Friendships develop through stages. You know many people. Advisors often hesitate because they aren’t sure how their approach will be received. Will I scare them off? The answer might be the opposite. As they say in real estate, the person is “ready, willing and able.”
There are plenty of reasons friends aren’t doing business. I met an advisor in Northern California who was excellent at getting new clients through his private club. He approached a guy one day. The guy was happy to be asked. He said yes. The advisor wondered: “Why didn’t you approach me?” The other member said: “I know you do business with lots of the big guys in the club. Word gets around. I assumed I was too small. I only have (large number.)”
Here’s the logic: As strangers become acquaintances and similar interests lead to friendships, decisions are made about you. It might be as simple as lending you some garden tools: Do I think I’ll get them back? Next they think about their car. Would they loan it to you if you asked? Babysitting is in there too. Would they trust you to look after their child if they needed to go out of town for a few days?
Put another way, have you earned their trust? The answer is yes. You did it incrementally, but they trust you. There might be signs like giving you a key to their house in case you needed to get in while they were away.
Trust isn’t just about keys and babysitting. They know what you do. They have asked themselves: “Would we be comfortable with (you) handling our money?” Often the answer is yes.
But they might not know how to bring it up. Like the club member above, they don’t want to be told “You are too small.” They need an invitation.
Here’s a tactful approach:
Step One: The introduction. “We are friends. You know where I work and what I do. I’ve never brought up business before because your friendship is important to me. I’ve never wanted to put our friendship at risk.”
Reaction: They will likely say: “Exactly. I feel the same way too.” You are on safe ground.
Step Two: The flattering assumption: “Besides, I’ve always assumed you work with someone else already. They probably take good care of you and provide excellent service. Most successful people have that kind of relationship with their advisor.”
Reaction: They are flattered you think they are successful. They might say: “No, I don’t have that kind of relationship. What can you do for me?” More likely they will just let you keep talking.
Step Three: The third party approach: “2020 was a difficult year because of the pandemic. You might know some people who haven’t been as lucky as you. (Having a good advisor relationship.) I thought we might spend a few minutes talking about “What I do. If you come across one of those people, you would know how I might be able to help them.”
Reaction: They should be receptive because you aren’t directly asking for their business. When talking about unnamed third parties, the tension is lessened. They might say: “I have a problem.” or “I fit into that category.” You tell your story.
This is a good, tactful way to learn which friends are ready to do business.
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 can be found on Amazon.