From the July 2009 issue of Research Magazine • Subscribe!

It's Time to Provoke Your Clients

TCG Advisors' Philip Lay says that financial advisors can win back lost clients by getting to the source of their angst.

Don't hide from your clients in the worst economic downturn since the Great Depression -- provoke them!

That's the advice of Philip Lay, co-founder and managing director of TCG Advisors, strategy consultants whose all-tech client roster includes Microsoft, Yahoo and Intuit.

Provoking clients and prospects has zero to do with getting their goat, of course. The whole idea is to bring up a critical financial issue that's sure to strike a nerve and generate a strong response; then you set forth your insightful solution and unique value as an advisor.

Nowadays, neither conventional solution-selling nor a consultative tack is enough, Lay says. Though the provocation-based approach takes creativity and diligence to discover upfront just what's happening in the lives of clients and prospects, it's a powerful way to put yourself on their side of the table.

The process starts with identifying an "ominous" client problem that "matters so deeply that even in a downturn, the money will be found to fix it," Lay and partners Todd Hewlin and Geoffrey Moore wrote in the Harvard Business Review. The March 2009 article was geared to motivate corporate sales executives, but Lay says the technique works equally well for FAs.

Once you pinpoint the problem, formulate an original view, and then deliver the provocation. Your goal is "to address unacknowledged angst" and "make the status quo untenable," TCG says.

Research recently spoke with the San Bruno, Calif.-based Lay, previously a Bank of America corporate finance officer and before that an IBM sales executive in the U.K. Here are excerpts from our provocative conversation.

Why is this a good time for provocation-based selling?

Clients' not wanting to do any investing is the equivalent of corporate executives saying, "My budget's gone! Don't talk to me!" The "budget" clients have for investing has gone negative -- disappeared. So you need to get their attention and motivate them to find the money to invest at a time when everyone around them is saying, "Don't!"

How does provocation-based selling differ from other approaches?

It's front-loaded in that you've got to put in time to understand your customer's problem before you even talk to them. In focusing on the types of clients that have commonalties in how they invest, you learn exactly how that class of client is feeling and acting these days. When you phone, tell them you've solved problems of other clients just like them. War stories create empathy. It's a way for clients to open up and say, "That sounds exactly like the situation I'm in."

You're telling them that unless they do something about the problem quickly, things will worsen?

Yes, but there has to be legitimate urgency. For example: "You're going to miss out on this bond because there's only a limited number of them, and they'll be available for only the next couple of weeks." Be aware that the whole approach relies on being brutally honest and incredibly respectful, and to not hype things.

But how is it different from high-pressure sales tactics?

You're not pressuring anybody. High-pressure selling normally isn't based on legitimate urgency -- the urgency is made up for the convenience of the vendor. And that's never good selling.

What else distinguishes provocation-based selling?

You come in with a bit of a contrarian view: When everybody is thinking one way, you tell them they should be thinking the other way. For instance, everyone around you has their money stashed in banks. A classic line advisors would say is, "I suggest we don't sit on our hands, because we're losing too many opportunities." But if that's not backed up with due diligence, thoughtfulness and something that resonates with the client, they're not going to listen.

At what point do you present the solution to the problem?

The potential client is thinking, "This financial advisor has taken the trouble to understand my situation and how frustrated I am. But he's also telling me it's going to cost me a lot more if I don't do something now. He's made me worry about not doing anything." So the client says: "You've made me think. What's your approach to solving this problem?"

Is this when you segue to the solution?

Not yet. You say, "There are some new investment opportunities that I'm taking a careful look at. But before I describe them to you, I'd like to get together and look at your portfolio in detail, especially how your objectives have changed from what your investment strategy was six to 12 months ago, when everything was a lot better. We need to really get our arms around how big this problem is."

But why wait to present the solution?

Because if you rush in and say, "I've got this municipal bond that's just come up," or whatever, in reality that may not be the best solution. You can't assume it's useful until you've taken a look at the client's portfolio and their objectives.

When do you demonstrate your unique value?

You get permission to do that once you've gone into this investigation as deeply as you need to. After you've had that 90-minute meeting, you say, "Here's what I recommend." Or the client might say, "So what do you recommend, Doc?" Now you've got permission, having taken the time with them to really understand the problem.

Any pitfalls to provocation-based selling?

One is that your provocation won't always hit the target. The client will say, "No, that's not my situation." Or they won't be willing to trust, and so you haven't opened them up. Or they're simply in denial about their situation and say they don't need to talk to you.

But if you've done your diligence and have the patience to get to the person at the right time, you should have a very high hit rate.

Suppose, when you hit that nerve, you scare off the prospect?

Lodging the provocation has to be done with firmness but with humility so that -- though the individual might get defensive about the problem itself -- at no point do they get defensive about your manner. If you go in with flightiness or arrogance or too much smiling or glad-handing, you're in trouble. This is a serious conversation, and you have to treat it with seriousness.

Is there a time when the client delivers the provocation rather than the advisor?

Yes. I just went through this with my own broker. I challenged him with a self-provoke. For a while, he'd been saying, "Stocks are cheap. There's a buying opportunity." I was saying, "Sorry, but 'stocks are cheap' is not a language I'm willing to listen to right now." When he called the other day, I said: "I don't want to just sit here and not do anything."

That was an invitation for him to talk to me about a different approach.

If a potential client self-provokes, it's like admitting they've got a problem. I opened up with him because I trust him. [Essentially] I said, "Yes, we've got a problem here. Let's do something about it."

But again, the financial advisor shouldn't jump in and make a deal right then and take advantage of a self-provoking client's vulnerability. The advisor should say, "Hold it. Before we rush into anything, let's take a real look at this."

Provocation-based selling brings real relief to all those who want to do the right thing.

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Freelance writer Jane Wollman Rusoff is a Los Angeles-based contributing editor of Research and is the founder of Family Star Productions.

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