Stop Qualifying Your Prospects
December 8, 2015
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
Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
I have a friend who rose through the ranks of a mid-sized corporation. Now an executive, he has vast experience in sales. He sometimes regales me with stories about his interactions with vendors and what he describes as the “sales-prevention team.” These are the people who raise issues that make it difficult for him to place orders and “customer service” personnel who cause problems instead of solving them.
Your process of “qualifying” prospects may be your firm’s version of a sales-prevention team.
I’ve found the typical qualifying process works like this: An administrator is designated as the person to whom all initial inquiries are directed. This person conducts an “intake” interview, ostensibly for the purpose of directing the prospect to the right advisor. The underlying objective is to determine whether the prospect meets minimum asset requirements.
In order to make this determination, the administrator asks a series of intrusive questions. Some even pride themselves on their ingenuity in extracting information about investable assets, often asking probing questions like, “To be sure I place you with the right advisor, can you give me a range of assets you would be investing?”
That may seem inoffensive, but it still requires the prospect to divulge highly sensitive information to a stranger over the phone. It also conveys to a prospect with less assets to invest that the advisor to whom he or she is being referred is less experienced.
Here are some reasons why you should take a new approach to the “qualification” process.
It raises an unnecessary barrier
Think about the time, effort and expense that went into getting the prospect to place the initial call. This is not an opportunity you want to squander. The prospect wants to speak to an advisor, not to an administrator, no matter how skilled or charming the administrator may be.
By requiring the prospect to go through a screening process, you are raising an unnecessary barrier. Some prospects will find it off-putting. Those that don’t may bristle at the personal nature of the questions being asked.
Sales is akin to dating. There may come a time, during both a date and a sale, when each of the parties is interested. The qualification process can kill the mood and ruin the connection. You wouldn’t use an administrator to qualify a potential date. You shouldn’t do so with a prospect.
It follows the wrong protocol
The qualification process involves the “qualifier” eliciting personal information about the prospect. While asking questions at the inception of a relationship is a good idea, these are not the kinds of questions that are conducive to forming a positive relationship.
I tell advisors to start meetings by getting to know the prospect as a person rather than as an object associated with a number representing assets to be gathered. Questions like “Can you tell me a little bit about yourself?” are much different from “Can you give me a range of assets you are prepared to invest?”
Think about it this way: How would you feel if, before the first date with your spouse or partner, you received a call from one of their parents asking, “Where did you go to school?” “What was your income last year?” “What is your occupation?”
I suspect you would cancel the date.