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Why prospecting is changing (and how to keep up)

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Since the times, they are a changing, so must practices evolve. I don’t like changing prospecting methods often or without good reason, but with changes in attitudes of prospecting and the huge changes in our economic picture, if methods don’t change, practices will fail.

A business model that has acquired traction and appears to be solid is the advisor model. Insurance agents who are dealing with assets of clients are finding that being a one-trick pony doesn’t work well with high-net-worth clients. Even clients with more modest portfolios wish to be treated as though they are much more valuable. The continuing declines in numbers of pension plans; the concerns about the value and stability of Social Security and a lack of investment experience in 401(k) savings opens a huge opportunity for advisors. An insurance license coupled with an investment advisor representative securities affiliation with a good Registered Investment Advisor is a wise and viable business model. Creating a relationship that begins with good investment advice opens insurance opportunities. Why not keep everything under one roof?

Excellent prospecting begins with an excellent business model. Let’s take a look at two types of prospects that are vastly different, yet both would make excellent clients.

The first is the young executive who can be educated about the need for an early start on retirement planning. It’s likely that he will have several jobs over a career that spans 40 years. As he leaves each place of employment, the former 401(k) plans will hold assets that should be moved to an actively managed platform. As these assets grow and accumulate over time, they could be substantial. In the meantime, he will also have life insurance, and eventually long-term care needs to be addressed. A growing client base of this type of client would make an excellent business model for the young advisor starting out and the more mature advisor with a changing practice.

Along the same lines, there are tremendous opportunities for the older advisor, working with 50-something clients. They often have IRA or 401(k) assets that are underperforming. Their incomes are larger, therefore insurance needs are stronger.

Where you find these clients is critical. A consistent steady stream of prospects will assure progress. In recent years, some advisors have become proficient with the ever-changing world of taxation.

One advisor friend actually hired a CPA to attract tax clients. By creating tax return clients, the idea was to gain financial advisory clients in the process. The four-year experiment has now been abandoned, primarily because the advisor was relying on the CPA to convert the clients. The problem was that the sales concepts didn’t resonate with him. Even when he saw opportunity, he couldn’t convert the opportunity to sales.

An effort to locate prospective clients by means of a leading, yet unrelated subject has its drawbacks — mainly in the area of conversion. If someone wants to see you about one subject, they may be unwilling to be led into another discussion.

Public seminars without the need to serve a meal have worked well for many advisors nationwide. There are, of course, varying response rates for different areas of the country, nevertheless very few advisors have experienced poor results. Seminar response to mailings tend to range anywhere from 0.5 percent to as high as 2 percent. The demographics used are ages 50 to 67, typically. The household income should be placed above $40,000. Homeowners with total assets over $400,000 is a good place to begin. An excellent appointment ratio will be above 50 percent of the households represented.

Mailing consistently, at least monthly, will create a very good flow of prospective clients who will bring a significant portfolio for review. Your total annual budget for seminars should not exceed $30,000 with total net revenues exceeding $200,000. If your market can support more seminars and you’re willing to increase your budget, the revenue should respond accordingly.

Providing seminars that do not offer meals will have fewer attendees, but better quality.

Having a great business model enhances the ability to prospect or market. Beginning with the end in mind builds a magnificent career.

For more from Kim Magdalein, see:


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