From the June 2014 issue of Research Magazine • Subscribe!

5 Ways to Escape Client Objections

Advisors should address concerns before they are raised

© Ikon Images/Corbis © Ikon Images/Corbis

A few years ago I researched how to overcome objections — frankly I couldn't find any decent strategies so I came up with my own. My system is simplicity itself: We design our entire client experience to not have any objections.

In fact, if we do get an objection, I feel like I haven't done a good job.

Generally, about 90% of our clients follow our recommendations. Here are some of the ways we avoid objections and have such a high success rate:

1. We Take Our Time Getting to Know the Client

It is not possible to build trust instantly—it takes time. Our client experience can take six to eight meetings for us to really understand our clients and for them to have confidence in our recommendations and us. It can take two meetings just to get a financial plan that will meet their goals. It might take another meeting to review our investment philosophy.

By the end of those meetings we will have a plan they like and they will have started implementing it. Holding this many meetings before the client ever pulls the trigger has the added advantage of the clients not feeling pressured. They feel comfortable with their decision and want to move ahead.

2. We Remind Clients Decisions Are in Their Hands

I will tell clients our job is to educate them and run through the pros and the cons of every recommendation. We empower clients by saying: “I know that once you have the information about this investment, you will be able to make a good decision that fits your needs.” Once again this takes the pressure off until they have the data they need to implement a recommendation.

3. We Carefully Match Clients and Investments

This is yet another lesson I learned the hard way. About 18 months into opening our office in Rhode Island, I noticed we had five clients out of 50 or so who decided not to move ahead on one of our recommendations. Treating this like a business, I realized not everyone was going to like our recommendations, but I felt I was missing something in helping these people. It really helped me to put each one down on paper, look for a common theme and evaluate what was going on.

This is what part of the list looked like:

  • Professional couple in their early 40s earning about $500,000 per year. Monthly savings over the last few years: nil. Had a hard time paying for term life insurance to provide for new baby.

  • Professional couple with four children at home. Together they earned about $1.7 million annually. Total investments: less than $200,000, all in qualified plans. They also owned 5 homes, each with a mortgage and all underwater. They started saving $20,000 per month for their children's college and stopped the payments after the third month because it pinched their lifestyle too much.

  • Professional couple with stay-at-home mom and working dad who made about $250,000 per year. They had two high school students, a summer house not far from where the Clintons vacation and zero savings for college. Although they had inherited about $80,000 in securities, they could not save anything on a monthly basis.

If you, too, are constantly analyzing your business, you will easily see what had initially eluded me: Each of these families made a lot of money, but they couldn't save. They may be affluent, but they would never be wealthy. This little exercise was quite eye-opening for me, and I had a few takeaways that helped improve our process:

For one thing, I couldn't recommend any investment strategies that had penalties if they walked away early. At some level this kind of client knows they won't save so they would say “no” to anything that required them to stick with a savings plan.

Similarly, I needed to get this kind of client in the habit of saving on a monthly basis before I recommended more complicated investments.

Also, the clients needed to have a clearer picture of their monthly expenses to see what they could realistically save. Now we frequently run through their monthly budget in a separate meeting, so they can see how our saving strategies will fit into what they are doing.

Today, I don't even recommend certain investments to this group. We stick to a simple dollar cost averaging approach that leaves them very liquid and can be modified on a monthly basis.

4. We Let Clients ‘Think About It’

Once in a great while, about 5% of the cases, we will get a client who does not want to sign our financial planning agreement at the end of our first meeting. They typically ask if they can take it home and review it in detail. About 20% of the 5% (yes, I know we are getting at a really small number, but this is a numbers game!) decide not to move ahead.

Here is how the conversation goes:

Me: (After reviewing our agreement in detail.) Do you have any questions about it?

Prospect: You know, I would like to go over this in more detail. Could I take it home and think about it?

Me: Of course you can. Why don't you read it through now while I am here so I can answer any questions?

Prospect: I would really like to review it at home. My mother told me never to sign anything without reading it.

Me: Absolutely no problem. That's fine. Let's go ahead and set up your next meetings and then if you could fax it back to me, that would be great. We don't usually start working on your case until we have a signed copy of the agreement. Will that work for you?

Prospect: Fine.

At this point, they agree to the next meeting and we get the date and time on the calendar. The 20% of the 5% will call and cancel before the meeting. The rest really do want to think about it or review the agreement and they will fax the signed copy and attend the next meeting. It actually doesn't bother me to lose these cases, because I have found these prospects usually would not have been a good fit for us. The prospect recognized it first and it saves the staff and me a lot of heartache in trying to accommodate someone who doesn't align with our philosophy.

5. We Handle All Standard Objections Up-Front

Another great exercise is to think of all the common objections clients could make to your product or service. It helps to write them out. Once you have these, make sure you bring them up before the client does. For instance, because many of our clients are young, and don't have any experience in investing, I make sure they know they can lose money. I do this in a number of ways:

  • I show them how their portfolio would have done in ’08 and ask them if they would be calling me crying in the middle of the night.

  • I remind them that in any 10 year period we are likely to have three years with returns above our goal, three years below and four that are close

  • I show them what the internal expenses are.

  • Finally, if they are concerned about making money, with our fees, I show how the portfolios have done AFTER the fees and expenses have been subtracted.

  • When it comes to certain insurance products, I will tell them many times that there are high fees and expenses up front. If there are surrender charges, I bring those up, too.

In Conclusion:

If I have covered all the pros and the cons of our recommendations, and even addressed the objections clients have been quietly thinking about before they voice them, clients are highly likely to move ahead. Adopting this approach has resulted in an even higher closing ratio and I can't think of a recent case where I have had any objections at all!

Page 1 of 3
Single page view Reprints Discuss this story
This is where the comments go.