There are numerous reasons for clients and prospects to say “no” to advisors these days. You can take your pick — the economy, distrust, fear, uncertainty — the list goes on and on, and all lead to a singular ending: a lost sale. Top advisor Chris Wright, of Prescott, Ariz.-based Wright Financial Group, will present his ideas on overcoming objections at this year’s Senior Market Advisor Expo in Las Vegas. SMA spoke with Wright to gain insight into his presentation. The following is a sneak peek of key points that advisors can expect from Wright on Aug. 26 at Caesars Palace.
I can’t get out of the market now, I’ve lost so much. I need to hang in there because I’ll never gain back what I’ve lost.
Response: First of all, I tell them to listen to their gut feelings. I want them to explore their ideas on the market. I want them to walk through their objections. Instead of coming off to them as all-knowing and throwing all types of ideas at them, I find it better to initially let them figure out their real thoughts on the market and their investments.
Once we get through that initial exploration, I explain the “wash” theory to clients. I show them the losses they’ve already taken on and the recovery path they would need to take to stay in the market. For example, if their investments have lost 50 percent, they will need a 100 percent return just to get back to square one. And it compounds dramatically. If they have lost 60 percent of their investments, it would require 150 percent to bring them back even. And finally, I let them know if they have already lost or were to lose 70 percent of their investment, it would take a 230 percent gain to get back to their pre-market-crash level.
So when I show them those figures, most people say, “I wanted to get out of the market, but my advisor hasn’t wanted me to.” That’s when I go into safe products and how we can formulate a plan to stop the bleeding.
How do I know you’ll handle my money differently than my current advisor?
Response: I began my career with Bank of America. Working in that situation, I learned that those captive advisors work for the executive in the big tower. There was always a new product, a new marketing pitch that I had to sell to. As an independent advisor, I bring the ownership of the money back to the client. Being an independent advisor is being part of a team. It’s important that you establish that kind of relationship with the client. At a wirehouse, the rep works for the company, not the client. It’s different for me. I tell clients, “you’re the CEO of your money.” The client should have control and final say. Why pressure them to keep their money somewhere they feel uncomfortable having it? Give them the guidance and advise them, then let the ball fall in their court. It’s their money, after all.
I have known my current advisor for 20 years. I can’t leave him.
Response: I reaffirm that it was their decision to work with him in the first place, that it was a good decision at the time, but as financial needs change, so should the way you’re investing. I bring this up again: “You wanted to get out of the market, but what did your advisor tell you? He told you to ride it out.” I tell them the market doesn’t always come back. “Why did you work 30 years for growth, and then when you retire, you forgot to retire the risk from your portfolio?” During retirement, I add, you have to make that money last. I reaffirm that initially they made a good choice with their advisor. But I then let them know that I’ve been pulling my clients out of the market. I let them know that we moved almost all of our 380 clients out between August and September (of 2008). We pulled them out before the Dow hit 11,000. In both my interviews and workshops, I stress to people that retirement is about peace of mind and sleeping at night, not about watching CNBC and the stock market for five hours a day. Because, if you are watching the markets go up and down on TV all day and haven’t been on a vacation in years, that’s not my idea of retirement.
I’m with a big brokerage firm right now. They have 20 advisors that can help me. What if you’re out of the office? What do I do since your business is you?
Response: My assistant Nancy is securities licensed. My clients know that I’m an Eagle Scout and a Scoutmaster, and sometimes I’m on camping trips with the kids. So, what happens if I’m gone? We have a general rule: Nancy is never out of office when I’m out of the office. We always make sure that one of us is there at all times, during regular work hours. Nancy can make a trade and take instructions. I realize that many advisors do not have a licensed assistant, but I would recommend that they get one.
I didn’t make any money with your suggestions.
Response: Yes, that may be true, but if we’re talking about indexed annuities that are guaranteed products, I tell them, you didn’t lose any money either. It’s a no-loss scenario. If I find they reject or are fearful of any program I suggest with variable or indexed annuities, I suggest adding an income rider with a 7 percent annual increase. I say, it’s not added to your cash value. It’s an increase to your income base, to protect your income in future years. If they are still fearful and keep saying they don’t want to move … “I can make 3 percent in the bank” … I follow up with the living benefit income riders. I explain to them if they pull out and sit their money in the bank, it’s highly unlikely they’re going to time the market perfectly when they jump back in. By the time they get back in the market, I tell them, they have already missed the first six months of the upswing. I show them the statistics that over 10 years, if they miss just the best 10 days of the market, it cuts their return in half.
How can you guarantee I’ll make money?
Response: Let’s talk about the strength of insurance, I tell them. Let’s talk about your confidence level in insurance policies. If your house burned tomorrow, talk about your confidence level of getting insurance from that. So, if you lose your house, you can submit your claim and have it rebuilt. When I can turn that corner with a client, I then say, let’s get that same protection on your IRA and your other investments. It’s the same thing.