Three Responses When a Prospect Already has an Advisor

by Dan Richards, 6/30/15

This spring I talked to a financial advisor at a large credit union whose biggest challenge when talking to members about their investments were the words “I already have an advisor.” When she offers to provide a second opinion on their portfolios, she finds few takers. That’s why our conversation turned to different ways to engage people who have existing relationships with other financial advisors.

Advisors who work for financial institutions aren’t the only ones who hear the words “I already have an advisor;” anyone who spends time talking to prospective clients runs into that response. For many investors, receiving a second opinion doesn’t provide a sufficiently compelling benefit. After all, when you make that offer, you’re asking someone not just to invest the time to sit down but also to risk experiencing an uncomfortable level of pressure from the ensuing conversation. In addition, there’s the question of how objective that second opinion will be.

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You have to give people a clear, tangible and credible reason to sit down with you. There are three hot buttons to use when responding to prospects who already have advisors. But before raising those hot-button issues, there’s something you have to do first.

Taking off the pressure

When prospects tell you that they already have an advisor, that’s a good thing. After all, they could simply say “no thanks” without giving you a reason. So the fact that they are honest about already working with an advisor gives you a leg up in building a relationship. The challenge is that when prospective clients tell you this, many expect to hear all the reasons that this shouldn’t matter and that they should meet with you regardless. As a result, right after they tell you that they already have an advisor, many prospects immediately put their guards up.

At that point, your first priority is to get past those defenses and convey that you and the prospect are on the same side of the table. Say something like this:

I’m delighted that you’re working with a professional advisor. People who work with good quality advisors are significantly more likely to achieve their long-term financial goals, so the fact that you’re already working with an advisor is a good thing.

You need to pause and wait from a response from prospects. Once you’re heard them out, ask a question that will introduce a seed of doubt about the advisors with whom prospective clients are working.

Here are three hot buttons to use to introduce that little bit of doubt.

Hot button 1: Running out of money in retirement

The first hot button relates to having a written plan to ensure that prospects don’t run out of money in retirement. So you could say something like:

I’m just curious, what kind of written plan has your financial advisor prepared to ensure that in retirement your income exceeds your expenses?

The research firm Corporate Insights has conducted in-depth studies with affluent clients of large firms to gauge satisfaction, loyalty and share-of-wallet. When it comes to financial plans, it has found that:

Roughly 25% of investors with assets of $100,000 or more say that their advisor has prepared a written financial plan;
Another 25% of investors say that their advisor has prepared a financial plan but not in writing; and
Overall, 40% of investors say that they would be interested in having their advisor prepare a written financial plan.

Hot button 2: Saving taxes

The second hot button relates to the two words that will get investors’ attention faster than almost anything else: saving taxes. Ask a question like:

Just out of interest, when did your financial advisor last conduct an in-depth review of your portfolio to ensure that it’s structured to minimize your tax burden, both today and in the future?

Hot button 3: Reducing volatility

The third hot button relates to some other hot-button words: reducing volatility and containing damage during a market downturn. So your third question could be something like:

Research has shown that regularly rebalancing your portfolio to your target asset allocation can tamper volatility and improve risk-adjusted returns over time. Tell me, how frequently does your advisor rebalance your portfolio to your target allocation?

Making it easy to say “yes”

In each of these cases, the purpose of the questions is to introduce second thoughts about existing advisors and to get prospects to sit down for a short conversation. To make it easy to say yes, have something concrete to point to, for example:

If prospects don’t have a written financial plan, you could say: “If you like, I’d be happy to walk you through a sample of the kinds of things that should be covered in a written financial plan.”
If their advisor hasn’t communicated that prospects’ portfolio is structured to be tax efficient, you could say: “If you’re interested, I’d be pleased to share two or three case studies that outline how modest changes can significantly improve after tax returns.”
And if your conversation related to rebalancing, you could say: “Should it be of interest, I could show you some of the research on the impact of rebalancing on volatility and returns of a portfolio that started off 20 years ago with a 50-50 allocation to stocks and bonds.”

When it comes to addressing the “I already have an advisor” objection, there is no silver bullet. But by responding in a way that relieves the immediate pressure, introduces a seed of doubt and makes it easy to say yes, you’ll significantly increase your chances of having those face-to-face meetings and of converting more prospects into clients as a result

Dan Richards 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 commentaries, go to www.danrichards.com or here for his videos.