It’s a lot harder to build a business if you focus on things you won’t do. Do you know another advisor or agent who says: “I don’t do business with friends?”
It’s likely they have their reasons:
- Things get sticky if something goes wrong and they lose money
- They think I’m on call 24/7.
- They don’t want to do business. If they did, they would have asked by now.
When people need something, many prefer doing business with someone they know. An advisor in New York said it best: “People may want to do business with you for a long time. The thing they haven’t figured out is why they need you.”
We can think of lots of reasons why they are hesitant. So, why are they eager? Here are seven reasons:
1. They trust you
It’s earned slowly over time. Been there, done that. They are your good friend because you have proved yourself to be ethical and reliable. If you married into the family, you have been a good spouse to their relative. You borrowed and returned their lawn mower. You’ve watched their children while they were away.
2. You understand them
Although financial planning seems to assume everyone fits into one of five risk tolerance models, most people consider their own situation unique. Have you ever seen a financial planning questionnaire that asks: “Are you pleased or disappointed in your children?” Your friends know.
3. You can provide a high level of attention
They know you have some big clients out there. They are not going to be one of them. Yet because of your friendship, you will be elevated to that status anyway. Years ago, people assumed advisors worked from a list. When they had a good idea they called their best clients first. Because they are your friend, they will be toward the top of that imaginary list.
Your friends know you, trust you and feel like they can count on you to tell you the truth. (Photo: iStock)
4. You are a known quantity
“The devil you know is better than the devil you don’t know” is a bit extreme. If they walk into a competitor, they get sent to someone’s desk. Are they any good? Are they a good match for your personality? Are they on probation? No problems like that when they work with you.
5. They think you can give preferred pricing
They assume they will get a discount. After all, what are friends for? Personally, I believe a professional is worth the fees they charge. If over time this proves to be incorrect, you vote with your feet. If you must discount, do it only modestly. After all, they will have high service expectations.
6. They know you will provide objective advice
If you and your child have ever attended a parent teacher conference, you know people can position negative news to let you down gently. The problem is not that your child doesn’t study or pay attention in class. Your child “could do better.” Suppose your friend and client is lavishly overspending in retirement. You will tell them. You will explain the consequences. They will get straight talk from you.
7. They like you
People do business with people they like. They are even willing to pay slightly more for the privilege. It’s part of human nature that works in your favor.
Still not convinced?
That New York advisor brought up a sobering truth. Suppose you had a friend that wanted to invest. Because of your reluctance to do business with friends, you turned them down. They aren’t abandoning investing! They will go to someone else who wants their business!
Suppose everything blows up years later. They’ve lost 70 percent of their money. They will come back to you, shattered portfolio in hand, and plead with you to take them on as a client. “Make me whole again,” they will say. Because they are desperate, you will agree to try and help.
You are a good friend. You are willing to take them on as a client when they are desperate. If you are willing to help after damage has been done, doesn’t it make more sense to get involved at the front end and try to avoid the damage in the first place?
There are lots of reasons friends prefer doing business with people they know. Get these factors working in your favor.
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- Got prospects on the fence? Here’s how to talk them down
- 6 steps to turn friends into clients
- How to connect — and prospect — in a small town
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