Minimize Relationships at Your Peril: A Response to Dan Richards
Salespeople who focus on interpersonal relationships are less successful, according to a recent article by Dan Richards, based on research published in the Harvard Business Review. Perhaps advisors should take heed and spend less energy on developing relationships? No. This research is accurate in some situations, yet its supposed implications for financial advisors deserve close scrutiny.
According to Richards, “relationship-centric” salespeople are defined as those who try to be friendly, social, and interested in a prospect’s personal life. Basically, they try to sell prospects by virtue of establishing rapport and connection with the potential buyer. The research in question has determined such salespeople are less successful than “challengers,” who highlight their expertise and actively lead the client toward a sale without focusing as much on the relationship.
I see two problems inherent in this study, at least insofar as it might apply to financial advisors. First of all, there are major differences between selling a product and acting as someone’s financial advisor. Secondly, Richards presents relationship-centric advisors and challengers as an either-or choice without considered the possibility that an advisor might embrace both models. Allow me to illustrate the distinction by way of a couple of real-life examples.
I recently needed a new roof on my home. I did some research on my own, and then I made appointments with four roofing contractors to get estimates. How did I choose between them? I considered price, of course, but it was not the sole deciding point; I was more concerned about what I would get for the price.
Secondly – although I wanted the contractor to ask about my preferred colors, shingle types, and desired result – I did not choose based on friendliness or how many questions the contractor asked about my children. I looked for a professional with expertise I didn’t possess – someone who would educate me, lay out options, and make recommendations. In other words, I looked for a “challenger” as opposed to a contractor whose ultimate goal was to demonstrate likability and rapport.
And I am not alone. I facilitate a support group for widowed people, and I have worked with over 1,800 grievers in the past two decades. Widows – more so than widowers – don’t like it when, say, a carpet salesperson comes into their home and starts asking too many questions about their life and family.