I am now selling to a client and not a prospect.  It is infinitely easier to sell to a client than a prospect.   When the money is transferred, the chances are very slim that he won't buy the UIT if that is what is recommended.  If he doesn't want the UIT, so what.  I still have the client.  We'll work to find investments that he wants.

As for your case where you took the money from the brother-in-law, that's the exception.  However, the reality is that you got the business because he didn't want to continue to work with his brother-in-law.   I'm making this assumption because the easy thing for him to do would have been to have his brother-in-law implement the changes that you were recommending.   The value that we bring to the table is not in specific investment picking.  Do we really have any idea if XYZ mutual fund is going to beat ABC UIT which is going to beat DEF VA?  I can't offer anything that someone else can't offer, so there has to be something above and beyond the specific investments that will cause the clients to do business with us.   You are correct that someone will always challenge my recommendations and yours and everybody else's.  They'll always be able to use hindsite to show why something else would have been better.  Our only protection against this is the relationship.   The client isn't coming to me because of my specific recommendation and the client isn't going to leave me because of someone else's specific recommendation.   and seriously anonymous, wtf is up with you not wanting your ideas stolen but stealing ideas yourself?   Can you take the time to explain this because I don't know what you mean.  I'm happy to steal the ideas of others and I'm on this board so that others can steal my ideas.   You said customer service wins? Customer service would have been you coming up with the ideas and research yourself to take care of your clients. If you did not take the time to take care of your clients in the first place then why are you entitled to keep them by stealing other's recommendations?   I think you may be completely misunderstanding me.  I don't steal others recommendations.  It's just premature to give my specific recommendations to someone who isn't a client.   I tell my clients that this is a lifelong process.  I tell them that we'll work together to design the best possible portfolio for them.   I actually like when they don't take my intial recommendations.   It makes them part of the decision making process.  Also, as I mentioned before, it is too difficult to make investment decisions before knowing exactly what is happening on the insurance side of the coin.        
Apr 16, 2008 10:39 am

Ice, that is probably what he's talking about.   I look at that in two ways.  1) I don't have all of the good ideas.  If someone has a better idea, I'm always willing to go with it.  2) There's many ways to skin a cat.  If there is a reason why the idea is inferior, I will immediately tell the client why it is a bad idea. 

The point is that if someone is with me primarily because of my investment ideas, someone with "better" ideas (probably using hindsite) will be able to steal my clients.  If someone is with me because we've built a great relationship and we're on a journey together to help them achieve their goals, a good investment idea will not be sufficient enough for someone to capture the assets. 
Apr 16, 2008 1:07 pm

Apr 16, 2008 1:59 pm


  Do not fool yourself for one second in believing you have the expertise and hardwork behind you as that of a doctor or a lawyer. You ARE not a doctor or a lawyer. A financial advisor can be a high school drop out and still be very very successful in this business. I have an uncle who is a doctor. The guy spent 4 years getting into med school and another 6 eyars to complete that. Are you ****ing telling me now your clients are obligated to treat you with the same respect as a doctor? Seriously.   Reality check: you are a salesman. And in reality you do not walk into a jewelry store,a  department store or any place where you pay the cashier money up front and then look around.   For the record, I did not attack anonymous' statement about ACATing in money first. I attacked him for stealing ideas. It was nice of you Morpius to take one proposal I missed out on and completely disregard my story of the client who gave me his account from his brother in law (a $640,000 account). I do not have any problems, for the most part (there's always room for improvement), hitting production.   Anon and Ice you are right in what I was referring to. My belief regarding your statement anon: The point is that if someone is with me primarily because of my investment ideas, someone with "better" ideas (probably using hindsite) will be able to steal my clients. that they should steal your client. Again if you did not take the time to come up with the better idea in the first place to betetr thsier situation, why should they honor you instead of wanting more money in their pocket. Are you telling me that if you were in the client's position and you knew you were getting the shaft you would not want to leave?   Morphius and others think they're "doctors". That's really cute. There's a huge difference between being a professional and fooling yorself into thinking your practice of selling mutuals funds is as complex as a doctor's diagnosis
Apr 16, 2008 2:04 pm

Anon, I will give your post above some thought. Thanks for the clarification. Good luck with production today all.

