Posts Tagged ‘Skepticism’
Tuesday, July 19th, 2011
Recent posts have focused on approaches to overcome the skepticism of today’s investors and ways to get in front of prospective clients.
In talking to advisors who have reached out to prospects, a common objection they hear to moving accounts is “I don’t want to lock in losses by selling my investments now.” Sometimes this comes up when they first talk to a prospect on the phone, on other occasions it arises during the initial meeting or when the advisor is presenting recommendations.
Here’s a step by step response if you hear “I don’t want to lock in losses” when talking to a prospective client.
Start by validating the objection
Whenever a prospect raises an objection, they put their guard up because they expect that objection to be attacked.
Instead, respond by validating the objection, saying something like “I can absolutely relate to your concern. None of us likes the idea of locking in losses by selling when investments are beaten down.”
Responding in this way reduces tension and demonstrates that you share the investor’s concerns.
Get the prospective client talking
Your primary objective in any conversation with a prospect is to get them talking, learning as much about them in the process as you can.
It’s especially important that you unearth as much as you can about the concerns that investors have about moving. It may be that selling investments at depressed levels is only one of the barriers to making a change — and maybe not even the largest obstacle.
Try to learn more by saying something like: “What other concerns do you have about the possibility of making a move?”
If you can’t get a response, you could try something along the lines of: “In talking to other investors, one concern about moving advisors relates to the paperwork entailed and the possibility of tax records being misplaced. To what extent is this something that worries you?”
Or if you want to be a bit more aggressive, you could say something like: “Some investors I’ve talked to tell me that they’re not sure they’ll really be better off working with someone new. Is this something that concerns you?”
Let prospects know they won’t be selling everything
Many investors are concerned that a new advisor will propose selling all of their investments as a matter of course in order to demonstrate how smart they are (and by implication how ill-advised the investor was in their choice of their previous advisor or to try to invest on their own.) As part of that, often investors fear that a new advisor will want to sell everything indiscriminately, regardless of the merit of these investments.
Deal with this up front by saying something like “It’s unlikely that we’d be looking at selling everything you own.”
If talking on the phone, you could say: “When we meet, I suggest we take a few minutes to talk about your objectives and goals as an investor and then go through your most recent statement so that we could talk about what the candidates to be replaced might be in light of that.”
If you’re meeting in person and you’ve already had the conversation about the client’s objectives, alternatively you could say: “What I suggest is that I take a copy of your statement and that we schedule a time to sit down again later this week. Between now and then, I’ll spend some time going through this in detail so that I can come back with specific recommendations on the investments it makes sense to retain and those that are candidates to be replaced.”
Focus on the positives
If a prospect agrees, focus first on what you’d hang on to — and err on the side of keeping investments rather than replacing them.
Next, write down a list of the investments you’d sell and beside that list write down what you’d replace those investments with.
Then go through each investment you’d sell and talk about what you like about that investment and what you don’t like. After that, talk about the investments you’d recommend putting in place of those investments you think the prospect should sell.
The key is to take the prospect’s focus off the pain of selling investments that are down and replacing it with the gain of the alternatives you’re suggesting.
Point out tax savings
If a prospect has a significant non registered portfolio, point out that they might recoup taxes by taking tax losses on investments that are down. You can offer to calculate how much they would get back — we all hate taxes, this can be a hot button.
Agree to maintain existing holdings for a period of time
If a prospect is still hesitant and a key reason for their unhappiness relates to poor communication last year, you could say: “I understand your concern about selling positions that are down. If you’re open to moving your portfolio over, we could agree to spend the first month developing a plan for you and spending some time ensuring that we’re on the same wavelength. Only after that would we look at making changes.”
Monitor how your portfolio would have done
Suppose you’ve gone through all of these steps and the prospect is still reluctant to make a move.
As a last resort, you could suggest using one of the investment tracking websites such as Globeinvestor to set up two portfolios on that site for them — the one they own and the one you recommend. As part of that conversation, agree that you’ll be touch about once a month to revisit how the two portfolios are doing and to answer any questions they might have.
As a result of the market events of the last year, we’ve seen a spike in the level of investor skepticism. Many investors aren’t just skeptical about their own financial advisor and financial institution, they’re skeptical about ALL financial advisors and ALL financial institutions. As a result, you need an approach to respond to statements like “I don’t want to lock in losses” that respects the level of anxiety many of today’s investors feel.
