How to Keep Prospects from Stealing Your Ideas

Of course, some advisors address this issue by charging for an initial financial plan before getting into recommendations (a cost which may or may not be credited back to clients who move their accounts over) but given the resistance of the majority of today’s clients to paying for a plan, this is not an option for most advisors.

In deciding how much to share with prospects, recognize that you’ll never eliminate every prospect who is shopping for free advice – and if you take the stance that you won’t give anything away because you don’t want people “stealing” your ideas, you’ll severely limit your chances of success with the majority of prospective clients who are in fact serious. That said, here are three guidelines for increasing the chances of turning prospects into clients without giving the shop away:

Step one: Have a clear process on dealing with prospects

Begin by clearly identifying your approach to talking to prospective clients. Today’ reality is that it typically takes longer for prospects to make decisions than in the past, in part because there’s often an incumbent advisor you have to displace and partly because they may be meeting with other advisors.

As a result you need to clearly define your approach when it comes to talking to prospects, with a view to getting to know them in a comfortable fashion while communicating your professionalism and value. I’ve written in the past about the “three meeting” approach with prospects:

• In a fairly short and casual initial meeting, you and the prospect talk informally to get to know each other, allowing you both to assess whether there’s a fit and you want to proceed.
• In a second longer meeting, you cover the prospect’s current situation, assets and portfolio in detail. You discuss her goals and might review her most recent tax return or any financial plan that she may have in place. Note that you get into a level of depth in this second meeting that would be impossible if you hadn’t had that initial conversation to test for fit and to build the prospects’ comfort level with you. In essence, that first conversation earned you the right to probe deeper on your second meeting.
• In the final meeting, you present your recommendations and ask for a commitment to move ahead and do business.

At the end of each meeting, you give the prospect the opportunity to opt out of meeting further with words like:

Note that when a prospect answers that they’d like to move forward after being given the option to stop the process, their commitment goes up. This is especially the case because you’ve struck a good balance between communicating interest at working together without appearing desperate to do so.

Step Two: Create a test of seriousness for prospective clients

In addition to learning more about prospects, the other big advantage of multiple meetings is that they’re a test of seriousness for prospects. One advisor normally holds the first meeting with prospects at their home or office but schedules the second meeting at his office. After years of experience, he’s concluded that if prospects aren’t prepared to come to his office for the second meeting, they aren’t truly serious. (This has the added benefit of setting expectations for meeting locations when prospects become clients.)

Follow your instincts here. If a prospect insists on getting directly to your advice on their portfolio or resists meeting a second time because they want to know what you think now, that’s a clear warning sign. The good news is that if a prospect doesn’t want to meet a second time, your investment hasn’t been that great.

Some advisors use other approaches to cull out prospects who are likely to waste their time. One successful advisor told me that experience has taught him to be cautious about investing extensive time with prospects who’ve held direct brokerage accounts for many years without working with an advisor; unless they can articulate a clear reason for talking to him, he finds that there is a low probability of converting them to clients. Still another veteran advisor looks for indications that prospects are willing to pay for advice in other aspects of their lives; if someone generally takes a do-it-yourself approach on things like their taxes, preparing wills, planning extensive travel or selling their house, chances are he or she won’t be prepared to pay for financial advice.

Step Three: Summarize your recommendations in broad brush terms

US advisor coach Katherine Vessenes advocates using flip charts to summarize the client situation and provide an overview of recommendations. There’s a lot to be said for the concept of providing a high level assessment of what you like and don’t like about a prospect’s existing portfolio and then laying out some broad thoughts on how you would structure their portfolio if you were their financial advisor.

Depending on the situation, you could get into more specifics on one aspect of their portfolio (for example the approach to international equity exposure) but if expectations are set at the outset, most reasonable prospects shouldn’t object to a high level outline of the strategy you’d take until they make a commitment to work with you.

This also speaks to why prospects choose to work with advisors. Few investors select an advisor based on specific portfolio recommendations – and clients for whom this is the overriding factor may be the first to leave when you run into a period of underperformance. Rather, most prospects decide on an advisor based on their comfort that an advisor operates professionally, does a good job of listening, understands their situation and will tailor the right advice for their needs. They also select advisors they like as people – one reason I like the approach of using flip charts is that it lets advisors ask more questions and engage prospects in conversation.

Here’s a final thought on maximizing the return from the time you invest with prospective clients. Sometimes, things come up and people you meet with get busy. As a result, even with the best of intentions, some will fail to follow through after second or third meetings, often because there’s no huge sense of urgency about making a change.

When that happens and a prospect doesn’t respond to your calls and emails or dithers about moving forward, you have two choices. You can write this prospect off as another ‘tire-kicker’ who wasted your time. Or if you walked away feeling that this was someone you’d work with well and would like as a client, offer to put her on the distribution list for information you send your clients. Not all of those prospects will become clients, of course, but if they were impressed by your initial interactions and have simply become preoccupied or busy, with appropriate follow-up over time some of those prospects will resurface and your investment of time with them will pay dividends.

conducts programs to help advisors gain and retain clients and is an award winning faculty member in the MBA program at the University of Toronto. To see more of his written and video commentaries, go to www.clientinsights.ca. Use A555A for the rep and dealer code to register for website access.

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