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Here's an exercise I use in my coaching sessions with advisors. I ask them to bring in an employee who is not an advisor.
The employee plays the role of the prospect. I then give the employee a series of questions to pose to the group of advisors.
The inquiry that advisors have the most difficulty answering is: "Why should I retain your firm?"
Typically, the initial responses I get are formulaic and convoluted. They often include statements like "because we
really care" or "because we provide a wide range of services, not just investing advice." I remind the advisors that
every firm will tell prospects that they “care” and most provide broad, wealth-advisory services.
A suggested response
The way I suggest advisors respond to this question may surprise you.
I recommend the following: "I need to know more about you before I can answer that question. I want you to feel free
to ask me any question you want about our firm. After you learn more about us, and we learn more about you, then
you will be in the best position to decide whether we are the right firm to entrust with your money."
Think about how presumptuous it is to answer such a difficult question without going through this process. What if
you are an evidence-based advisor and the prospect tells you that they are looking for someone who can tell them
when to get in and out of the market? Your firm would be a poor choice. Why would you assume otherwise?
You are not fungible
If you are pressed to answer why your firm might be a good choice, even after going through this process, consider
this response: “Because you get me.”
I previously
discussed the prominent role that emotions play in the decision-making process. By some estimates, 80% of
decision-making is emotional and only 20% is rational. A well-prepared advisor enters any prospect meeting with a
carefully crafted plan to establish an emotional connection.
One way to create that connection and forge a strong relationship is by asking questions and eliciting information
from the prospect. The knowledge you obtain will provide you with information not just about investment-related
goals and assets, but also about the prospect as a person.
If you implement this plan well, you will establish a sincere emotional connection with your prospect. The prospect
will already be persuaded that you "care" and will be comfortable trusting you.
While it may be difficult to differentiate your offering from those of your competitors, you are not fungible as a
person. Once a prospect has that special feeling about you, the emotional part of their brain will establish a
relationship with you. At that point, you don't have to say anything in response to their inquiry other than that
one statement: “Because you get me.”
You can’t be replaced by an algorithm
The rise of robo-advisors has put additional pressure on fee-based advisors to justify those fees and explain their
value proposition. However, the rampant concern over being replaced by an algorithm is vastly overblown. There is credible data
indicating that people prefer to make judgments based on their gut instincts, even in instances where algorithms are
shown to be consistently superior to human judgment. This preference for human judgment is known as “algorithm
aversion.”
One study found that people are
particularly unforgiving of algorithms if they have experienced even a small failure when using them (like when
Google Maps directs you to a dead end). We are much more forgiving of errors made by humans.
You are not replaceable either by another advisor or a computer, but you have to understand how to frame the debate.
Dan Solin is the director of investor advocacy for the BAM Alliance and
a wealth advisor with Buckingham. He is a New York Times
best-selling author of the Smartest series of books. His latest book is The Smartest Sales Book You’ll
Ever Read. He limits his sales coaching practice to advisory firms that advocate evidence-based investing.
Read more articles by Daniel Solin