For more information, please visit http://www.getkeepclients.com.
Tags: Depressed Levels, Extent, Investments, Investor, Investors, Losses, Moving, Objection, Objective, Obstacle, Occasions, Paperwork, Prospective Client, Prospective Clients, Prospects, Skepticism, Step By Step, Step Response, Tension
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Wednesday, March 16th, 2011
Talk to advisors about the challenges they face today and you’ll get a lengthy list — often headed by unhappy clients, reduced income and a struggle to stay positive and productive.
While these are all serious issues, for most advisors they are dwarfed by the number one obstacle to getting business back on track — and that’s rebuilding client trust in our competence and our integrity.
Given the intangible nature of advice, it’s impossible to have a functioning relationship without a minimum threshold of client confidence.
The good news? There are clear steps that every advisor can take to begin the process of reestablishing trust.
One investor’s story
Rebuilding trust starts by understanding what’s led to its decline.
While recent performance may have been the catalyst for consumer skepticism, this is far from the sole cause.
A recent article in Atlantic Magazine titled “Why I fired my broker” detailed why one investor became disillusioned with his advisor. In the article, he quotes a high profile US money manager to the effect that “the financial system is rigged against the average investor” and talks about the absence of contact from his broker since last fall.
The good news is that he has not given up on the industry, but he is much more guarded going forward.
His parting sentences:
“Our main job now is finding someone to advise us. This is a very difficult task.
This search is made more difficult because we don’t have enough money to make ourselves interesting to most of the best advisors and the typical advisor is not sufficiently independent-minded to be effective.
Unconventionality makes me nervous, but less so than conformity. I’m finished with conformity. In picking an advisor, I’m also looking for someone who is unleveraged; someone who is putting his own money into the investments he’s recommending and someone who can explain to me, in a few sentences, in language easily understood by earthlings, his philosophy of investing.”
Begin by taking responsibility
So that’s the problem, how about the solution?
Start by recognizing the problem, make rebuilding trust a paramount priority and begin to put specific strategies in place to repair your relationship with clients.
In many cases, rebuilding trust starts by acknowledging some level of responsibility.
It’s not just financial advisors who have taken a hit in their trust level. A poll of Americans taken early this showed trust in corporations at 38%, down 20% from a year ago and at the lowest level on record, well below where it stood in the post-Enron era. In recent articles in Fortune Magazine, Indra Nooyi of Pepsico and Jamie Dimon of JP Morgan Chase talked about how business needs to rebuild trust.
Dimon also addressed the issue of taking responsibility. He wrote: “In order to address the public anger and outrage over what has happened to our financial system, we in the banking community need to take some responsibility. Banks, including ours, should acknowledge that we made some mistakes.”
In interviews with investors, one of the biggest irritants is the failure of their advisors to admit any fault or take any responsibility for the meltdown of their portfolios. In some cases, all that investors are looking for is their advisor to say they’re sorry.
Here’s how one conversation might go:
“First and foremost, I’m truly sorry that I was unable to anticipate the events of the past year. I would have dearly loved to have been able to shelter you from the market downturn — unfortunately, these took just about everyone by surprise, me included. What I would like to talk about is what we’ve learned from this and how these lessons are shaping the recommendations I’m making going forward.”
Four drivers of trust
One of the top names and researchers around the issue of how to build trust is a U.S. based consultant named Charles Green.
He’s created a trust building formula that advisors can apply that has four elements — Trust equals C plus R plus I divided by S.
The first three drivers of trust are above the line, or the numerator if you remember your high school algebra. They’re Credibility, Reliability and Intimacy.
Remember, there are two elements of trust — trust in your capability and trust in your integrity.
Credibility addresses the first issue. How much do clients trust your competence and how believable you are in terms of the advice you’re providing? Are you seen to have real expertise? Does your track record build your credibility? Do you instill confidence in clients that you are providing the best possible advice?
Even where clients have been comfortable on this dimension in the past, their confidence in your ability to provide good advice has been shaken and needs to be rebuilt.
Reliability basically speaks to whether you do what you say you’re going to and deliver on your commitments. That can be little things — if you say you’re going to call, do you call? Or it can be big things — if you tell a client that their maximum downside risk in a 12 month period is 20%, does the portfolio you construct deliver on that?
The third factor above the line is intimacy. Do you engage the client at a deep, personal level? Do you ask questions that tap into their emotions and feelings? Do they feel that you are really listening to their answers — and is your relationship with them such that they feel comfortable sharing those with you?
