All financial advisors need to be adding clients. Newer advisors are starting to build their clientele. Experienced advisors need to replace clients lost through attrition. It can be easy to ask strangers to become clients and awkward to ask people you know. It makes sense to approach most people you know and give them the opportunity to become clients. Lets look at seven reasons why it makes good sense.
1. Everyone should have the opportunity to say no. If you approach a friend, ask them to become a client and they say “no.” that is their decision and they have made it themselves. When you decide not to ask them to do business, you are making the decision for them that they will not become your client. Do not take the decision-making ability away from them. Let them make their own decisions.
2. They might feel flattered. You are looking for people you can help. Generally speaking, they need to have liquid assets at a certain level because some investments have minimum thresholds or you need several to get adequate diversification. If you assume they do not have enough money, yet you ask them anyway, they may be flattered because they assume you think they are wealthier than they actually are in reality. Once they understand what you do and your thresholds, they might say they don’t fit the profile, but they know someone who does.
3. They needed help and you did not offer. A manager at a major firm related a story where an advisor knew a married couple and one of them died. Being sensitive, he did not bring up business because he did not want to appear predatory. He sat silently in the background while the surviving spouse sorted through their new financial situation. The advisor noticed that person was becoming more distant and the relationship cooled. Finally, they asked and learned: “You knew I was in a difficult position and had financial decisions to make. You were in a position to help me, but chose not to.” You want to be sensitive, but it makes sense to let them know you have helped other people in similar circumstances. You respect their privacy, but are here if they need help. All you need to do is ask.
4. You have friends with problems, but they have not approached you. You have known these people for a long time. You have picked up clues they have financial decisions to make. They know what you do, so you assume they have made a conscious decision not to reach out. Neither do you. They may have a problem, but do not know where to turn for advice. They have a limited understanding of how you help people. They might assume “you help people invest their money.” They do not know your expertise extends to the lending side and insurance, including long term care. Again, give them enough information to allow them to make an informed decision.
5. They are waiting to be asked. Your friend meets your criteria to become a client. They have not approached you, leading you to believe they have made a conscious decision not to do business with you. They might assume you have all the clients you can handle. Asking for help would be an imposition. They do not want to impose. In reality, they are ready. Approach these silent friends. Let them know if they need help, you would be honored to have them as a client.
6. You have earned their trust. Trust is earned slowly over time. You have achieved this threshold with many friends. They know what you do. They have “tried you on for size” in their minds. They are ready to become clients but have not taken the step of reaching out. Perhaps they do not feel a sense of urgency. Consider the analogy of one person proposing marriage to another. The question is not a complete surprise in most cases. This is obvious because they answer immediately. When you ask them to become a client, this may be a decision that requires little thought on their part.
7. They will work with someone else. A New York advisor made a good observation. If you have a friend who is in a position to invest, you might have your reasons for not asking them to become a client. They will probably invest anyone, only with someone else. If they get bad advice and suffer significant losses, they will probably approach you to take over their account and somehow “make them whole again.” Why? Because you are their friend and they trust you. Her logic was: “If you are going to be called upon to help when things have gone badly wrong, you might as well get involved at the front end and give them the best advice possible while their assets are still intact.
Let us wrap up by recalling the first point: “Everyone should have the opportunity to say no. Do not make the decision for them.”
Bryce Sanders is president of Perceptive Business Solutions Inc. He provides HNW client acquisition training for the financial services industry. His book, “Captivating the Wealthy Investor” is available on Amazon.