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Portfolio > Mutual Funds > Bond Funds

This Technique Gets You to ‘Yes’ Faster, Without Sales Pressure

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An advanced, multiple-choice closing technique touted by Harvard-trained negotiation and mediation specialist Raphael Lapin — who uses it himself — gets to “yes” faster and boosts  satisfaction at the same time. For financial advisors, it can help curb the widespread, off-putting penchant for applying sales pressure, Lapin tells ThinkAdvisor in an interview.

More effective than single-point offers, the MESO approach — short for Multiple Equivalent Simultaneous Offers — comprises three different proposal packages, all of which, by their customized construction, are acceptable to the FA.

Not only does a MESO increase the chances of a mutually satisfying agreement because it makes it easier for clients and prospects to reach agreement, the technique can also be used to gather information about clients’ top priorities for further discussion.

Lapin’s long-established consulting practice is based on methodology taught at Harvard Law School. His firm, Lapin Negotiation Services, providing training, consulting, coaching and dispute-resolution expertise, includes among its clients AT&T, Microsoft, the U.S. Air Force and Yahoo.

In the interview, Lapin discusses the three steps to formulating a MESO, which, he says, works as a key part of a negotiation’s “deliberate, orchestrated progression.”

The method was developed by Victoria Husted Medvec, management professor at Northwestern University, and Adam D. Galinsky, Columbia University professor and chair of its Business School management division. In four 2005 studies, they and two other academic researchers showed that the MESO brought better outcomes versus a single offer, plus helped create value for the MESO-givers, who were perceived to be flexible and accommodating.

ThinkAdvisor recently chatted with Lapin, on the phone from his Los Angeles office. He is a member of the L.A. Superior Court Dispute Resolution Panel and author of “Working with Difficult People” (DK Penguin 2009), a guide to the art of compromise and negotiation. Lapin’s sales training for firms and individuals focuses on a proprietary “Investigative Selling” approach. Here are excerpts from our interview:

THINKADVVISOR: What’s the big benefit to using MESOs?

RAPHAEL LAPIN: It’s more likely that you’ll reach a deal than without it because you’re making it easier for the other person to say yes.

When would a financial advisor use a MESO?

Negotiating an employment contract, or recommending products to clients, which is negotiating too.

MESOs “appeal to a human need for autonomy in making choices,” you write. Please elaborate.

Nobody likes to feel they’re having things imposed upon them. Even if they’re good things, people like to feel they’re making a choice. That makes it easier for them to say “yes.”

How does this apply to a MESO?

You’re giving someone a menu from which to choose. If you go to a restaurant and are presented with an elaborate menu, it’s more likely that you’ll make an optimal choice than if the waiter says, “Tell us what you want, and we’ll make it for you.” With a menu, you think more broadly and creatively. MESO is basically a menu of offers from which the other party can choose.

How many offers should you present in a MESO?

No more than three. Otherwise it becomes too broad, cumbersome and complicated.

What’s another advantage to using MESOs?

They allow you to get more information because the client may say, for example, “None of these fully appeal to me.” But then you can ask, “Which of the three is the closest? If I can understand which is closest, maybe we can develop that.” By getting this information, you’re learning more of what’s important to the client and can then go back and massage the MESO somewhat, appealing to the need you’ve just learned about. In that way, you’re drilling down to potential agreement.

Suppose an advisor is recommending that the client buy a bond. Do they just present three different bonds?

No. The three options of a MESO need to be totally different from one another — not just a bond versus a bond versus a bond, in that scenario. So that may involve a complete bond package; the second offer might be a different bond product; and the third, a hybrid product of stocks and bonds.

How do you decide on the three options?

Each choice needs to be acceptable to you, the advisor [or any other negotiator]. In other words, all your critical needs have to be constant. It’s the variables in the MESO that will address the client’s needs.

What are the three steps to generating a MESO?

First, break down the issues into as many sub-issues as possible to increase the number of items that can be traded in negotiation. That is, use fractions of the whole to create the variables in the three offers. Usually a negotiation involves multiple issues. Think of that in terms of paragraph headings in a contract: terms, conditions, schedule, and so on. In an employment negotiation, some of the components would be sign-on bonus, vacation time, opportunity for promotion.

By the way, there have been many FINRA arbitrations in which advisors claim that when hired, they were promised certain things but that once they joined the firm, those promises were never kept. How does an FA avoid that situation? The hiring branch manager often says the firm doesn’t put such promises in writing.

The first thing is to ask the reason for that.

The response is usually: “It’s not our policy.”

Then ask them: “I’d like to know a bit more about what that policy is based on.” If the branch manager says he doesn’t know, ask, “Who might know? I’d like to get a better understanding of this so that we can come up with an arrangement that makes us both feel more comfortable.” You want to question them, but not in a confrontational way. However, if they say it’s because we can’t guarantee those things, well, then, you know where you stand.

Okay, what’s the second step in developing a MESO?

Integrate and package the fractionated sub-issues into three equally weighted options, all of them acceptable to you as the advisor.

And the third step?

Keep issues that are important to you constant: You don’t want to concede on things that are of vital interest to you. Make sure all the options in the MESO don’t compromise vital interests of yours. Be prepared to concede only on areas that are important to the client.

What’s next after you’ve presented the MESO?

Allow for discussion and dialogue around it, then refine and fine-tune as necessary.

Anything else to keep in mind when using this approach to close?

The client or potential client is typically in a dual role because often they’re negotiating on behalf of their spouse and children, as well as for themselves. Seldom are they negotiating in a vacuum. So the advisor needs to make sure that the interests of parties who aren’t present are addressed.  One of the dangers of a single-point offer is that you’re appealing only to the needs of the principal.

Sounds like a MESO is appropriate with married-couple clients polarized in their investing approaches — one is conservative; the other, aggressive.

Yes. Putting a MESO on the table makes it easier for them to reach a decision. They can compromise: “Offer ‘A’ isn’t great for me. Offer ‘C’ isn’t great for you. But Offer ‘B’ would be a good compromise.”

When does the MESO-presenting FA ask for the client’s answer?

You want to build up the agreement incrementally at a comfortable pace for the other party. You might say, “You have three possible ideas to consider. Think about them.” You don’t give them an ultimatum. People don’t like to feel they’re being pressured into agreement. That’s why we dislike secondhand car salesmen.

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