These first three elements in the trust equation make up the total above the line.
The most important driver of trust
The last factor is the number below the line — and is as important as the first three combined. That below the line element is perceived self-orientation, in other words to what extent are clients concerned that you may be putting their interests behind yours?
There are a number of things that you can do to address this.
Do you appear to be really interested in what clients have to say? Do you ever seem to be in a hurry — is there any point where you demonstrate impatience and the desire to move things along? Do you really seem to be listening to them? (There’s that listening word again.)
Do you contact them with ideas and advice even when there is no revenue entailed for you? Whether it be on a personal or business matter, if every conversation has something in it for you, clients may be legitimately unsure about what drives those calls.
And something that’s especially problematic these days, are clients absolutely comfortable that your recommendations are not skewed by the compensation that results?
Recently, there has been extensive media coverage about how advisors’ recommendations may be motivated by their interests rather than clients. Short of doing something for free, compensation is always an issue. Even when dealing with accountants and lawyers, some consumers wonder whether all the time they were billed for was necessary or actually spent.
Compensation is particularly a problem in the financial industry, however, where it is typically commission based, embedded in management fees or billed as a percentage of an account. Even when the fees are transparent, clients sometimes wonder whether they are getting good value.
There is no perfect solution on compensation, other than being upfront and transparent — here’s what I charge, here’s why and here’s what you get for it. As well, some advisors need to be more open about discussing available alternatives on how clients can pay for the advice they receive.
What’s your trust quotient?
Rebuilding trust will not happen quickly or easily — and it’s tempting to put it off as a result. Given it’s critical importance, however advisors who don’t give reestablishing trust priority do so at their peril. Now’s the time and today’s the day to being the critical task of repairing client trust.
For advisors who want to learn more, a twenty question diagnostic online questionnaire can be completed at no cost at Charles Green’s website. You’ll receive a short report that highlights potential weak spots and makes recommendations.
Go to http://www.trustedadvisor.com/ and click on What’s your TQ rating?
For more information, please visit http://getkeepclients.com.
Tags: Catalyst, Client Challenge, Client Confidence, Client Trust, Competence, Conformity, Decline, Earthlings, High Profile, Intangible Nature, Integrity, Minimum Threshold, Money Manager, Obstacle, Rebuilding Trust, Recent Article, Sentences, Skepticism, Sole Cause, Unhappy Clients
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Wednesday, November 24th, 2010
The world has changed in all kinds of ways over the last decade.
First, attention spans have shrunk dramatically.
Beyond this, most everyone is much more time pressed.
And third, the level of skepticism has spiked among existing and prospective clients alike.
As a result, what worked in terms of client communication as recently as five years ago doesn’t work nearly as well today. As a result, you need to fundamentally change how you communicate with clients.
Getting written communication read
Lets be clear, clients still want to hear from you — in fact chances are they want to hear from you more often.
But they typically want each of those interactions to be shorter
So for example getting something short once every month or two rather than a longer piece once a quarter.
Beyond this, clients are looking for communication that’s tailored to their situation and that, given today’s skeptical mood, taps into credible third party support.
Suppose a client received one of two things.
One alternative is a quarterly, four page glossy newsletter from you or your firm talking about the outlook for the economy, interest rate forecasts, opportunities in global investing and tax savings strategies.
The other option is a monthly email with an article from Fortune, Forbes, Barrons or the New York Times, discussing one topic such as the dollar, prospects for the US economy or trends in global investing.
When asked, which do you think clients prefer?
The vast majority go for the monthly articles — they provide not just shorter and more frequent communication, but also tap into credible third party support.
All in all, monthly emails with those articles are much more closely aligned with what most clients actually want.
Identifying if material is well received
Note that in some cases there is still a role for those four colour quarterly newsletters.
Tags: Attention Spans, Barrons, Client Communication, Email, Forbes, Fortune, Frequent Communication, Glossy Newsletter, Interest Rate Forecasts, Last Decade, New York Times, Prospective Clients, Prospects, Quarterly Newsletters, Skepticism, Taps, Tax Savings Strategies, Third Party, Time And Money, Wasting Time
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Wednesday, June 30th, 2010
Each Wednesday we are sending you 3 articles you can send to clients to stay in touch and to promote open lines of communication with them. Its especially difficult to be motivational when there is so much skepticism about the economy and the market. When the market was a screaming buy, clients were not exactly beating down your door, and now that the market has had a massive rally, the skepticism turns back to downside concerns.
