From the January 2008 issue of Wealth Manager Web • Subscribe!

From Friends to Clients

There's an old saying in business that it isn't what you know, it's who you know. For the purposes of this book, I'd amend that to say "It's not who you know, but who you know and how you get along with them."

After all, business is nothing more than working with people. That's especially true in the prickly area of doing business with wealthy friends. For many brokers this is the most tantalizing and elusive goal of all. Many people feel far more comfortable doing business on a professional basis and not mixing business with pleasure. Financial Advisors often start a professional relationship with a client that also develops into a personal friendship that lasts for decades. When asked, most financial advisors prefer to do business with "people they like," yet asking these people to do business with them isn't easy.

Another challenge is approaching longtime friends and family members--people who have known you in previous careers or since you were a child--to now view you as a professional and do business with you.

In this chapter we will examine both sides of the issue: asking new friends whom you've met over the past few months to become clients, and approaching family members and longtime friends to do business with you.


The objective is to expand the relationship with high-net-worth friends and family from a social relationship to one that is both a social and a business relationship.

Do Family and Friends Do Business With You?

When exploring if friends and family "do business with you," you will uncover a series of reasons why they "don't do business with you." Listed below are 10 key questions that each identify a reason. The first nine can be addressed so the person becomes a client. Only the tenth reason is insurmountable.

1. Confidentiality--Can you keep their secrets? Friends don't know you are under a professional obligation not to talk about your clients. They assume, since they can tell anyone they want that they work with you, that you have the same freedom. This needs to be subtly communicated.

Years ago I visited a financial advisor in Napa, Calif. I noticed his financial plans, neatly arranged in binders in a bookcase, had code numbers rather than names on the spine.

He explained: "When friends visit, I tell them we live in a small town. People take a lot of interest in other people's business. When you visit me in the office, you never see a client's name on a binder or a piece of paper on my desk. Alternatively, if you ever became my client, and another client visited the office they would never see your name on a binder or piece of paper on my desk."

2. Do They Know and Understand What You Do?--Often the answer is, "Of course they know what I do!" However, they may only have a vague idea. They may think of you as "a stockbroker at XYZ" and associate you with buying and selling stocks. Difficult market conditions means they aren't interested in stocks right now, and therefore they aren't interested in doing business with you. Here's the test: Do they know if you do mortgages? They probably don't have any idea of how you run your business, your process and the products you offer.

3. Have they been asked to be clients?-- Often people assume friends and family members are naturally so supportive they would approach you to do business, much as you would approach a plumber or accountant in the family if you wanted something done. They may assume, "You haven't asked because you are not interested."

4. Do they know you are still adding clients?-- Do you know any attorneys or accountants who work for a large firm or partnership? Where do their clients come from? No idea? Then why should people instinctively know how you get your clients? They may think the firm "gives" them to you. They may think that you have enough clients. This may be especially true if you are visibly successful in your profession (big home, cars) or you always talk about how busy and overworked you are.

5. Do they know your account minimum threshold?--There's an interesting problem with the words high-net-worth individual or wealthy person. It always sounds like "more money than you have!" You may want to do business with a friend; however, they may think the amount they have to invest is too small for you. You need a way of communicating this information.

6. Is this the right time? Do they have money now?--Dr. Tom Stanley, when talking about selling to the affluent, explains that many wealthy people are paid on a form of "salary plus bonus." You need to talk with them when the bonus money is becoming available. For some businesses, this may be at the end of January; for others, the beginning of July. Wealthy friends may not do business with you because you are asking at the wrong time.

7. Are they comfortable with your experience?-- If you've been doing this for 15 years (or a few market cycles), this isn't a problem. On the other hand, if you are new to the business--perhaps you were an airline pilot six months ago and now you are a financial advisor-- friends may consider you inexperienced. There are two solutions to the problem: First, if you are a member of a team, talk about the combined experience of the team or the different specialties of each member. Second, talk about the training you received from the firm. Newer people know the newer techniques and may understand recently developed products and services better.

8. Are they satisfied with an outside relationship?-- Often wealthy people have financial relationships going back generations. These are difficult to displace, but there are a few opportunities. One solution is to request a smaller amount of money so the other major relationship isn't displaced. You may learn they have several relationships, some newer than others. They may displace the underachiever to start a relationship with you. The second solution is that things change. Firms get bought by others. The level of service the friend used to receive may deteriorate if the firm has been bought by another and absorbed into its operation.

9. Can You Deliver?--This is the "risk to friendship" that scares away business. The risk is really on the downside: If you doubled their money every three years, they could handle the risk to the friendship! A financial advisor in New York developed this approach: When a friend wants to invest in the market, be conservative. Stick to large capitalization growth or value funds (or individual stocks). Let the client determine they want to take more risk. Wait for them to ask about small capitalization growth funds or Internet stocks. By asking, they have an ownership stake in the idea. They are initiating taking additional risk.

10. Do they prefer to do business with someone else?-- There could be a simple reason why, such as confidentiality. However, if not, the answer may be, "They just don't like you!" and nothing is going to change that! If so, they probably would not have been the ideal client: As a New York City financial advisor explained: "If you don't have a good relationship with your brother-in-law, it's unlikely this will change for the better if they become a client!"

Bryce M. Sanders is president of Perceptive Business Solutions Inc. ( He provides HNW client acquisition training to the financial services industry. He has been published in the US and the UK.

This article is adapted from Captivating the Wealthy Investor: The Guide to Identifying, Meeting and Cultivating the Invisible Rich, by Bryce Sanders, available through and

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