Apr 16, 2008 3:43 pm


  Reality check: you are a salesman. And in reality you do not walk into a jewelry store,a  department store or any place where you pay the cashier money up front and then look around.  [/quote]   I'd say that's the difference between a service sale vs product sale.  Service sales are based off of upfront trust (doctor/lawyer) rather than a product sale, where the sale is based on trust on the specific product after it's seen.  What it boils down to is if an FA is selling products or selling his service
Apr 16, 2008 3:56 pm

[quote=stokwiz]Couple of points-

  I use a tactic from the Sandler institute of giving an upfront disclosure at the first meeting. "Mr prospect, through the course of our discussion you may find that what you need and what I do are two different things. However turnabout is fair play and I may find  that I can't help you. In any event, I will tell you, and I need you to tell me if that's the case. I can accept a yes or no, but not a maybe. Does that sound fair?"   On your current case if you can contact them again and they say they need more time, I would say "You know Mr. Prospect, we both know it takes information, not time, to make a decision. What other information were you looking for? Nows the time to ask while you have an expert on the phone."     If they say they aren't interested I would say" can you give me a reason or two why so I don't waste time calling with inappropriate ideas in the future?" This will tell you what he wants to buy.   Or Hell, maybe it's just you.   Stok[/quote]   Stok, best post on this thread.
Apr 16, 2008 5:21 pm

Wow, apparently I touched a raw nerve based on your reaction, anabuhabkuss. 

As I’m sure you realize, my comments about attorneys, doctors and architects not giving away their expertise for free were analogies, as was your analogy about buying diamonds.   I also know you are smart enough to see the obvious differences between  buying services and products in these different analogies.

I was not trying to insult you, anabuhabkuss.  I was simply trying to share a lesson from my own experience relevant to the disappointment you described.  I decided to change my process precisely BECAUSE I was sick of working hard and still losing prospects who couldn’t make up their mind about my specific recommendations - not because I thought I was a doctor.   And since that change I have never had that problem again. Not once.

If you don’t choose to use the process I described and use that’s fine with me.  Really.  I don’t mind a bit.  But I’m proof you don’t have to be a doctor to avoid this type of situation.  You just have to change your mindset and your process.

Apr 16, 2008 9:37 pm
Anon and Ice you are right in what I was referring to. My belief regarding your statement anon: The point is that if someone is with me primarily because of my investment ideas, someone with "better" ideas (probably using hindsite) will be able to steal my clients. that they should steal your client. Again if you did not take the time to come up with the better idea in the first place to betetr thsier situation, why should they honor you instead of wanting more money in their pocket. Are you telling me that if you were in the client's position and you knew you were getting the shaft you would not want to leave?   Anabuhabkuss, you are making some big jumps with this.  First of all, having a good idea won't allow them to steal my client.   My claws are in too deep.  We are working together to accomplish their financial goals.  Their life insurance is with me.  Their disability insurance is with me.  They rolled over their 401(k) to me.  Their 529 plan is with me.  I'm advising them on paying their debt, etc. etc.   They aren't jumping ship for an investment idea.    I want to do what is best for my client.  If someone else has a better idea, I'd be a terrible advisor if I didn't admit that it was a better idea and use it.   My clients want to work with me.  If someone has a better idea, the client doesn't want to leave to implement the better idea if they can do it with me.   Besides, most "better ideas" are only "better ideas" in hindsite.   If this better idea isn't better in the future, why do it?   With most ideas, we don't know if they are going to be better or worse.  A typical example might be a client who is invested 70% in the U.S. and 30% foreign.  He talks to someone else who says he should be 70% foreign and 30% U.S.  Is that better for this client?  Beats me.  Ask me in the future.  If the client wants to go more foreign, it's fine with me, and we'll make the change.  The point is that the other advisor telling my client to make this change will never get him the client.    If I was a client and felt that I was getting the shaft, I would want to leave immediately.  However, I would not equate "a better idea" with "getting the shaft".    When we lose business, it is almost always over relationship issues and not investment issues.  The reality is that none of us have much of a clue as to what the market will be doing, because if we did, we'd be on our yachts instead of calling prospects.   Our value is always going to be in helping clients achieve their financial goals and improving investor performance.     
Apr 18, 2008 1:08 am

Morphius, I was not insulted in the least by your post just a bit surprised by your thought process which I’m sure is making you a living.

