Why Advisors Fail to Land Hot Prospects

You’ve got a crack at a multimillion-dollar account — a corporate retirement plan or a multigenerational high-net-worth family. You go in there with everything you’ve got. You lose the opportunity.

Sound familiar? It happens all the time, leaving disappointed advisors wondering in what way was their preparation inadequate.

“Did my explanation of the plan’s auto-enrollment feature fall flat? Did I not display enough knowledge of dynasty plans?”

According to negotiations expert Raphael Lapin, financial advisors are more apt to fail not because of inadequate substantive knowledge, which he stresses an advisor must possess, but because advisors lamentably don’t appreciate the difference between pitching and negotiating.

“Advisors are often lording their knowledge over people, proclaiming ‘This is why we’re the best,’” the Los Angeles-based, international consultant tells ThinkAdvisor.

“But people have an innate resistance to pitching and, immediately, their defensive walls go up. The more you shout [figuratively], the more they shut out,” he says.

Paradoxically, Lapin continues, a display of substantive knowledge can actually be alienating.

“When you’re trying to show your expertise, the first thing you need to do is to engage them in a dialogue—making sure you understand what their needs are, what their fears are. It’s not [the knowledge you display]; it’s what you can demonstrate you understand about the prospects even before offering any solution, so they say: ‘This guy understands us; maybe we should take his ideas seriously.”

A Harvard-trained negotiation specialist who also teaches at a Southern California law school, Lapin often sprinkles contemporary diplomatic foibles when elucidating negotiating principles.

In that regard, he decries what he regards as a fiasco in the West’s confrontation with Russia over Ukraine.

“You have to separate understanding from agreeing. The first step in negotiating is to really be able to immaculately understand the other party, without agreeing,” he says, adding that the U.S. tends to allow past experience with Russian expansionism during the Cold War to shape its expectations about Russia’s behavior, fueling “the West’s tendency to react before verifying and clarifying.”

But noting that Russia has not yielded to U.S. demands, Lapin warns financial advisors not to make that mistake with prospects — by understanding the difference between selling and negotiating.

“Selling and pitching is about me; negotiation and authentic persuasion and influence is about you.”

So rather than an “output” of your knowledge, advisors must focus nearly exclusively on input in that first meeting.

“What’s more important at the initial phase is gathering an input of information — what is called the information development stage, where I want to get as much information from the client as possible in terms of his needs, concerns, anxieties, priorities and values.”

Completely apart from the value of such data in crafting a financial plan lies its value in building a rapport with the prospect.

“Once he feels that you really understand him and are taking him seriously — only then will he be prepared to take your ideas seriously in terms of the solutions you can offer,” he says.

So it’s not a failure to explain to a corporate client how auto-enrollment can reduce administrative costs nor a lack of breadth in explaining the various kinds of trusts that can be used to pass tax-free wealth to heirs. Rather, it’s as simple as the failure to signal you care.

“Many times proposals are rejected because they’re offered prematurely — before sufficient information development has occurred and before the prospective client feels that his advisor really does understand him,” Lapin says.

Practically speaking, Lapin says advisors need to work on their communication skills, beginning with the ability to shut their mouths.