Close Close

Practice Management > Building Your Business

How To Transform Wealthy Friends Into Clients

Your article was successfully shared with the contacts you provided.

How do advisors ask for business from people who are new friends or acquaintances along with old established friends?

Bryce Sanders, president of Perceptive Business Solutions Inc., New Hope, Pa., raised that question here in a focus session of the annual meeting of the Million Dollar Round Table.

“We want to expand the relationship to be one that is both social and business,” he said, but the question is, how to do that? “Because you are a friend or acquaintance, you (might) find it difficult to ask them for business,” he said.

At least 10 things hold such people back from doing business with a friend, Sanders suggested.

Sanders said his interviews with successful high net worth individuals revealed that, when being approached, they prefer the professional to be “gently persistent and patient.” Oddly, he said, they did not list “pushy” as an attribute.

In addition, “they would like to see a willingness to be thoughtful. They would like to be reintroduced through a peer. They would like to have an established basis of trust. They would like you to be satisfying a need.”

Finally, they would like the advisor to be “reactive,” said Sanders. “They said, ‘Don’t call us, we’ll call you,’” he explained.

When approaching one’s own friends, though, Sanders suggested 3 strategies:

First, increase their understanding of what the business does and what benefits the clients gets as well as relevant training, experience and professional certifications. Let them know the number of clients now on the books, the firm’s commitment to fair pricing and that client needs come first. This is a low key approach and won’t require the advisor to leave his or her comfort zone, Sanders said.

Second, win them over. “Your friends (already) know who you are,” Sanders said, but “they need to learn more about what you do and why you are good.” That requires investing in the relationship, and being ready to talk about business when the questions come up, even if only stories about something that happened during the week that shows how the work benefits people. This is a slightly more active approach that also keeps the advisor in the comfort zone, he said.

Third, ask for the business. This entails identifying a need, approaching the person, and offering a solution through which that person becomes a client, said Sanders. So, “find out what keeps them awake at night. Look for life changing events–death, divorce and disease are the big three.” And remember, people talk to their friends about such things before they talk with their advisor and money changes hands, he said. This approach is “shooting them between the eyes,” he allowed. “It’s riskier but you get your results a lot quicker.”

Sanders also presented several short-term strategies or what he termed “one-liners” for advisors to use in social situations to ask friends to do business with them. Here are some of them:

Saving money. Most wealthy people want to stay wealthy, Sanders said. “Regardless of market conditions, if you can save them money, they usually have an interest in what you have to say.”

Don’t limit savings options just to cutting fees and commissions, he said. Also bring up rates for mortgages, loans, etc.

For instance, Sanders said, “if someone at a party asks ‘How’s business,’ you can reply, ‘With all the talk about the Fed and interest rates, I can’t believe we are still lending money at ____%.’” Then stop talking, he said. If they’re interested, they will start asking for more information, which would be a good time to suggest setting up a meeting to discuss it.

The existing relationship. Inertia keeps most people with their financial services firm, said Sanders. “They will put up with poor service, high fees, and indifferent performance because it’s a hassle to find a new broker and change firms.” His suggestion: Say to the friend, “You’re probably very happy with your financial advisor. Here’s my card. If anything ever changes, give me a call.”

The common issue. It’s normal for peers to talk about a problem they face in their lives and ask for advice or feedback. Sanders suggested that the advisor tell the friend about how the advisor dealt with such a problem. The discussion can bring up information about the friend’s situation and also spark interest in the solution.

After playing golf. Sanders told of story he heard about a commercial insurance broker who used golf to open up business discussion among friends.

Two or three times a week, the broker invited business owners to play golf. He “would play golf with them in the morning and buy them lunch afterwards. Over lunch he would say, ‘May I call next week and set up an appointment? I have some ideas I would like to share. I think I may be able to save you money.’ The guests are under such an obligation because he took them out on a great course and bought lunch; it’s very difficult for them to say no. He got lots of appointments.”

Referral via spouse. Here, when a husband and wife attend a social function, the wife can listen for financial problems or questions their friends have and then suggest they talk to her husband, because he may be able to help them, said Sanders. The wife can also circle around to the husband, to suggest he call the friend later or even sit at their table that evening. All of this is low key, Sanders said.

Offer to do something. That is, offer to send along a fax or piece of information about a hobby or interest the friend has, one that relates to the financial services aspect. For example, if the interest is gourmet food, consider sending the friend a research report about a market leader in the field in which the friend is interested. “They will probably decline–don’t go to any effort on their behalf,” Sanders allows. “But you explain this stuff comes across your desk every day. You’ve opened a channel of communication.”

Ask for something. When solicited by a friend’s charity or non-profit, why not send the contribution directly to the board member who most likely put the advisor’s name on the mailing list, suggested Sanders. Then, in a follow-up conversation, suggest that the organization allow the advisor to speak to the members or board about a financial topic. “A little pushy but effective for the financial advisor.”

Ask. Consider using the questions normally used with a professional investor with a friend, and “treat them with the dignity and respect you would give a professional investor,” said Sanders.

The conversation might go like this: “Mary, I know you use professional money management at (competitor firm name). You’ve explained that to me. We offer professional money management at (firm name). We have good performance figures. We are competitively priced.” Then ask Mary when her firm reviews the performance of its money managers and indicate interest in winning some of that firm’s business, he suggested. Also ask if the firm is open to presentations about outside money managers at that time.

If the company isn’t pleased with the performance of a current broker’s recommendations, that may be an opening, he indicated, and the firm may decide to “give you a try with those funds,” he said.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.