This is what the legendary investor Jeremy Grantham, founder of Boston-based GMO, referred to as rigor mortis, the immobilization that sets in, and what to do about in his prescient and resonant March 2009 newsletter, “Reinvesting When Terrified.” In late July, Grantham followed up on his views of what to do at this stage of the market’s advance, mostly by discussing what he is doing and why, in “Boring Fair Price!,” and shares his Plan C, What to do if the market overruns:
Plan C: What to do if the Market Overruns
Given our view that we are in for seven lean years in which the market will be looking for an excuse to be cheap, we recommend taking some risk units off the table, including becoming underweight in equities – between 1000 and 1100 on the S&P, if it gets there this year. Around 880 you should continue to move slowly to fair value, twiddle your thumbs, and wait to see what happens. Boring!
Otherwise, it is time to focus on the lesser issues: which types of equities are cheaper or more expensive than the market. This leads us back once again to the bet on quality stocks.
This week I thought it would be interesting to focus on some thought provoking, but positively balanced subjects of discipline and direction. Ideas, that is, that would spur calls to action. This week’s selection is about the importance of Quality in investing, now and timelessly.
Jeremy Grantham, a quiet giant in the pantheon of great investors says this week, in Reuters, that the time has come to focus on quality and value, and get rid of junk. Seems like a logical thing to do, but naturally it is not. Getting out of investments that have had a strong run is emotionally very difficult, and then taking the proceeds and putting them to work in high quality assets, but have underperformed the market, is even more difficult. Separating the wheat from the chaff is an idea that is easier said than done.
In short, Grantham says its time to be “long quality, and short junk,” as those stocks and bonds that were most battered in the crisis had the best performance.
Quality in focus after investor binge on cheap assets, Reuters, August 11, 2009
U.S. investor GMO calculates that the 40 stocks in the S&P 500 with prices above $50 rallied 21 percent on average between March and April. The 50 stocks with prices below $5 rallied 115 percent.
Credit markets have seen a similar trend with Bank of America-Merrill Lynch’s once battered global high-yield bond index gaining some 45 percent since March.
Now, however, investors are looking for the cream to rise to the top.
“Long quality (or long quality and short junk) is substantially the most outlying bet available today in all global equities,” GMO Chairman Jeremy Grantham wrote to the firm’s clients.
By the way, Grantham’s new focus is high quality energy and energy transition stocks. This is all covered in “Boring Fair Price!”
It should be obvious from simple arithmetic that population growth is on a direct collision course with increasingly scarce resources. For millennia, food constraints held the world’s population nearly constant. About 12,000 years ago, these constraints were altered signifi cantly with the start of organized agriculture. Then, around 200 years ago, the so-called Agricultural Revolution – the introduction of science to farming – allowed for another doubling in output. All of this was dwarfed, however, by the harnessing of hydrocarbons – the sun’s energy stored over hundreds of millions of years. This remarkable patrimony is now about half gone, and some time in the next 10 to 40 years, half of all of our resources will have been used or, stated another way, one last doubling will remain.
David Rosenberg, Gluskin Sheff’s Chief Market Economist, attests to the overbought nature of low quality stocks in this rally with these facts in his July 27th notes:
• The 50 smallest stocks have rebounded 17.2% from their nearby July 10th lows, outperforming the largest 50 stocks by 750 basis points.
• The 50 most shorted stocks have rallied 17.6%, outperforming the 50 least shorted stocks by 880 basis points (over the same time frame).
• The 50 stocks with the lowest analyst ratings have outperformed the 50 with the highest ratings by 380 basis points.
• 85% of the market has already broken above their 50-day moving averages, which in some sense highlights an overbought market, but the other three factoids still attest to a low-quality rally.
Bloomberg reports that the US economy is defying its most irrefutable skeptics by turning around, that the Obama stimulus is working:
U.S. Enters Recovery as Stimulus Refutes Skeptics (Update1), Bloomberg.com, August 12, 2009
Recovery from the worst recession since the 1930s has begun as President Barack Obama’s fiscal stimulus — derided as insufficient and budget-busting months ago — takes effect, a survey of economists indicated.