  Anon, I understand fully what you are saying and I myself am as deep as you put yourself in my client's lives. However, my view differ in that these people have come to me with hundred and thousands of dollars in checks not because I'm a nice guy, or I babble about my granny, or because I can tell them the difference between an IRA or 401k; reliastically any of our competitors can and DO! My point is they bring me their checks because of what I can do for their money that makes more sense to them than someone else's ideas for the same categories (insurance, 529s, etc).   I know this because I have taken accounts from other brokers who do what I do.   Dude, seriously, the guy who brought me his accounts from his brother in law recently did  so not for personal reasons. I told this client to put himself in his brother in law's situation and ask why he never continued to research better ways to improve thier investment lives. In this fast year, I have stolen 3 accounts from brokers who have been working with my clients for over 15 years! BTW, I'm 29 years old just for the record.   I would dread the day where this conversation occurs (and I've heard it to happen):   Client: "Dear broker, I recently had my portfolio looked over by another broker who explained to me the unnecessary risk and tax ramifications that eat out of my bottom line. I understand you can not control what the market does, but I would expect you could control the risk and tax factors in said protfolio. My question to you, Mr. Broker whom I have worked with for 20 years, is if I take my money that I have worked 60 hours for 30 years to earn so seriously, why did it not occur to you to take it as seriously and come to me with ideas like this? Is your bottom line more important than mine!?"   What are you going to tell the client anon? "Umm, you should trust me because you gave me money to sell you insurance 529 and a rollover IRA?"   In my opinion, you are looking at it from your standpoint. The fact that the client gave you their hard earned money is more important than the fact that they trusted you because you spoke about insurance, 529'ers and what have you.   Again, what would you tell a client that comes to you with that question? Here's my secret, I lost the UIT case because it was new money. When I deal with existing investors, I tell them to go to their current brokers and ask that question I typed above.   Result: $2.1MM in new money for me.
Apr 18, 2008 1:11 am

Of course, I did all this minus the booze in my system and grammar/spelling mistakes.

Apr 18, 2008 3:31 am

Ice, we’re not arguing justifying fees etc. I’m not sure if I grasp your point bringing fees into this.

  About how to respond when a broker has more game or knowledge than me; this is a vague question and I do not know how to interpret it but if he does have more knowledge than me and it was I who came up with the better proposition for the client long term what do you think the client will say?: "Mr Broker you have a CFP but couldn't come up with this?!". There's also the question about the brokerage firm the other broker works in. If he does not have a massive money management team or estate planning guru in his/her back office that they can use as a resource they're kinda at a disadvantag do you not agree?   To answer that question I go in giving it my best and not the lame duck "Here are 10 fantastic American Funds for you!" BS. If my proposition gets beat, it gets beat! I lose. But like I said I do not think for one second a client's is going to stay with a broker's piker model just because they have CFP plastered on their business card. No way.   With that said, are u sold on your lawyer because of the service he brought to you on that case from your previous career or did the relationship with him exist first? What made you have him on your team in the first place?   Sounds like he sold you on the good job he did: Product/service. Relationship (you hiring him thereafter) came second. No? Relationship is F-ed when client knows he could be paying the same high fees for someone who is going to do a BETTER job.
Apr 18, 2008 11:13 am

Anahubakuss, I was going to address your points, but let's try this another way.  Let's try to put this in action.  Maybe we can both learn.  You can show me how you would go about stealing this client and I'll show you how I can stop you from stealing the client.

ex.  I've been working with a client for 4 years.  We have a good relationship.  He is married with 2 kids.  Husband and wife are in their late 30's and the kids are young.  Both he and his wife have life insurance (WL/term combos).  He has a DI policy.  They have adequate savings.  They have 6 different 529 plans.  They have WL policies on their 2 kids.  They have about $400,000 in non-qualified money all of it in a BS portfolio of equity funds from American Funds.    There is also an IRA that we rolled over from a previous employer.  It is $50K and it is also in American Funds equity funds.  They are not Roth eligible.  They are both maxing out their work retirement plans.  They are just hitting the point that they can put another $1000/month away. 

We'll assume that you are great on the phone and you have a good relationship and work with some of my client's partners at work.  Because his colleagues speak highly of you and since you will already be in the building, my client agrees to meet with you.  He tells you that he is quite happy with me, but he understands your view that nobody has a lock on all of the great ideas, so he's willing to have a meeting with you.   Please tell me what you can possibly say to get him to consider moving any of his money to you.  I will then tell you how I will counter to make sure that he doesn't move anything.  Hopefully, we (and others) can  learn from this.
Apr 21, 2008 7:36 pm

Anon, Ice,

  I will get back to you as soon as I settle down from the travelling I am doing. I definitely think I can learn a thing or two here as well and will definitely respond back soon.
Apr 21, 2008 9:07 pm

[quote=Andre017]Thanks all. Sounds like I need to think about my process with prospects and focus on listening a little more. Although I do understand about creating trying to create an environment where they are buying ME and not whatever investment plan(s) I may propose, I still would like to get a better understanding of how any of you get out of the “show me your plan and I’ll transfer the money” and into the “transfer the money and I’ll show you the plan”. I’m going to make a guess that the latter is a little easier to accomplish when you’re out of the “starving artist” phase of your business and more established - of course, that could just be a head game too…[/quote]

Reading this thread I’ve realized that, even with more than a decade of experience in the business I still give away too much information before I get the signature on the ACATS papers.

