The way to a man's heart is through his stomach, right? The way to prospects’ assets is through self-awareness that their current advisor is taking enormous advantage of them.
So says Mike Kaselnak, 52, a former FA who for the last 14 years has coached 500 advisors in how to use his system of motivational interviewing that can triple the typical advisor's income, he claims.
“Don't sell—ask questions!” is the peppy Kaselnak's mantra. But not just any questions. The founder and principal of 5Q Group, in Rochester, Minnesota, has a specific list. These questions are intended to make prospects arrive at the conclusion that their current FA is failing to serve them in their best interest.
When that light goes on, Kaselnak insists, prospects will be eager to pick up and move their account right over to you.
The former Navy nuclear power instructor came up with his “secret sauce,” as he calls the list of questions, after struggling as an advisor for eight years, never earning more than $50,000 annually. Frustrated, he quit the business for about two minutes but was persuaded by his best client and wife Michelle to stick with it.
Michelle, then a behavioral psychologist at Mayo Clinic, suggested he try an approach called motivational interviewing. The technique was created by psychologists to help people with addictions realize that their behavior is self-damaging.
Kaselnak borrowed the theory but came up with his own “21-point checklist” designed to make prospects conclude that staying with their current advisor is hurting them: They may be overlooking a variety of financial issues or worse, deliberately not disclosing matters, like investment fees.
After using MI for three years, Kaselnak went from making $50,000 a year to almost $1 million—and in the relatively narrow market of Rochester. He was on to something—but if he stayed an FA, would need to work about 80 hours a week. So he shut his practice and began full-time training of other FAs in how to use his system.
The program includes Flagship Marketing, fun events designed to get FAs in front of qualified pre-retiree and retiree prospects. Kaselnak pays all marketing costs upfront (including coming up with the prospect list); advisors reimburse him for each attendee up to 50.
Compensation for Kaselnak can also include revenue sharing, in which he receives an override on insurance products sold through him, and $500 a month to be on his www.2objects.com prospecting website.
While Kaselnak insists that his checklist simply wakes up prospects to what's going on with their money, dissenters call his use of motivational interviewing manipulative. The two psychology professors who introduced and developed the technique in the 1980s, William R. Miller, of the University of New Mexico, and Stephen Rollnick, of Cardiff University in Wales, say it is “unethical” to employ MI when “the interviewer has a personal investment in persuading someone to switch financial advisors and move their assets,” Miller notes in an email.
Miller cites only two instances when MI would be in the client's best interest: to prepare a will and to decrease spending to preserve resources. In the third edition of Miller and Rollnick's book, “Motivational Interviewing: Helping People Change” (Guilford Press, 2012), they point out that “ethical consideration should be given to any methods that are effective in changing client aspirations to more closely match those of the counselor.” In particular, “the situation becomes ethically murky or manipulative when you have a personal investment in the outcome…. This scenario is usually termed ‘conflict of interest.’”
Kaselnak, a native of suburban Egan, Minnesota, started out as an advisor at IDS (now part of Ameriprise Financial) in 1987. He then tried bank brokerage and working with independent BDs until he came up with what was for him—and many of the advisors he coaches—the route to real success.
Research recently spoke with Kaselnak about his secret sauce.
Why do you call it a “secret sauce”?
Here's the thing: [Most] marketing attracts crappy prospects. It gets you in front of people who have no intention of working with you. So you’d better have a way to turn them into people who are going to work with you.
What results can be expected from using your system?
Typically, an advisor will see their income go up by 63% the first year and by 257% by the end of the second year.
Please explain your 21-point checklist's purpose.
We walk prospects through a conversation about things they hadn't thought about before when it comes to their finances. Some of them are on the fringes of finances, some directly about finances. The checklist is an eye-opener to the many problems they didn't know they have.
We begin with the Survivor's Guide, which goes through all the things their loved ones need to know [when] they pass away. When they come into our office, they think the first thing out of our mouth is going to be to sell them a product. So their defenses are up. If the only thing I talk about is money, they’ll think I only want their money. And the more money they have, the more guarded they are to let me get my hands on it. So our first 40 minutes is all about non-financial things, but we tie them to their finances.
In your motivational interviewing, do you ask the same questions used to help people who have addictions?
No, but I use the same theory and philosophy, which is the more you tell a drunk to quit drinking, the more he's going to drink. The more you tell a drug addict that he's screwing up his life, the more he's going to take drugs. Motivational interviewing is about taking people through a question-and-answer process where they discover for themselves that their current actions are hurting them.
What are the questions you ask?
