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Why advisors fail to close prospects -- according to advisors

Trust, transparency and excluding traits remain problems but standing out in the crowd is hardest of all: Differentiation

Wednesday, December 17, 2014 – 4:18 PM by Guest Columnist Jack Waymire
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Fresh, ripe but just the same. Differentiation is the advisor's big challenge.

Whether its a $500-an-hour psychiatrist or a $5,000-an-hour McKinsey consultant, the technique is the same for researching and delivering the highest level of counsel to the paying customer: Ask the client to tell you what the problem is and then deliver it back to them.

One reason that this technique is so effective is that people like their own ideas simply because they were conjured up in their own minds. But a bigger reason that client-generated ideas are so powerful is that they are in fact very good thoughts. After all, who is a bigger expert on their business than the principals or, in the instance of a psychiatric case, the person themselves?

In that spirit of self-diagnosis, my company asked the advisors who use our services to tell us what they were doing badly when it comes to winning new clients. Advisors cited 14 marketing bugaboos but five of them that jumped out. These criticisms don’t come from an armchair critic. They come from you and they are worth pondering as 2015 and its new set of challenges looms. See: Financial advisors need to look at client onboarding in a whole new light.

1. List, checked twice

Every advisor we talked to said they had lost multiple relationships to lower-quality competitors who may have had superior sales skills. Most of the losses were caused by advisors’ inability to describe differentiating characteristics that separated them from salesmen who masqueraded as real advisors. See: 5 questions advisors must prepare to answer to remain relevant.

They said differentiation was the key to converting more prospects into clients. Investors make better decisions when they have the facts. The problem is that every advisor presents different facts and all of the information is in a verbal format. This increases the impact of advisor personalities and sales skills. It also opens the door to manipulation because investors do not have written records of what was said to them.

There is an easy solution. Make a list of attributes that differentiate you from other advisors. That list will look boring and generic. So make a second list that describes how your services and value help investors achieve their financial goals. It’s only through this differentiated way of thinking about how you are different that you will — through hard work — arrive at a marketing distillate that will help a prospective client make the right decision.

Make the list a part of your sales presentation. Want to take it a step further? Suggest the investor obtain the same written information from everyone they talk to — level the playing field.

2. 'Truth’ telling

Financial advisors continue to struggle with the process of transparency. What information do they disclose to investors? What information do they withhold from investors?

One key element of bafflement is identifying where the line is for full disclosure of all expenses that were deducted from an investor’s accounts. A high percentage of advisors are reluctant to disclose what those expenses will be before investors select them. They are concerned early disclosure might cost them the relationship to an advisor that selectively disclosed lower investment expenses. See: Why a reputation of shadiness persists in the financial advisory industry.

A number of advisors said they did not believe they had a simple, intuitive explanation for their 100 bps fee schedules. This may be a bigger problem as robos gain visibility and respectability. See: Online RIAs will mostly fail — and here are 10 reasons why.

In other words, know how to describe your value to a client and the problem of transparency will go away in the bargain.

3. How not to be excluded

Very few investors have an objective process for selecting financial advisors. All too often, personalities, sales pitches, undocumented sales claims and brand names impact their decisions. See: In what may be a first, an RIA brings on a psychologist as a financial planner.

Lurking in the background is an even bigger issue. Investors use a process of exclusion and very few advisors had adapted their sales processes to avoid exclusion. How important is the process? It determines which advisors are selected by investors.

For example, an investor who interviews four advisors has a dilemma. His goal is to select one advisor, but he does not know how to identify the best advisor. He uses a process of exclusion to reject three and select one. See: How analytical advisors can finally supercede salesy advisors.

This decision process has impacted every advisor in the industry. You have to make sure you never give investors a reason to exclude you. Start by having a 2015-looking website and removing anything in your office that smacks of a 1975 insurance agency in Des Moines. See: Outdated RIA websites risk compliance trouble not to mention credibility .

4. Custodian credibility

Most advisors said they did not do a good enough job explaining the security of investor assets. Ironically, most of the advisors used one or more of the five major RIA custodians: Schwab Advisor Services, Fidelity Institutional Wealth Services, TD Ameritrade, Pershing Advisor Solutions, LPL Financial. But the role of these firms and the security they represent was largely ignored in their sales presentations. And, custodians were rarely mentioned on their websites.

This is an easy fix. Add custodian content to your website and your sales presentation. If custodian content is opaque, raise the issue with the representatives of the firm you work with. See: Part II: RIA custodians’ answer to challenges to their monolithic control: We still have big-time scale advantages.

5. The right questions

Advisors identified credibility as a major marketing challenge. The source of the problem is that virtually all financial advisors claim to be trustworthy financial experts whether it is true or not. They know this is what investors want to hear. They use this tactic to reduce sales resistance.

This approach works for untrustworthy advisors with a trustworthy manner because advisors do not have mandatory disclosure requirements and investors do not know this about advisors. Most investors believe advisors when they make this undocumented sales claim. See: Why RIAs should avoid the carnival barker approach to publicity.

Advisors can throw their hands up in the air. A better approach is to take control of the conversation and give the prospects the right questions to ask about competence, ethics, expenses, and business practices. And, investors have to know good answers — ones that benefit them — from bad answers that create hidden risks.

Jack Waymire spent 28 years in the financial services industry. For 21 of those years he was the president of an RIA that provided advice and services to more than 50,000 individual and institutional investors. He is the founder of Paladin Registry, which provides free tools and information to investors who use the services of financial advisors.

Mentioned in this article:

Paladin Digital Marketing
Consulting Firm, Marketing & Public Relations, Investor Referrals
Top Executive: Jack Waymire

Coach Maria Marsala

Coach Maria Marsala

December 29, 2014 — 10:32 PM

Understanding differentiation (#1) is so very important. Most advisors tell me that they provide great customer service as a differentiator — so wrong.

Ask an advisor for their onboarding script — most wing it. By creating repetitive systems and tweaking them, advisors will know exactly what’s working and what isn’t. And have a script for their hires to use, too.

Niching also helps.
Advisor prospects make appointments to talk with me, and 9 out of 10 times when go to their website and LinkedIn prolife I am unable to tell who their clients are —-and I’m really looking. An advisors prospects are looking, too. Niching helps an advisor connect with the right prospects. And today, with technology being what it is, they can research their clients online before meeting them; learning more about them and how they are connected =- personally or professionally, too.

brooke southall

brooke southall

December 30, 2014 — 3:48 AM

Good stuff, Maria. But I’ll complain anyway. What is niching and how do I get in to one when I just want rich people of any shape or size?


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