The Secret Weapon for Gathering AUM
July 22, 2014
by Dan Solin
Charlie Munger: Invert And Use “Disconfirming Evidence”
Charlie Munger is considered to be one of the best investors and thinkers alive today. His thoughts and statements on investment research, investment psychology, and general rational behavior are often incredibly insightful. Anyone can learn something from this billionaire investor and philosopher. Q2 2020 hedge fund letters, conferences and more If you’re looking for value Read More
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Getting a prospect to agree to a meeting takes an enormous amount of time, effort and money. I estimate that at least half of those efforts fail. Research shows that a small change to the way you handle prospect and client meetings could greatly improve those results.
Under the best circumstances, winning new business is difficult. It’s an important decision for an investor and fraught with uncertainty. You are asking someone, who most likely does not know you well, to trust you with their life savings. It is a big leap of faith.
Even a small increase in your conversion rate can dramatically increase your AUM, which in turn will generate higher revenue and profit. Yet I have never met an advisor who keeps track of conversion rates, much less attempts to do anything about improving them.
This means there are no reliable statistics on conversion rates. However, there’s a lot of data on the science of persuasion. Psychologists have studied it extensively, and their findings are published in peer-reviewed journals. There’s one thing we do know for certain: We are programmed to react in fairly predictable ways to certain stimuli.
Here’s an obvious example. You are in your conference room, engrossed in an important meeting with a prospect. In the distance, you hear the sound of a fire truck. The sound gets progressively louder. Your brain will immediately prioritize the sound of the alarm until it is convinced that you are not in danger. You don’t have to do anything in order for this to happen. It’s automatic.
Based on psychological research on stimuli, here is a simple change you can make in your firm that could increase your conversion rate.
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