March 3, 2009
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A key theme of the morning workshops I recently conducted was the need and the opportunity to engage in conversation with prospective clients. For that reason, half the morning was devoted to prospecting strategies.
Advisors want know to how to respond to the question of how their clients did last year. In some cases, apprehension about getting this query is a key obstacle preventing advisors from approaching prospects. As a result, one key to ramping up prospecting is feeling confident about your ability to address this issue.
Let’s start by getting some perspective on the historical role of performance when investors select a new advisor.
Going back to the eighties, research on this subject is quite consistent. Performance was the major reason about 40 percent of the time investors fired their advisor. The rest of the time, the key reasons related to things like dissatisfaction with the frequency or quality of communication, a sense that their advisor wasn’t listening, a poor or indifferent relationship, or not feeling valued as a client.
Given last year’s events, investors are very much attuned to performance on their investments. Talking to investors who have fired their advisor or are on the cusp of doing so, performance certainly comes up as an issue - but it is far from the only factor driving change. In fact, there is a broad sense among many investors that everyone was hit hard by last year’s downturn - and if that’s the case, why will clients move for performance reasons if it wasn’t different elsewhere?
As a result, the catalyst for deciding to change advisors often relates less to the advice investors got in the past and more to the advice that they are getting today. Fairly or not, many investors are frustrated by what they see as passive, stand-pat advice from their advisors. Some investors take the view that the market environment has changed dramatically, so why is their portfolio the same?
In other cases, the biggest source of dissatisfaction was the communication investors received through the latter part of 2008.
In light of this, there are three key stages to a conversation with a prospective client.
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