And what about my daughter-in-law? If she died, my son might still have to deploy. What funds would be available to care for my grandchildren? I made sure there was plenty of life insurance on each of them to counterbalance the risk of their premature deaths.
Your Clients Need You To Focus On The Best, But Plan For The Worst
What about your clients? What if a similar situation happened to them? Have you gone through scenarios like this with both your clients and your prospects to demonstrate that, in your role as their financial advisor, you think about more than just their investment portfolios or how their assets are allocated?
You don’t want your clients to ever have to go through an experience like I did and wonder what would happen to their home or their investment accounts if an unexpected death threw their plan into turmoil or they were ever sued. And let’s face it—the more money a prospect or client has, the bigger target they become.
From the time a prospect comes into your office, you want to first and foremost talk about risk management. Focus on all the various forms of risk that a prospect might be subject to.
Ask them about their parents, brothers and sisters, and their children. Explore all areas of risk—not just those that pertain directly to the client themselves. I learned many times prospects had parents that might one day be dependent upon them. If that were the case, why not talk about purchasing long-term care insurance on that parent so the burden of an extended long-term care occurrence could be mitigated?
Risk Management Is The 'Secret Sauce' To Closing Prospects
In my training business, I train all of my advisor students how to use a discussion on risk to close prospects of any size in the first meeting. I have a series of what I called Disturbing Tracts. These are 22 areas of risk they should be asking in a prospect or client meeting. I advise them that the very best way to win clients is with risk management, rather than focusing on your investment philosophy or manager selection process.
These disturbing tracts are a series of questions and scenarios that help clients think outside of the box to identify potential risks they need to address, manage or avoid.
If you want to close a new prospect, speak to them about scenarios that could potentially play out that could wreak havoc for them or for those they care about. It’s not fear mongering; it’s good financial planning. It is taking the time to point out potential pitfalls in their overall financial situation that haven’t been properly addressed.
Given the opportunity, every prospect or client would like the ability to address those issues before a situation befalls them and it’s too late.
I will say, because I brought up many issues with prospects that their current advisor had overlooked, I typically ended up with a new client. My goal was to close a new prospect in the first meeting, regardless of net worth. I want that for my advisor students as well. Prospecting is hard—when you do get in front of a prospect, you should be armed with the right tools to close them in your first meeting.
I can tell you from experience, you will find more success by addressing risks, rather than returns. Become an expert in risk management and your clients will thank you and your prospects will hire you!
Erin Botsford, CFP, The Advisor Authority, is the creator of the Elite Advisor Success System. Botsford was a 31-year veteran of the industry and a Barron’s Top 100 Advisor in all categories. Learn more about her and her training at ErinBotsford.com.