The Secret Weapon for Gathering AUM

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The Secret Weapon for Gathering AUM

July 22, 2014

by Dan Solin

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Baupost’s Seth Klarman Suggests That The U.S. Could Be Uninvestable One Day

Seth KlarmanIn his 2021 year-end letter, Baupost's Seth Klarman looked at the year in review and how COVID-19 swept through every part of our lives. He blamed much of the ills of the pandemic on those who choose not to get vaccinated while also expressing a dislike for the social division COVID-19 has caused. Q4 2021 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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