The economy will expand 2 percent or more in four straight quarters through June, the first such streak in more than four years, according to the median of 53 forecasts in the monthly Bloomberg News survey. Analysts lifted their estimate for the third quarter by 1.2 percentage points compared with July, the biggest such boost in surveys dating from May 2003.
“We’ve averted the worst, and there are clear signs the stimulus is working,” said Kenneth Goldstein, an economist at the Conference Board in New York.
The new projections, following better-than-anticipated reports on manufacturing, employment and home construction, echo gains in investor confidence that have propelled the Standard & Poor’s 500 Stock Index to its high for the year.
Finally, high quality dividend-paying stocks have underperformed the market during the recovery, and while they are never a sure bet, dividends and the ability to maintain one, serve as evidence of a company’s relative strength and quality. Consider wading into dividend-paying stocks or funds as a way to get into the market at a time when focus is shifting towards being “long quality.”
Stock Dividends Make a Difference, Wall Street Journal (via Yahoo, without a sub), August 12, 2009
As the stock market continues to recover, more investors are easing back into the market. While stocks have had a good run, they remain well off their record levels reached in 2007.
Given the carnage of the past two years, it’s unsurprising that some people are hesitant to invest in the stock market. One strategy to consider when wading back in is to look at dividend-paying stocks. Such stocks, or mutual funds that focus on dividend-paying stocks, often called “equity income” funds, provide you with an income (the dividend) while giving you a chance to benefit from capital appreciation of the stock.
Beyond the dividend income, there are several reasons for investing in dividend-paying stocks. One, companies that can maintain or even increase their dividend payouts in the current environment are proving their strength. Also, in the wake of various accounting scandals, a steady dividend is proof that a company is actually making the money it says it is making. While accountants can fudge lots of numbers in a quarterly financial statement, they can’t conjure up the cash required to make dividend payments.
Update: Globe and Mail’s David Berman asks how much longer this low-quality rally can last? No dividend, low growth: Big returns: But how long can low-quality stocks lead the market?
On a final note, we would love to hear from you with your suggestions and your feedback, as well as article submissions. Please let us know if there are some other areas that we could help you to cover. Thank you!
Tags: Amp, Bet, Discipline, Downside, Excuse, Gmo, Immobilization, Investor, Jeremy Grantham, Lean Years, Massive Rally, Overruns, Pantheon, Quality Quality, Quality Stocks, Quiet Giant, Reuters, Rigor Mortis, Skepticism, Underweight
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Wednesday, June 9th, 2010
In recent conversations with investors, I have been struck by the level of skepticism many feel about whether their advisor’s and firm’s interests are truly aligned with theirs.What’s especially interesting is that the majority of these investors haven’t fired their advisors — but are simply looking at the advice they’re receiving with a much more jaundiced view.
An article in the May issue of Atlantic Magazine, titled “Why I fired my broker” does an excellent job of capturing the broad sense of being unsure who to trust that many investors today share.This article is not a rant, far from it. Rather it presents a rational recitation of some of the elements that have caused reasonable investors to become skeptical (and in some cases cynical) about the advice they’ve received in the past and are getting today.
Five of the key messages in the article:
1. Like many, this writer and his wife feel shell-shocked by last year’s downturn. “I took a random walk down Wall Street and got hit by a bus.”
2. Investors are interpreting messages about the need to focus on the long term as being a cop– out on the part of the financial industry. What the writer hears is “Give up — you’re not going to make money for five, ten or twenty years, get used to it.”
3. Many investors are paralyzed because of the level of uncertainty we’re all operating in. A Nobel prize-winning economist says “You no longer know the world you live in — it’s unclear what rules apply.”
4. This writer, like many investors, is unsure who to believe and who to trust. Bill Gross, America’s best known bond manager, says “The system is rigged against average investors.” The writer goes on to say “My crucial mistake was believing that brokers, wealth managers and the cable-tv oracles who make up the financial services industry complex had my best interests at heart.”
5. Despite the title of the article, he says “I didn’t fire my broker — he fired me, when I haven’t heard from him since before September.”
Consider taking twenty minutes this weekend to read this article — and think about whether some of your clients might be feeling the same way that this writer does.
The good news is that he is not giving up on investing or on working with a financial advisor. In his concluding remarks, he writes “Our main job right now is finding someone to advise us — this is a very difficult task.”
There is much work ahead for the financial industry. High on the list of tasks is rebuilding trust among many investors, not just trust that the market will be a good place to be going forward but trust in the advisor and firm they work with.
