Do financial advisors in Asia have an easier time of getting new clients? I’ve often thought so. In parts of Asia, it’s considered important to assemble a personal group of experts. It’s called a Guanxi in Chinese. This is your “go-to” list when you need advice or want to buy a product or service. Here’s the really great part: When you need something and someone in your personal network sells that service, it’s considered an insult not to contact them first. Can you imagine a better referral generating system? I can’t.
Life in the West is different. We don’t systematically assemble a network of service providers, but we do have friends. When we have a need, we feel doing business with someone we know will give us a fair deal. Why? Because we have already built up a level of trust and there is an ongoing relationship. We feel a friend wouldn’t sacrifice the relationship to make a quick buck.
I’ve written before about why friends hesitate doing business with people they know. Now lets look at why they prefer that arrangement:
1. They like you. It’s simple. People prefer doing business with people they like. When I was a financial advisor in Brooklyn, I had a client who was a doctor. We became friends and I decided I would like to have him as my family physician. I asked him how I go about it. He laughed and said: “Bryce, I’m a pediatrician. You would be my oldest patient!” Obviously, I didn’t become a patient, but you can see the logic that got me to ask.
2. Objective advice. There’s an old proverb: “No man is a hero to his valet.” This means people who are close to you know you best, warts and all. They still choose to be your friend. This means you don’t pretend in front of each other or only tell them what they want to hear. If they want to do something risky or are overextending themselves to the point they could suffer severe financial loss, you will tell them. You won’t physically slap them, but your advice will be unbiased and direct.
3. Treat you like the best. Your friends know you have clients much richer than them. You keep your client identities confidential, but clients often talk about their advisors. They know your UHNW clients get white glove service. They assume as a friend, you will give them the same degree of personal service and attention. Why? Because you are friends. In their mind, it doesn’t matter the UHNW guy has 100x more money with you!
4. Tapestry. A client I interviewed for my book explained this part to me. As a friend, you understand the context of their lives, their tapestry. When a financial planner sits down with a prospect, they gather data. At that point, they just have numbers. They know the prospect is married. As a friend, you know the strength of that marriage. They know the prospect has seven children. As a friend, you know if they are pleased or disappointed with the life decisions each one has made. Put another way, as a friend, you “get” them.
5. The known quantity. You’ve heard the expression: “The devil that you know is better than the devil that you don’t.” OK, you are an advisor, not a devil. The point is the same. You are a known quantity. They know your strengths and weaknesses. They’ve considered everything and chosen to be your friend. If they call or walk into a brokerage office, they will likely get “the broker of the day” or be assigned as a lead. What do they know about that advisor? Are they in the top 20% or the bottom 20%? Are they committed to their firm and career or planning to quit next week? You are the safe choice.
6. They trust you. Another person I interviewed explained trust is built little by little, over time. As a friend, you have achieved that threshold. If they sat in front of a stranger at another firm, it would take awhile before they built up that level of trust. You’ve already got it.
Some people say: “I don’t do business with friends.” They have their reasons. A New York advisor explained why you should set that rule aside. Here’s why:
• They will do business with someone else. If you choose not to take their account, they aren’t going to give up the idea of investing;
• If problems develop and they lose 70% of their money, they will come back to you, asking you to take over the account. Why? Because you are their friend. They trust you.