Strategies To Convert More Prospects
August 24, 2015
by Dan Solin
This year has been a record-breaking year for initial public offerings with companies going public via SPAC mergers, direct listings and standard IPOS. At Techlive this week, Jack Cassel of Nasdaq and A.J. Murphy of Standard Industries joined Willem Marx of The Wall Street Journal and Barron's Group to talk about companies and trends in Read More
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I limit my coaching practice to evidence-based advisors, so I am intimately acquainted with the challenges they face. I’ve found they share a common frustration. Despite recent trends towards passive investing, the vast majority of individual investors still attempt to “beat the market” through stock picking, market timing and selecting outperforming fund managers.
These individual investors often ignore the overwhelming evidence that this is a fool’s errand.
While Registered Investment Advisor (RIA) firms in the U.S. are legally required to put the interest of their clients first, they often lose out to brokers who are permitted to (and often do) provide conflicted advice that benefits themselves and their firms at the expense of their clients.
While it’s not alone, the brokerage world has a checkered history that includes a litany of unsavory practices. Evidence-based advisors must adhere to a fiduciary standard, which governs their conduct.
The playing field is not level
Part of the problem investors face when trying to find an advisor is that evidence-based practitioners tend to be small firms scattered across the country with limited advertising budgets. Brokers and insurance companies tend to be large entities (often part of banking conglomerates). By some estimates, the financial services industry spends more than $8 billion a year on marketing.
The securities industry also benefits from non-stop reinforcement by the financial media. Cable networks and other outlets reinforce the notion that “gurus” have the ability to predict the direction of the markets and are successful in other “market-beating” activities.
Evidence-based advisors are no match for this steady drumbeat of misinformation. As a consequence, they need to be especially skilled at persuasive techniques grounded in peer-reviewed data, which will permit them to convert more prospects into clients.
Here is a research-backed strategy to accomplish that goal.
The power of certainty
A recent article in the Harvard Business Review discussed some of the studies showing how “certainty” can be used as a persuasive strategy. The bottom line of many studies is that “people who are certain of their beliefs are more likely to buy, buy sooner, and spend more.”
This finding is a blessing and curse for evidence-based advisors. They are frequently confronted by prospects who are “certain” of their belief that they can “beat the market” by relying on the recommendations of their broker.
Here are some tips for using the power of certainty to dissuade prospects from their strongly held views.