An important first step is understanding what has led to the heightened skepticism on the part of many investors — and this article is as good a place as any I’ve seen to begin that process.
In future articles, I’ll explore how to go about rebuilding trust with investors.
Tags: Bill Gross, Bond Manager, Cable Tv, Client Trust, Conversations, Cop, Downturn, Economist, Financial Services Industry, Mistake, Nobel Prize, Oracles, Random Walk Down Wall Street, Rant, Recitation, Skepticism, Twenty Years, Uncertainty, Wall Street, Wealth Managers
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Tuesday, May 18th, 2010
Given markets over the past year, today should be a great time to be bringing new clients on board — after all, history shows that clients move when they’re unhappy, not when things are going well.
Advisors need to do three things to take advantage of this opportunity:
1. Conviction and confidence
Many advisors tell me they have seen an erosion in confidence around their ability to provide good advice and serve clients well. Being confident in the value you bring is the necessary first step to prospecting success.
Second, you need to carve out the time to focus on prospects, whether it be two hours a week or twenty two. In my conversations with advisors, many say that existing clients consume all their time and there’s no energy left over to focus on prospects. This is sometimes avoidance behaviour, ignoring the reality that almost every advisor will see client defection in the period ahead and that new clients will be needed just to maintain assets at the existing level.
Finally, even advisors who are talking to prospects about providing a second opinion report that the response is often an indifferent one. Even if you bring confidence in your advice and give prospecting priority, you need an approach that responds to today’s investor reality.
That approach has to address the level of skepticism that marks many of today’s investors — they’re not just dubious about their own financial institution and financial advisor, many are skeptical about all financial institutions and all financial advisors. As a result, even investors that aren’t all that happy are often reluctant to move, not sure it would be better elsewhere and taking a “devil you know” view towards making a change.
The result is that with many investors, you have to earn the right to get them to share their statements and give you the opportunity to provide a second opinion.
If you’ve been communicating with prospects regularly over the past couple of years, chances are you’ve earned that right.
And if you’ve built recognition, credibility and visibility in the community a prospect belongs to, this may not be an issue.
But if you’re going at this from a standing start, you will often need to start by building trust.
Here’s how one Chairman’s Club level advisor went about doing this last fall.
In late September, she approached her clients and said: “Given markets over the last while, my team and I are spending a lot of our day staying on top of all the available information on what’s happening. Going forward, I’m going to be selecting one article each week that I think is particularly useful and sending it on Friday afternoon to any clients that are interested in getting this. The sources of that article could be as diverse as The Wall Street Journal, the Economist or a commentary from a leading money manager. Is this something you’d be interested in receiving?”
The response was overwhelming positive — clients were anxious, the sources she talked about were credible and she was sending only one article.
She then approached prospects, explaining that she was sending one article each week to any clients who were interested and would be happy to extend this to that prospect as well. Again, she got a very positive reaction.
Six weeks later, in early November, she began following up with these prospects. She asked them if they had any questions on the most recent article she’d sent and also asked if they’d like to schedule a time in the next two or three weeks to sit down and talk about what was going on in the markets and about their own situation. While not everyone she talked to jumped at the offer, the response was generally very positive — even people who didn’t want to meet right then generally left the door open to talking in early 2009.
Every advisor is different and no approach will work for everyone. Just bear in mind that to capitalize on today’s prospecting opportunity, you need conviction about your value, the right level of priority and a process that is aligned with today’s investor reality. Put those three things in place and you too will see new clients come on board.
For more information about Dan Richards, visit http://www.getkeepclients.com
Tags: Assets, Avoidance Behaviour, Confidence, Conversations, Conviction, Defection, Devil, Erosion, Financial Advisors, Financial Institution, Financial Institutions, Good Advice, Great Time, Level 3, Momentum, Priority, Prospects, Second Opinion, Skepticism, Three Steps
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Wednesday, May 12th, 2010
Given the spike in skepticism, building trust and credibility with prospects has never been more important.
Of course, the best way to do that is to get introduced by referral a referral — the reason referrals work is that they’re a transfer of trust; when a client refers you to a friend or colleague, the trust that your client feels towards you is transferred to their friend.
Beyond referrals, another way to build trust is by offering to share testimonials with existing clients about the experience they’ve had working with you. The idea here is that when you’re talking to a prospective client on the phone or meeting with them, you’re able to say “Here are comments from some clients about the experience they’ve had working with me.”
