Six Ways to Build a Prospect Pipeline
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One of the biggest issues limiting financial advisor’s business development efforts is a lack of time to press for new business. Sometimes it’s a lack of an effective focus. New business development is not easy. For example, in 2017, Merrill Lynch attracted only about 7,000 net new households, with the average broker opening fewer than one account on a net basis. Merrill raised brokers’ growth targets in 2019 and 2020 but modified the 2020 plan in June to acknowledge the effects of the outbreak of COVID-19 on broker prospecting. The new account requirement was lowered to three households from four and remains at the lower level for the 2021 plan.
Too often, advisors do not have a formal prospect list or it is not updated regularly. It’s great if it’s in your CRM, but if it’s not in your face, then out of sight is out of mind. If it’s in digital form, and it should be, you should have a paper copy of your top prospects on your desk, and you should be contacting five to 10 every week and spending at least 20% to 25% of your time on prospecting to grow your business. That includes the time you spend with clients figuring out how you are going to let them know that their family, friends, and colleagues are missing out by not working with you.
This article discusses how to build a prospect list, from generating leads to getting potential clients to meet with you.
What is a prospect?
- Before an individual becomes a “prospect,” they are a “suspect.” These are individuals who may have a need for the products and/or or services an advisor offers. They are potential clients who may have been introduced to your product or service, e.g., a known investor, and have not rejected your offer…yet. They are not as strong of a candidate as a prospect, and you have not likely met with them yet, but you would like to meet them.
- “Prospects” are individuals who appear qualified based on their buying authority, financial capacity, and knowledge of what you do, and have a general willingness to “buy.” To be a prospect, they must be willing and open to meet with you or have met with you and are willing to talk.
The key factor that defines a prospect is someone with whom you are communicating on a regular basis.
Where to focus business-development efforts
There are at least 20 business-development approaches for building your prospect list. Many of us get offers every day from marketing organizations offering solutions that will provide leads. Included are various social media approaches, where you reach out to individuals you don’t know. You send cold or warm-ish messages, pay for advertisements, post articles and comments, etc. all to garner leads and/or help build a brand or name recognition. Some organizations sell lead lists. Companies offer ways to build lead funnels using emails for mass marketing and other forms of impersonal marketing approaches.
This is indiscriminate and untargeted mass marketing in an industry based on relationships. Since the most essential aspects of your business are based on human-to-human interaction, your content and approaches should also be human-to-human.
Mass marketing approaches are not what our industry nor your practice needs. These methods add to what is called “digital pollution,” a term I learned in the book Human Centered Communications, by Beute and Pacinelli. They pointed out that 2.4 billion emails are being sent every single second. Further, they state that half of it is pure spam. That’s on top of the 4.5 billion spam text messages sent every year. This pollution costs us time and money. For example, the cybersecurity industry is projected to grow to a $173 billion industry by 2026, up more than 50% from 2020. The professional worker receives an average of 120 emails per day.
On the day I drafted this article, I received about half that amount, but it included about 115 individual articles, some of which were repeats. Yes, I understand this article adds to this content.
I argue against indiscriminate and untargeted material. The same book reported that a HubSpot survey found that just 3% of us trust salespeople, barely edging out stockbrokers, lobbyists, and politicians. The indiscriminate, untargeted, and impersonal sending of mass marketing content puts all of us in the industry in a bad light and contributes to the waste of our most precious resources, time and attention. Those mass marketing approaches can keep your name in front of prospects and clients, but whether they answer questions a prospect or client has or are of any particular value is questionable.
There are much better ways to market based on human-to-human interaction where I suggest your focus should be.
My top six approaches are based on human-to-human interactions. Each approach requires further detailing in separate discussions or written material. Each approach must be used in a genuine, sincere, and honest manner. However, regardless of your sincerity and even your knowledge, experience, competence, and more, as Albert Gray said, “The secret of success of every person who has ever been successful lies in the fact that she/he formed the habit of doing things that failures don't like to do.” He also stated that the things failures don’t like to do are the same things that no one likes to do! Successful people do it anyway.
Every one of these approaches requires a process, an action plan, and consistent execution!:
- Introductions from existing clients;
- Introductions from centers-of-influence;
- Local small business networking;
- Targeted social media outreach using LinkedIn;
- Targeted educational programs and events, not via direct mail and purchased lists1. Utilize focused events/targeted roundtables, corporate programs, e.g., lunch and learns, client and prospect education, webinars, and dinners; and
- “Book of Life,” e.g., family, friends, neighbors, colleagues, networking contacts, affiliations and other to whom you may send relevant and personalized materials and contact directly. Other good prospect sources are broader networking (formal and informal), speaking at public forums including service organizations, and publishing articles for public consumption in well placed publications.