I think more than anything, Andre, you have it right: It is a matter of attitude.  The analogies regarding an attorney or an architect are very valid.

  You and I are probably very similar.  At some level I want the client to agree that what I am proposing is a great idea for them, so I give them way too much detail.  I basically give them the plans to go to Vanguard or Fido and build it themselves.  Or I give them so much detail that they get confused and just decide it's more simple to leave things alone.  Whichever, it means I don't get the sale or the client.    Anon will be more successful because he's not trying to sell the intangible - investment returns.  He's selling himself, his process, his handshake so to speak.  They can see that and come to terms with it.  The investments are almost an afterthought.  I have so much to learn. 
May 2, 2008 2:02 am


  Having giving this a lot of thought I have to concede on a few of your points and make some clarifications on my process (prior to our butting heads here).   Meeting one is about how I go about picking the right investments, gathering information and setting appointment two.   HEre is where I concede defeat. I would have the "solution" laid out in appointment two and put myself in a situation where the client then had to make a decision to work with me based on THAT appointment rather than reflect on my process in round 1.   I get it.   In the last week I have tried your technique. HEre is what happened on one occassion:   Mr/Mrs Client, now that you understand my process, do you have any questions?   "Ana, we are blown by what you are explaining to us. No one has ever given us this kind of indepth knowledge about what options are available to us (IRAS, distribution startegies, alternative strategies, etc) and what strategies would help us given our personal and tax situation. We like what you are saying. So after we sign the paperwork you'll tell us what specific investments will hit our goals based on your assessment?"   "Absolutely. I want you to understand Mr. Client, talking about the specific investments is the easy part. You are going to hear the same story elsewhere. There are plenty of people who can sell you a car. I do not want to sell you on product, I have product, I need you to udnerstand that I can come and educate you on what your options are. Once we decide out to invest in different taxable/tax deferred accounts, I can then come up with a portfolio that will, in my best judgment, be in your best interest given your circumstances. How would you like to proceed?"   I gathered assets without showing them my UIT/mutual proposal.   So, thank you.   Now, going back to your question anon, I would just show those folks my process, speak with their preferred tax professional/cpa and then let them judge which picture fits their needs.   That's all I got for you. Sorry for the late response.  
May 2, 2008 2:05 am

Again, the pitch is going to be sdifferent when sitting with uneducated investors vs people already situated. If I were sitting with someone as in your hypothetical scenario, I would look at how their portfolios are structured (how much money in taxable, tradsitional Ira, roth ira, vuls) and then see if there’s room for improvement and work that rouite. That is how I won past cases. So I would stick with that minus showing them my proposal in round 2 as I have in the past.

May 4, 2008 3:34 pm

anahuabkuss, I guess that we aren’t going to be able to have too much fun with this one.  Welcome back.