And on that piece of paper you have five short comments with the names of actual clients.
Ways to make testimonials more effective
There are a few things that can make testimonials more effective.
First, you have to use actual client names — initials largely defeat the purpose of the exercise.
Second, you can say a bit about them — the area they live in and perhaps what they do. So for example, it might say Paul Smith, North Toronto, Consultant or Corporate Executive or Retired.
And in the perfect world, you’d borrow from American Express and talk about how long they’ve been a client — for example client since 1990, client since 2001, client since 2006.
Finally, you can make the testimonials relevant to your prospect.
So you could say “Here are five comments from retirees, or senior corporate executives or business owners.”
By making the testimonials more relevant to your prospect, you increase their impact.
Getting client agreement
There are two steps to getting a client testimonial.
The first step is getting a client’s agreement to provide it.
And once a client has agreed, you have to actually get the testimonial itself.
The best way to get a testimonial is face to face, although it can be done over the phone.
Let’s suppose you’ve just had a meeting with a client you’ve worked with for a number of years. Your sense is that they’re reasonably happy and also that their personality is fairly open and outgoing — they’re not someone who is secretive or withdrawn or uptight. In the perfect world, in fact, at some point in the past they would have referred someone to you.
At the end of the meeting , you say:
“Paul, I wonder if I could ask a favour.
When I’ve been meeting with prospective clients recently, a couple have asked if they could get a sense from existing clients of the experience that they’ve had working with me.
As a result, I’m approaching a few clients about the possibility of getting a short written comment about what their experience has been that I could offer to prospective clients.
And I wonder if you might be able to help me out by giving me a comment I could use, along with four or five other clients.”
Asked that way, most clients will agree.The key is how you started — “I asking for a favour.”
And you’ve also said that this client will be one of five or six, so won’t be singled out.
Getting the testimonial
Now you have agreement to provide a testimonial, but you don’t actually have the testimonial.
Some clients will say “Why don’t I write something down and I’ll send it along to you?”
The problem is that now you’ve lost control. The client may or may not send it and you don’t want to be hounding them. In fact, they may actually start ducking phone calls on other things because they feel guilty about not sending your testimonial, so it could strain the relationship.
And even if you do get the testimonial, you may not be able to use it — it might be too long or too convoluted.
After a client agrees to provide a testimonial, your response should be
“That’s great, thank you very much — I really appreciate your help on this.
I wonder if I could take two final minutes and ask you — if you had a friend or someone at work ask about your experience working with me and how you’d describe me, how would you answer that question?”
Then you sit back and listen and write down how your client answers that question.
Suppose your client says:
“I have found Dan very good to deal with. He’s managed risk in my portfolio, is on top of my account and is always quick to respond to my questions.
Your response to your client is “here’s what I heard you say” — and you play back the words the client just said, perhaps in somewhat shortened form. And then you say:
“That’s exactly what I’m looking for — could I use that?”
Most clients will quickly agree, relieved because they’re off the hook and now you have your testimonial.
Getting client agreement on personal information
There are a couple of final details.
First you have to get client agreement to use their name, saying something like:
“Paul ‚thanks again for your help on this — I truly appreciate your help.
I’ll send you the final list of all the testimonials. If it’s okay I’d like to use your name and say you live in North Toronto and perhaps say that you’re a consultant, but won’t provide any personal information beyond that. Are you okay with that?”
Depending on your firm, you may also have to get clients to sign an agreement to allow you to use their testimonial and disclose their names — you should obviously button this down before talking to clients.
Note that there is an upfront investment of time to put together your client testimonials. By spending that time, though, you can differentiate yourself with prospects and build trust and credibility.
Tags: American Express, Building Trust, Business Owners, Client Names, Client Testimonial, Colleague, Compendium, Corporate Executives, Credibility, Initials, North Toronto, Paul Smith, Perfect World, Piece Of Paper, Prospective Client, Prospects, Referral, Referrals, Skepticism, Spike, Target, Two Steps
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Friday, December 18th, 2009
As prefaced in today’s newsletter:
During this period of heightened requirements for communications to your clients, keeping in touch with your network of clients and prospects is critical. While there is no substitute for one-to-one meetings and phone calls, weekly or periodic emails are an effective way of staying visible and developing frank and open discussions with both clients and prospects.
