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Financial Planning > Behavioral Finance

Three Ways Advisors Can Stop Prospects From Walking Away

By Gil Weinreich

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Every failed meeting with a prospective new client starts with the advisor hearing the prospect describe his or her needs, yet somehow the advisor’s response was inadequate to the occasion.

What is that intangible quality keeping even an articulate and knowledgeable advisor from connecting with a potential client?

For an answer to one of the most common and frustrating advisor challenges, AdvisorOne turned to the veteran financial services marketer Jay Nagdeman, president of Suasion Resources and author of “The Professional’s Guide to Financial Services Marketing.”

“The tendency of an advisor is to say, ‘I hear you, now let me tell you what the answer is,’” he said.

So while an advisor and prospect are ostensibly discussing investing and retirement, it is the deeper, beneath-the-surface qualities that really must get communicated, says the Roseland, N.J.-based consultant.

 “What advisors tend to think about is how to articulate the products or services that they can offer to their prospect or their client; whereas I’m not sure that is what the prospect or client is really thinking about,” Nagdeman says. “What it all boils down to is the advisor is not selling products and services; they’re selling trust.”

Nagdeman offered three critical ways a financial advisor communicates that intangible quality. “First, the advisor must show that he or she cares about the client and wants them to succeed—and really understands their concerns. Above all what they’re expressing is the care that they have for that client.”

In other words, the advisor should not be trying to sell, and it is not enough to hear what the client or prospect is saying. Rather, the advisor should actively listen, and respond on a human level.

The second critical factor that builds trust is transparency.

“It’s important that advisors really communicate all the information necessary so that the client can evaluate all the options, to make sure the client knows what’s being recommended and why it’s being recommended, and when fees come up, to really discuss all aspects of advisor compensation in a thoroughly forthright manner,” Nagdeman says.

Advisors should show no hesitation on this sensitive topic. “Clients understand that advisors have to be paid for what they’re doing and there should be no shame in collecting a fee.” Nagdeman adds that such transparency is a competitive imperative today. “Look at what the competition has these days,” he says. “You can go online, do all your trading, research, recordkeeping and more, and it’s all as transparent as can be.”

The third critical factor in establishing trust is demonstrating competence. “Your knowledge, communications skill, advice and guidance, the specialists you call on all determine the extent to which you are viewed as having genuine expertise,” he says.

Another area, apart from basic trust building, that advisors sometimes have trouble with is in understanding the distinction between marketing and sales, and not to give short shrift to the former.

“The ability to effectively communicate who you are and what your value propositions are and to frame that in messaging which is compelling is the value that marketing provides,” Nagdeman says.

And that is more critical today than ever as a result of the intensity of competition in financial services.

“You have to differentiate yourself from others who are doing exactly the same thing as you are. We are living in a very commoditized area, which is why people turn to the Web to do [low-cost] trades. Because they don’t understand the value that an advisor brings to them.

“So the ability to market yourself effectively is really the ability to tell your story in such a way that gives you a relevant differentiation from others who are doing the same thing and to state why they should do business with you,” he says.

So rather than sit across from the client or prospect with sales goals in your mind, a financial advisor would do well to consider that marketing and sales work together, but the former precedes the latter.

“Peter Drucker said: ‘Marketing takes the ball and runs the first 50 yards, then hands off to sales, which runs for the touchdown.’

“It’s really the marketing that makes successful sales seamless and effective,” Nagdeman says. “It’s the combination of the two skill sets that first gets, then capitalizes on visibility and attention in the target marketplace.”

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