Your Prospect Said Yes: How to Hold It Together

Has a prospect ever “reneged” on you, backing out of stock trades they approved the day before? In the insurance industry the free look period, often running 10 or more days, gives the prospect the opportunity to cancel if they choose. It’s something every advisor wants to avoid.

Why Do Some New Clients Renege?

Let’s look at the problem from the point of view of an advisor recommending equities, mutual funds, managed money or fixed income.

You are meeting with the prospect at their home. The little voice inside you says: “I’m not going home without an order.” Your natural enthusiasm plays a role too. After talking and talking, back and forth, the prospect says: “OK, you’ve convinced me! I’ll buy. Show me where to sign.” Victory!

The intensity level in the room suddenly drops. You start smiling. The client signs the papers and hands over a check. Maybe they sign transfer papers. You pack up your briefcase and clear out as quickly as possible. You have your reasons. It’s been said lawyers are taught once the judge says “Not guilty!” pack up and get out of the courtroom as quickly as possible.

What’s your new client thinking? “Hmmm, I think there was a winner and a loser in this situation. One of us grabbed a check, gathered up papers and ran out of here smiling. If she’s the winner, then the loser must be … me!” They call the next morning to back out.

Departure and Follow-Up

An experienced insurance agency owner explained this approach. As you can see, the strategies are ideally suited for managed money and other investment products.

1. Reinforcement. After the prospect says yes, congratulate them on making a good decision. Review the details of their situation, their goals and how these specific investments put them on the path towards achieving their goal. You are reaffirming the reasons for their decision. This is important because they may need to explain this to their spouse or another third party. In simple terms you’ve explained their issue and where these investments fit in.

2. Review. Also called reading back the order. Go over exactly what they agreed to do. This is important because they might have just said: “Do it.” You better confirm they know what “it” is. You might be saying: “We are going to transfer over these securities. They will then go to the money manager we will be using. They will sell securities and buy others consistent with their strategy…”