It's a secret sauce—so I’m going to keep it secret! But here's an example. With the Survivor's Guide, they realize that if they haven't written down all the information about where they want their finances and hard assets to go when they pass away, their entire family can disintegrate. We give them examples of where that has happened. Another question is about whether or not their advisor keeps their [advance health directive filed electronically].
That last one is important in case of emergency. So the checklist mainly covers things their FA has overlooked?
The first half does. But when we get into more specifics about their finances, they’re usually things advisors would just as soon the client didn't know.
Such as, fees?
Yes. For example, we might say, “Let's look under the hood of variable annuities. They have fees, and they’re used to pay the manager. Are you OK with that? “Now, let's look at some other fees, like a life insurance fee.” The prospect says, “What do you mean, life insurance fee?” We explain, then ask, “So do you think that's expensive or cheap?” “That's expensive!” We also inform them that annuities are the only life insurance where the death benefit is taxed.
What else do you ask about VAs?
“Was it shown to you that you could have bought basically the same funds without all this life insurance that you don't want? If it had been shown to you, what would you have done?” They say, “I certainly wouldn't have bought it.” Then we ask, “So why do you think these things weren't shown to you?” The prospect says: “So that guy [FA] could make a lot of money on me.”
Seems that the questions mainly get prospects to ask themselves: Is my advisor acting in my best interest—or in his?
Exactly. We never say a bad word about their guy. We just ask the prospect questions and let them draw their own conclusions that their advisor doesn't have their best interest at heart.
Is this the goal of your questioning technique?
Yes. With each question revealing—fully disclosing—things they think would have been good for them to know about, we knock their advisor off their pedestal. Now they realize, “My guy doesn't walk on water.” But we don't attack the advisor.
If we attack the advisor, who am I really attacking? The client and their decision-making process. So their knee-jerk reaction is to defend their advisor. To boil a frog, you don't throw him into boiling water because he’ll jump out. You put him in a pot of cool water and slowly turn up the heat. Likewise, with our [method] the prospect finds out more and more things their guy forgot to disclose, didn't know anything about or didn't disclose on purpose. We let the prospects decide for themselves.
What do you believe goes through the prospect's mind?
“My advisor showed us all the good stuff, but he never showed us the bad stuff. He made 21 mistakes, all of them in his favor.” Eventually they think, “There's a character flaw here.”
Used by an advisor, does this approach serve to differentiate the FA from others?
Exactly. Advisors talk, walk, look and smell the same. So we need to differentiate ourselves. Otherwise, prospects are just going to stay with their current advisor. The way to look different is by adding value to the relationship, by doing things we don't get paid to do. Prospects say, “Holy cow! Nobody has ever brought these things up!” We never ask for their money. Instead, the prospects say, “Will you take us?”
You tell advisors to “stop the beauty pageant mentality.” What's that?
They think that if they’re smarter, nicer, “prettier,” the prospects are going to leave their advisors for them. No they are not! The only time they’re going to leave is when they can no longer stomach the advisor they’re working with. If you try to show how smart you are, they’ll take your information to their advisor and say, “Can you do this stuff?” And the guy will say, “Yup.” But if he can really do it, whey wasn't he doing it in the first place?
What sorts of seminars do you train advisors to hold for pre-retirees and retirees?
Free fun events. Surveys show that [one of] the top things people worry about is losing their marbles. So our events are about keeping your brain sharp. In a PowerPoint presentation, we have optical illusions and puzzles. And there are easy riddles that don't make people feel stupid. They have a blast.
How large a turnout do these events draw?
We’ll get between 80% and 90% of the people who say they’ll come. The amount that become clients depends on how good the advisor is at using my system.
What's the biggest challenge for advisors in employing the 21-point checklist?
They love to tell and sell and preach and teach. Instead, they’re supposed to ask questions. The hardest thing for them to learn is to shut their yappers and let the clients tell them instead of their telling the client. You have to let people discover for themselves how smart you are.
Does the checklist help build credibility for the FA and hence, engender trust?
Yes. Prospects say, “Finally, somebody is showing me the good, the bad and the ugly. Then, when we present solutions, we don't talk about any of the good things; we just go through all the negatives. We spend most of 60 minutes going through how horrible the product is and making sure they’re comfortable with the worst-case scenario.
What happens at the end of the secret-sauce conversation?
We finish with three questions: “Do you have a clearer picture now of where you are? Do you want to keep doing what you’re doing? Or do you think you need to make changes?” If they say they need to make changes, we say, “What would you like me to do?” When you ask that question correctly, they’re going to say, “Would you take our money? Would you help us?” If they say they love everything that they’re doing right now, we say, “God bless you. Then you’re doing the right thing.” But that doesn't happen very often.