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What It Takes for a Rookie Advisor to Survive, Part 2

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Author’s Note: Surviving this business is tough. In this series, I bring you the skills I believe you must have and use to make it your first three years.

In Part 1, I covered hard work, new accounts and appointment setting. Now I turn to proposal writing and education. Next time, in Part 3, I will cover proposal presentation and closing.

If you missed the first “What it Takes,” I have put a link here: And yes, you have to cold call. Networking ultimately will produce bigger accounts, but by the time it kicks in, you’ll be pursuing other career opportunities.

Proposal Writing

Once you are done with the first appointment, you need to craft a written proposal. Here’s a conversation the two of us might have:

You: Do I have to write a proposal?

Me: Yes. Your competitors are doing it. If you don’t, your closing rate might be one in six instead of one in three. This means you need eight first appointments a week during that second six months. Not going to happen.

You: OK. I’ll do it, but what should it say?

Me: Your first proposal is four pages long. Page1: “Keep these Investments.” This is just a list of what they should keep. It is investments they like plus other good investments they already own.

Page 2: “Cash Positions to Reallocate.” Recommend they keep enough cash to handle emergency needs. Additional cash should be reallocated. Page 3: “Sell these investments.” Page 4: “Own these investments.”

Please, don’t save paper. There are four topics. Each topic starts a new page. By showing the prospect one topic at a time, you keep them (and you!) focused. I have added a proposal template for you on my cold calling page.

Prospect Management

What I’m going to tell you now may be the most important skill in the “what it takes” category.

Once you start the selling process, SET THE NEXT APPOINTMENT AT THE END OF THIS ONE. Failure to do so causes two dreadful things to happen.

1. Your client or prospect becomes a floater—a prospect with no next appointment. The appointment focuses them on a single next action. When you do not have that next appointment, the selling cycle often bogs down. I cannot tell you why. No next appointment may cause uncertainty that leads to talking to friends, watching CNBC and reading Money magazine. Uncertainly builds. When you call to get the appointment, they’re more difficult to reach. If you allow floaters, you will lose a big percentage of people who would otherwise become clients.

2. The next appointment forces out non-decision makers. Sounds like I just contradicted myself, doesn’t it?

Here’s the truth. A large number of people are afraid to say “No.” Asking someone for a next appointment oftentimes calls their bluff. If they are not going to do it, you want them to get out of the boat. Failure to push out non-decision makers, false cherries and do-it-yourselfers will fill up your boat with people who will never become clients, and YOU WILL STOP PROSPECTING BECAUSE YOUR PIPELINE IS SO FULL. But it’s not full of prospects. It’s full of junk.

Prospect Education

You can talk about advising all you want. Before you can advise, you have to convince your prospect to do business with you. It’s called selling.

But before convincing, there’s another step: education. Why? Consider this statement by economist Richard Thaler in The New York Times, “Even if we grade on a very generous curve, many Americans flunk when it comes to financial literacy.” Don’t believe me? Google “financial literacy.”

If your prospects do not understand the fundamental concepts necessary to make an informed decision, they will tell you, “We need to think it over.” Educating your prospects shortens the sales process and helps close a higher percentage.

Let’s pick up with the second meeting.

You have seated them, provided them with their preferred beverage, and you chit chat for a few moments. Let’s now set the table for education.

1. Restate the goal and obstacles. “Dudley and Mary Beth, at our meeting last Wednesday, it became clear that your most important financial goal is to be able to maintain your lifestyle in retirement and leave enough to ensure your kids can educate your grandkids. Is that a fair summary?”

2. Summarize your strategy. “In order to accomplish this, we need some portion of your assets in income producing investments, and some in investments that will grow over time. That’s what we will use to fund your grandkids’ education. Of course, we need some cash for emergencies.”

3. Define key terms. From the way your prospects answered questions, you should have an idea of the degree of their financial sophistication. Hint: Always gear your presentation to the least knowledgeable person. Here’s how I have seen some of the best in the business do it:

“So that we are both on the same page, I want to explain some of the language we use. These are not difficult terms, but it is important you understand them.” (Stand up and go to your flip chart or white board.)

“I’m going to start with the term ‘asset class.’ The reason you need to understand this is because we are going to diversify into several different classes. An ‘asset class’ [write it on the board or chart] is a group of financial instruments with similar characteristics. They behave similarly in the marketplace. They are subject to the same laws and regulations. Are you with me so far?”

“The three main asset classes are: stocks, also called ‘equities,’ fixed income called ‘bonds,’ and cash. We want some of our assets in each of these big buckets. Make sense?” Continue with other key concepts.

4. Explain the strategy using “the magic sequence,” explained below. If you follow these steps in explaining your strategy, the prospect will likely ask, “What do you recommend? The steps: (a) Sell the concept. Do you think the prospect should invest in equities? Sell the concept or idea! Go into historical growth rates of asset classes. There are bucket loads of slides out there, all on your wholesaler’s websites.

“As I mentioned earlier, there are four [or however many] reasons why we need to be in equities. Do you agree we do need some of your assets in equities?” They need to buy into this concept. Do not go to the next step until they agree.

Next step: (b) Present the alternatives. “There are four options to invest in equities. We could do individual stocks, mutual funds, separately managed accounts, or ETFs. [You have already explained what these mean.] Let’s go into the pluses and minuses of each.” Add: “What questions do you have?”

If you gave a balanced presentation, they will most likely ask, “Which one do you recommend?” When you get this question, your prospect is engaged. There is a high probability they will buy.

Finally: (c) Make your case for the investment type or types you will recommend. Let’s assume it is ETFs: You would give some examples of ETFs. You would talk about reducing risk by reducing the risk of an individual stock tanking. You would compare fees for ETFs to fees for mutual funds. Then close it! “How comfortable are you with this type of investment?”

Next time: Part 3, on covering the proposal and closing the sale.