Building your prospect list
Unfortunately, the best predictor of new clients in the next 12 months is the number of new clients you attracted in last 12 months. If that number was low, one of several things is likely true:
- You had poor or no formal business development processes including a lack of regular prospect communications.
- You executed good formal business development processes poorly.
- You did not have a good prospective client list.
Even if your history is not perfect, having formal business development processes and executing excellently will build a significant list of prospects. That list should be 50 or more people with whom you regularly communicate and who are willing to receive your communications. If you are a newer financial advisor, I recommend a list of a 100 prospects.
Getting prospects into the pipeline
This is the most challenging element of business development, so significant and consistent efforts are musts. Moving prospects through the pipeline can be frustrating because you and your prospects have different senses of urgency. Prospects have many things on their plates, while you are more narrowly focused. Patience is a virtue and a must to convert that prospect to a client. Advisors I have spoken to for decades have said, “If I can get them into the chair, I can close them.” In today’s competitive world, this may not be as true as it once was, but great planning, care, and time will result in a good share of conversions… and you must believe that and keep focus.
Each approach to get prospects into your pipeline, whether speaking at a forum, authoring an article, conducting a client review meeting, or having a discussion with a COI, friend, or business associate, needs a “value trigger,” something you can offer the person or group they will enthusiastically want to receive. For example,
- In a client review meeting, “Just before I let you go, as you can imagine, in speaking with my clients recently, many have friends and family members who are unsettled by the markets and looking to the future with some apprehension. I’m telling you this because I want to remind you that, as a value-added service, I will gladly be a sounding board for anyone who is looking for a voice of reason. Keep in mind, they don’t need to become a client to take advantage of this service. If they’re important to you, they’re important to me.”
- In talks or meetings, discuss experiences or stories that positively impacted client situations: Exemplary case studies of how you helped individuals plan retirement, protected their estates for their heirs, assisted individuals in preparing “aging plans,” helped families with college planning, conducted a family meeting, or any of the other things you do for clients on a regular basis.
- Conduct educational events that deliver immediate value such as information about tax law changes, new estate laws, what’s happening at… (Meta, Facebook, Tesla, Bitcoin, or volatility in general, etc.)
- Special “wow” events with small homogeneous group of prospects, e.g., private chef dinner from local, well-known restaurant
“Value triggers” must:
- Address hot buttons;
- Be relevant to the audience’s concerns or wants/needs;
- Capitalize on existing communication to clients; and
- Tap into credible sources.
Find out from your clients what It would take to interest them in meeting with you if they were not yet a client. Identify prospects that have similar interests and concerns. It could be a group of their friends, relatives, or colleagues. Try diverse kinds of events like Sunday brunches for prospect couples you personally invite. Four or five prospect couples would be moderate cost and effective. Look for various times and days when prospects may be free.
In a talk or in the right networking situations, ask provocative questions out of curiosity. For example, “I’m curious, do you know exactly how much money it's going to take for you to comfortably retire and remain comfortably retired?” If you get a no, you can make an offer. “Would you like me to sit with you and help you figure out the answer to that question?”
- Have a formal prospect development process with clear stages and milestones.
- Keep a regularly updated prospect tracking worksheet in both your CRM and in paper on your desk. If you would like a free copy of my prospect tracker, go here
- Allocate time and effort each month to developing and managing your prospect pipeline.
- Be patient and be consistent.
- Focus on goal #1, your first face-to-face meeting with your future clients.
David Leo is founder of Street Smart Research Group LLC. He is an author, speaker, coach, consultant, and trainer to financial professionals. David is an experienced business manager who works solely with financial advisors, planners and firms that want to organize, structure and grow their businesses by attracting, servicing, and retaining affluent clients.
David had a 30-year career at IBM including as a business process reengineering consultant and engagement manager for the financial services industry. He also spent seven years at UBS/PaineWebber working directly with financial advisors to assist them in productivity growth.
David received a Bachelor of Science degree in Commerce and Engineering from Drexel University and an MBA from New York University.
If you would like additional details or have any questions about his articles or an interest in coaching, schedule a free 45 Minute Strategy Session at https://calendly.com/davidileo or contact him at [email protected]. Call 212-598-4229 (Office) or 917-379-1249 (Cell) and visit www.CoachDavidLeo.com.
1Having said that, this is my personal experience. I do know FAs that swear by direct mail invites and the use of lists. I have heard one FA talk of investing over $600,000 in this kind of seminar effort which has yielded $1B in AUM.