I’ve had a waitlist to take on clients for more than a dozen years. It isn’t because of my skills in sales. In fact, when it comes to the “art” of convincing people to buy services or products, I consider myself the worst salesperson on the planet. Let me explain why and how you (and more importantly, your clients) benefit from being an awful salesperson as well.
A little background – I used the wrong word
Early in my career, I worked for the global management consulting firm McKinsey and Company. One of my first assignments was to help a senior partner prepare a proposal for a large engagement for a Fortune 50 potential client. I thought the proposal looked brilliant – it described our expertise, the study methodology, and the benefits this client would receive if they hired us. In addition, it gave them some useful information to consider even if they didn’t hire us. I looked at the partner and said, “This will really sell them!”
The partner looked at me and said something like, “We don’t use the word ‘sell’ at McKinsey.” He explained that we provide information to the potential client as to the value proposition and how they will benefit from hiring us.
This seems like sales, but there is a distinct difference.
A reader commented on my last article on behavioral finance. He noted that many decades before Kahneman and Tversky, the master salesperson Dale Carnegie wrote:
When dealing with people, let us remember we are not dealing with creatures of logic. We are dealing with creatures of emotion, creatures bristling with prejudices and motivated by pride and vanity.
Selling has less to do with logic and more about motivating someone to hand over their money to you by using emotion rather than logic.
How to sell your services to a client
Just because I’m a terrible salesperson doesn’t mean I don’t find financial sales fascinating. I love learning about sales advertisement techniques such as:
- Asking the client to state their values and imagine what they would do with their lives if they had enough money so that they could do what they wanted for the rest of their lives. This imagery creates excitement versus their current lives and motivates them to move forward and sign on during that first meeting.
- Building trust and perceived expertise with easy-to-get credentials and awards.
- Buying lists of pre-qualified clients eager to hire you.
- Keeping a client by being their life advisor.
All these techniques work in client acquisition. They appeal to our fast, “system-one” emotional brain, based on Daniel Kahneman’s book, Thinking Fast and Slow. But I’d rather appeal to clients’ slower moving logical, “system-two” brain. In fact, I want to protect any potential client from their system-one brain and do my best to have them act logically. Though my financial planning model happens to be hourly, the following process will work for multiple models.
My client acquisition process – or lack thereof
I don’t have a client-acquisition process. I don’t pay for lists of qualified candidates or for any advertising, nor have I ever and (hopefully) I never will. Admittedly, this led to a very slow start to my practice well over two decades ago and very little revenue my first year.
But that first year taught me a lot. Having spent a couple of decades in corporate finance, I was sold on indexing when most people didn’t know what it was. One potential client came in and wanted me to pick a few stocks for him to buy. He didn’t want to learn about indexing; that was a bad fit. Finally, I landed a big client – she was a senior officer of a publicly traded company. A third of the way through the engagement, I could see I wasn’t going to be able to help her given her beliefs that we should outsmart the market. I withdrew from the engagement, wrote off all the time, and still remember how much that hurt.
Yet those early experiences brought me to the now obvious conclusion that, in spite of my lack of revenue, I had to set up a process to only meet with potential clients who would be a fit with my investment beliefs of low-cost indexing. I set up the process that I still use today.
Step 1: Pre-meeting
Before agreeing to meet with any prospective client, they must first spend some time completing a confidential profile. My website reads:
I cannot, however, tell you whether I can help you on a cost-effective basis without receiving the Confidential Personal Profile first.
I do this for two reasons. It makes sure that the potential client comes to my web site and learns about my philosophy and approach. If I’m not a fit, this saves both the potential client and me a lot of time and frustration. I call that a win-win.
The second reason is that the potential client will need to spend at least a half hour to complete the form and likely a bit more if I ask to see the holdings and unrealized gains in the taxable accounts. This accomplishes two tasks. Most importantly, it gives me a lot of information about the client and their situation. Along with the discussion, if the client is a fit, I can now give them an estimated cost of the engagement if they decide to move forward. The second task is that the person has invested a little bit of time which means they are more serious about wanting my help.
