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When You’re Talking, You’re Losing

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Can you convert a prospect without explaining how you will manage their investments? Advisors should focus on establishing trust with potential clients, but what happens when all that person wants to do is talk about risk?

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Global Risks
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I counsel clients to start meetings by asking questions intended to get to know the prospect as a person, rather than as someone with assets you want to manage. Typically, advisors will ask something like this: “Tell me about yourself.” They will then ask questions that naturally flow from this response.

While my process is easy to articulate, it is difficult for some advisors to implement. They are so wedded to a script designed to “get down to business” that breaking their ingrained habit is challenging.

Most of the time, the process goes smoothly. The conversation can take some unexpected turns, as prospects relax, secure in the knowledge that the advisor has a genuine interest in them. Advisors report that prospects have opened up about intimate details of their life, and often exclaim that they have “never discussed this with anyone.”

Once that level of trust is established, the prospect is likely to become a client.

A different reaction

Recently, an advisor reported a different reaction to his initial efforts. Instead of answering the question and disclosing information about himself, the prospect replied: “I don’t mean to be rude, but I have limited time and a long list of questions. Would it be okay with you if we started with those?”

Fortunately, I had prepared the advisor for this possibility. The core of the Solin Process℠ is a focus on eliciting information. While the initial question didn’t work as expected, it still served its purpose because the prospect disclosed exactly how he wanted the meeting conducted. All the advisor had to say was: “Of course. What’s your first question?”

The prospect had this question: “I’m very concerned about risk. How do you handle that?”

Clarify before responding

When confronted with this question, many advisors would launch into a lecture about standard deviation and asset allocation. They might embellish their response with a discussion of historical returns for their portfolios at different levels of allocation to stocks.

Those advisors might lose the prospect at that point.

Instead, don’t respond to a question until you have a full understanding of what is really on the mind of the prospect. In this instance, the correct response would be something like this: “Of course, but first can you elaborate on your concerns about risk and tell me why that’s important to you?”

When the advisor did this, the prospect told him he lost “a bundle of money” in the dotcom crash in 2000-2002 and wanted to be sure that would not occur again.

This information permitted the advisor to frame this brief response. “If I told you we could deal with that concern through broad diversification of the stock portion of your portfolio and by reducing your overall allocation to stocks, would that alleviate your concerns?”

The prospect said it would. The advisor proceeded to explain (briefly!) how he would implement that strategy.

Read the full article here by Dan Solin, Advisor Perspectives