  It's good to hear that my technique worked for you.   "If I were sitting with someone as in your hypothetical scenario, I would look at how their portfolios are structured (how much money in taxable, tradsitional Ira, roth ira, vuls) and then see if there's room for improvement and work that rouite. That is how I won past cases. So I would stick with that minus showing them my proposal in round 2 as I have in the past."   First of all, I can promise that they will have $0 in VULs.   I can also promise that you will be able to find something that you can do better for them.  You have hindsite on your side.  Ultimately, it won't matter that you have some great ideas.   The client will come back to me.  They will tell me that you said that some of my ideas weren't very good and they should be doing things differently.  I'll go over your ideas and explain why they aren't better.  However, you may come up with an idea that is better.  I will simply tell my client that the idea has some merit and if they want we can devote some money to giving it a try.  I will get paid to implement your idea.   It simply comes down to the fact that people switch or don't switch based upon trust.   My clients won't leave me for a better idea.  Neither will yours.   As long as we give good attentive service, most of our clients will be clients for life.     One of the things that I always do is find out how strong of a relationship that they have with their current advisor.  If they don't have one or if the relationship isn't very strong, I go after all of the business at once.  If they do have a strong relationship, instead, what I try to do is to get the business that their current advisor is ignoring.     Example: Client: "I'm working with Jim Smith from ML." Me: "How long have you been working with Jim?" Client: "10 years.  He does a great job for me." Me: "Fantastic.  ML has lots of great advisors who do a fantastic job for their clients with their investments.  I don't know Jim personally, but his office has a good reputation.  In fact, some of Jim's colleagues are actually clients of mine and they send business to me." Client: "Don't you do the same thing that they do?" Me: "Yes and no.  We do to some extent, but because ML is an investment house, their focus is overwhelmingly on investments.  For instance, I would bet my last dollar that Jim has never spent the time to go over the ins and outs of your disability policy or spent the time make sure that your buy-sell agreement is funded in the proper manner. Client: That's true. Me: It's not a knock on Jim.  He just doesn't get paid to do these things, thus it makes sense that he would never develop the necessary expertise.   Client: It makes sense. Me: I, on the other hand, work on these types of issues on a daily basis, thus they send business to me.  I do not want to get in the way of your relationship with Jim.  Let's spend our time focusing on the non-investment issues of your financial planning. Client: That sounds fair.    Obviously, I want all of the business, but I'm going after the low hanging fruit first.  Once I get him as a client, if I have a better investment idea, he will implement it with me because I'm not an outsider.  I'm one of his advisors.   The key to this technique is knowing the weakness of the other advisor.  Often, we'll know it simply due to their firm.  For example, if they work with someone from Ameriprise...   Me: "Let me guess, Mr. Prospect, your objective advisor had you paid money for a financial plan and the recommendation was to buy an Ameriprise VUL policy and Riversource Funds and a disability insurance policy from Ameriprise."   Client: "How did you know?"   Me: "In my experience, all Ameriprise advisors give the same recommendation. I'm not going to charge you a fee.  Let's take a look at your situation so you can get some objective advice."   Client: "Ok"
May 5, 2008 8:52 am

I whole heartedly disagree with you. People will leave you if they can get the same/better service AND better ideas. Are you telling me someone will stick with a banker or a state farm agent just because the agent’s service is great despite the fact that his investment options are limited? Yeah right.

  Come on now. It's plain as day that you do not work for a brokerage. People will leave you for better ideas/more resources. You are seriously naive if you think clients will choose loyalty to a nice agent/broker rather than their bottom line. (Oh my portfolio is down 17% when the market is down 12%, but he has all our money and calls us so he must be good! lol)   People do not buy cars from salesmen because of their customer service. They know what car they're buying. People aren't going to trust customer service to have spine, brain surgery, they're going to go to the person who can get the job done. You seem to insist you'll have clients for life just because you have quarterly reviews to go over proprietory products. Come on.   I'm going to say this once more. People go looking for financial advisors for results for their hard earned money. Service means crap without results. Results are based on investment ideas/strategies. I don't know what kind of clients you prospect but I know you're not going to get a check for 5 million by saying "I don';t know the answer to that, go ask another broker and let's hear what he/she has to say and implement a plan of action!"   You are wrong because, I repeat, I have stolen accounts from brokers who were working with clients for 10 plus yrs.   Don't assume you'll never lose clients. You won't fool us.   I hope you don;t seriously think people will go to a knowledgable doctor with a good reputation and take their plan for surgery to another one who is less experienced. Read what you're typing and think.
May 5, 2008 9:15 am


   However, you may come up with an idea that is better.  I will simply tell my client that the idea has some merit and if they want we can devote some money to giving it a try.  I will get paid to implement your idea.   \[/quote]   No they won't. They'll ask why you did not have the knowledge, resources and time to come up with the strategy first and question your ability to manage their hard earned money (especially when dealing with high net worth investors. )   Then just as you claim you do, they'll have started a new relationship with another broker by filling the void that you missed by cutting said new broker a check. And yet somehow you think the client will come to you so you can steal others' ideas (because, naturally, other brokers will risk giving their investment strategies away to come to your desk)? Do you not see what a hypocrite that makes you? It's alright for you to fill a void for cleints who have established relationships currently in place but there's no way that will happen to you? Instead, you think clients will come running right to you asking you to steal ideas ? lol Not a chance in hell.   Let me ask another question, what do you do if the other broker doesn't get specific about what mutual fund to buy and yet has the client's attention with a strategy that beats the pants off of yours? You think you'll be able to steal that too and keep the client while you turn around and try and establish a repoire with a prospect who has a broker that never talks to them about estate planning investments?