Often, I’ll get a call and the person wants to talk first before investing the time to complete the profile. Sometimes I’ll hear statements like “you don’t understand – I have a nine-figure portfolio.” I’ll congratulate them and say I understand it’s their decision if they don’t want to spend the time, but it’s a requirement before our initial 20-minute meeting, which is free of charge. I regard my model as being more like that of a physician; no patient would request to see the doctor and then decline to disclose current health issues.
Step 2: 20-minute meeting
Most of my clients are out of state and these meetings are almost always remote. Clearly, video meetings through Zoom are good at building rapport and trust and many request such meetings. I let the person know that I’m happy to use Zoom during an engagement but not for this exploratory meeting. The main reason is that it takes more time – waiting for the parties to be on the line and, of course, potential technical issues on either end such as Wi-Fi connections.
I have only one purpose for this meeting; to give the potential clients some useful information. It is a diagnosis of the health of one’s portfolio and finances. While I’m not giving specific recommendations, I am noting things like:
- You have a concentrated and high-cost portfolio unlikely to earn the market return, but there are some tax consequences of moving to a more efficient portfolio.
- You are paying a lot of money to an advisor to pay even more to fund managers to try to outsmart the market, including institutional investors.
- Your assets are not located in the most tax-efficient manner.
- You have $5 million in a money center bank paying 0.02% annually, which is costing you over $250,000 a year versus a Treasury money-market with less risk.
- Options and futures funds are not investments because, in the aggregate and before fees, not a penny has ever been made. It’s gambling.
- Your portfolio is better than mine – I don’t think you need me (yes, this actually happens).
Much like a job interview, I’m looking for responses to my statements. Sometimes the person will argue or spend most of the call justifying their actions. I can quickly conclude that we are not a fit and try my best to let them know this in as gentle of way as I can. It doesn’t always work, and I get the occasional disgruntled email telling me I’m a jerk. Though I apologize for offending them, I know this was a less bad outcome than working together when there was not a good, mutual fit.
Often the person agrees or may already know some of these things and want help in the complexities of moving toward simplicity. Assuming I can help on a cost-effective basis, I give the client both an estimate of the costs and the approximate start date of the engagement. Rather than sell them, I point out that, in addition to my fees, they will be spending a lot of time completing a very detailed and not-so-fun data request before the start date.
Finally, I ask the potential clients to think about it and let me know. If the person says they already want to move forward, I tell them I have a policy that they must wait at least one day. I want them to think about it and decide with their aforementioned system-two logical brain.
The method to my madness
My client acquisition process was partially designed by using the opposite techniques being sold to advisors. It’s critical that any client engagement be a positive experience for both of us.
The process, and especially the call, is so differentiated from the typical sales process that I’ve been told it is actually a sales tactic. And the theory of reciprocity could reinforce this argument, in that giving the potential client valuable information during the initial call increases the likelihood they want to reward me by being a client. My goal, however, is to help someone rather than sell anything.
I am not preying on anyone’s emotions, prejudice, or pride. I am trying hard to engage their logical brain. I can help a client increase their wealth and the probability they will be financially independent to have choices in life. But I make it clear that I am not a life advisor, and those choices are up to them.
Dale Carnegie was right that sales is about using emotions to motivate. But I won’t use this tactic. Whether you view my process as a differentiated sales technique or just differentiated (hopefully the latter), I do think it leads to better outcomes for the client. And while I’ve never asked for a referral, when the client has a good experience, they tell their friends and family.
Consider whether some of these techniques will help you better serve the right future clients.
Allan Roth is the founder of Wealth Logic, LLC, a Colorado-based fee-only registered investment advisory firm. He has been working in the investment world of corporate finance for over 25 years. Allan has served as corporate finance officer of two multi-billion-dollar companies and has consulted with many others while at McKinsey & Company.
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I’ve had a waitlist to take on clients for more than a dozen years. It isn’t because of my skills in sales. In fact, when it comes to the “art” of convincing people to buy services or products, I consider myself the worst salesperson on the planet. Let me explain why and how you (and more importantly, your clients) benefit from being an awful salesperson as well.