Starting today, and every Wednesday from today, as a service to you, we will be sending a listing of 3–5 articles from high value sources (e.g., G&M, WSJ, NYTimes) that you may use to send to your clients and prospects as part of your communications strategy. We will also include some helpful prefacing notes that you may use as well.
Keep in touch, and , by the way, if and when you find useful articles, we would be extremely grateful for your submissions.
Below is this week’s selection of articles that you can send to clients.
Here are three articles that I thought you might find interesting which discuss the economic outlook of Lakshman Achuthan, one of the foremost economists in the US, the outlook for stocks from the Wizard of Wharton, Jeremy Siegel, and an article from the Wall Street Journal about the opportunity in income/dividend paying stocks (as a general heading).
The Recession is Over!
ECRI declares the recession over with the US economy tracking up to 2.4% in the third quarter…
Source: Slate.com/Washington Post
There is a great deal of skepticism about the economy, and many mixed offerings in terms of opinion on outlook. The Slate.com article, The Recession is Over!, discusses the contrasting view of Lakshman Achuthan, of ECRI (Economic Cycles Research Institute), one of the most highly regarded independent economists, known for a long list of accurate and prescient economic forecasts, who points out that three significant leading indicators are currently flashing green.
They’re (ECRI) the Spocks of the economic forecasting crowd—unemotional, uninvested in anything but the logic of what history and their dashboard tell them. “From our vantage point, every week and every month our call is getting stronger, not weaker, including over the last few weeks,” says Achuthan. “The recession is ending somewhere this summer.” In fact, it may already be over.
Jeremy Siegel: ‘The Market Will Stage Another Recovery’,
Knowledge@Wharton, June 24, 2009
Jeremy Siegel, Wharton School Professor, Director of Wisdom Tree ETFs and author of the investing classic, Stocks for the Long Run, says that now that the recession will not turn into a depression call stocks are poised for a recovery.
Siegel: Well, of course, we had a tremendous downturn from January to March, a plunge. And we’ve had recovery back to those January levels, basically. So year-to-date, we’re sort of even on the market. Actually, in Asia, we’re well above it. Markets are about 20% higher than the year-end. For the emerging markets and the Asian markets, there’s been a much better recovery, because there’s been a better economic recovery.
It’s always very hard to predict the stock market. It’s certainly taking a breather now. I maintain that if we can keep oil at the $70 level, and if interest rates on long-term bonds, 10-year bonds, don’t go much above 4%, the market will stage another recovery that could bring it up another 15% to 20% — really, by year-end. It’s hard to know exactly when that will take place. But I think people really see [that] the recovery is coming. Again, just like they were relieved that, “Oh, it’s not a depression, it looks like it’s ending,” [they see] we are getting some recovery. I think if the [price of oil] and interest rates … remain stable and low, we will put more money in stocks. There’s still over $4 trillion in money funds that are earning about 1% or less, which is not as attractive as rates that I believe could be moved into the market, once prospects of the recovery seem more certain.
Bright Outlook for Income Investors
July 4, 2009 — Wall Street Journal — By Tom Lauricella
Out of last year’s turmoil in markets a bright spot has emerged for investors looking for income — The payout on dividend-paying (or income-paying) stocks has gone up as a result of share prices falling further than payouts.
The main point of this article is that battered high quality dividend stocks as well as government bonds are now offering higher real rates of return as a result of inflation running at 2% or lower.
Yes, dividends may have plunged — but share prices have fallen further. Translation: The percentage payout of many dividend-paying stocks has actually gone up. Some traditional yield plays — such as utilities — look attractive. Bond funds, aside from U.S. government bond funds, offer other options.
And investors shouldn’t dwell too much on yields that seem low. What matters is how they compare to inflation.
“When investors see a yield of 4% or even 3.5%, it looks like a low-yield investment,” says Fran Kinniry, head of the investment strategy group at Vanguard Group. “But with inflation running at 2% or lower, the yields on fixed income or even equities aren’t that poor.”
Tags: Communications Strategy, Dashboard, Dividend Paying Stocks, Dividend Stocks, Earnings, Economic Cycles, Economic Forecasting, Economic Forecasts, Economic Outlook, Economists, Income Dividend, Jeremy Siegel, Lakshman, Leading Indicators, Offerings, Open Discussions, Periodic Emails, Prospects, Recession, Skepticism, Slate, Spocks, Vantage Point, Wall Street Journal, Washington Post, Wharton, Wsj
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