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8 Ways to Get Prospects to Switch Advisors

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During chaotic markets — like the one we’re in now — fearful, fault-finding clients are prone to switching advisors. But don’t push someone else’s client to leave their existing FA: That typically backfires. Instead, let prospects experience your talent by, for example, creating a “phantom portfolio” for them, Wharton marketing professor Jonah Berger tells ThinkAdvisor in an interview.

Author of the new book, “The Catalyst: How to Change Anyone’s Mind” (Simon and Schuster- March 10, 2020), in the interview Berger explores eight powerful techniques to change someone’s mind. End goal? The acquisition of new clients.

An expert on behavior change and why products and ideas catch on, he has consulted to firms and organizations including Apple (to improve its customer service), Facebook (to introduce new hardware products), the Gates Foundation (to sharpen its messaging), Google (to roll out new projects) and Vanguard (on marketing strategies and new products).

In our conversation, the bestselling author of “Contagious” and “Invisible Influence” reveals how reducing key roadblocks makes changing minds easier.

For instance, he explains how using “tactical empathy” — emotion as a negotiation tactic — helps gain trust and “lays the groundwork for influence.”

While “The Catalyst” — which has drawn kudos from leading experts and influencers like Robert Cialdini and Arianna Huffington — is a guide for changing anyone’s mind, from salespeople to corporate heads to parents of young children or teens, it is perhaps particularly relevant to FAs in exploring folks’ “ingrained anti-persuasion radar.”

ThinkAdvisor recently conducted a phone interview with the University of Pennsylvania professor. He urges: To identify barriers and change someone’s mind, rather than asking yourself, “What can I do to convince this person?”, think: “Why hasn’t this person changed already?”

Here are highlights of our conversation.

THINKADVISOR: What’s a good time for trying to acquire a new client who has a financial advisor?

JONAH BERGER: The longer someone has been with an advisor, the less likely they’ll be willing to switch unless there’s a very clear reason. Maybe their portfolio performance has been really bad lately — not due to the advisor but because of the market. That’s obviously an opportunity when people are more willing to consider switching.

But many clients don’t want to take a chance with a different advisor, correct?

Yes, but there can be a cost to sticking with their existing one. People often think that doing something new is very risky. I have an example in my book: a financial advisor who showed a  [conservative] client that he was losing money relative to what he could have been making had he moved money from his savings stockpile into the market.

Let’s discuss, in random order, eight of your techniques to change someone’s mind in order to acquire them as a client. First: “Determine the Barriers.” Start by identifying the barriers that are preventing someone from changing their mind, you write. Why is that important?

Advisors are really good about advising and the markets but less good thinking about the things going on in their customers’ minds that make them uncomfortable or upset: What are those barriers and how can I mitigate them? Until you think about and understand what they are, it’s going to be really hard to reduce them.

Two: “Overcoming Pushing Back.” The harder you push, the more the other side resists. Please elaborate.

If you’re trying to have a client switch to you from their existing advisor, you’re likely to say, “Let’s have a 30-minute phone call, and I’ll tell you what I can do for you. Then I’ll put together a PowerPoint presentation that will give you more facts and information about how I think I can perform well for you and your assets.”

What’s the matter with that?

If we give people more facts and figures, we think they’ll go in the direction we want them to go. But when we push, they often don’t go in that direction. Often, they push back.

Please expand on how that behavior — called reactance — manifests.

People have ingrained anti-persuasion radar: When they sense someone is trying to convince or persuade them, that radar goes off and their defense system goes up. They ignore — avoid — the message. An advisor might say their method of investing is great. But the prospect might think: “How do I know that’s actually right?”

What can the advisor do to try to overcome that?

Figure out a way to allow the prospect to participate more, have more of a role in the process — to get them to persuade themselves, instead of you doing the persuading.

You’ve suggested that offering a menu to pick a path — that is, providing options — is effective. Why so?

First of all, ask — don’t tell. Ask questions rather than make statements to get a better sense of what the prospect wants and needs in order to help them see how the paths you’re laying out are the best ways to reach [their goal].

What’s the advisor’s chief benefit of giving options?

Whenever we pitch, the person is thinking about all the reasons why we’re wrong. When we provide a menu, it subtly shifts their role from knocking down our argument to making comparisons. Rather than thinking about why they don’t believe what we’re suggesting, they think about which option they prefer. And in making a comparison, they’re much more likely to pick one of the things we’ve suggested.

How many options, or guided choices, as you term them, are best?

Two or three — not 15 or 30. Often that many is overwhelming. There’s lots of research showing that if you give people too many options, they don’t make a choice at all. But giving them a [small] set of guided choices encourages them to select within that set, and that makes them more likely to move in your direction.

A third technique: “Use Tactical Empathy.” To gain trust, you need to listen and put yourself in the other person’s shoes, you write. This “lays the groundwork for influence.” Please elaborate.

The challenge is that, sure, the advisor who the client may be with isn’t perfect, the client [thinks]; but how do they know someone else will be better? It comes down to: Can I trust this person? Do I think they have my best interest at heart?

Please talk more about the significance of listening.

It’s not about telling people you’re trustworthy; it’s about showing them you’re listening and starting to understand them. Active listening is about being responsive. Part of trust comes from the client’s realizing you’re listening to them after you’ve asked the right questions and are using tactical empathy to show — not tell — them that you’re listening.

For financial advisors, a fourth method is: “Construct a Phantom Portfolio.” What’s that?

Just telling a prospect: “You’re going to do better with me than with your existing advisor” is just cheap talk. Allow people to experience it themselves by [for example], creating a phantom portfolio. You don’t put any money in it; you use it to compare [what] if the prospect had invested with you vs. with their existing advisor.

How do you broach the idea?

You can say, “Let’s agree that, if in three months, my phantom portfolio is beating your real portfolio, you’ll switch to me. If not, you’ll stay with your current advisor.” So, if you can show how much more the phantom portfolio has made, it will make the prospect much more likely to switch. This also reduces uncertainty: It lowers the barrier to trial by allowing them to see how well they would have performed with you as their advisor and then make that comparison.

What’s the best hoped-for outcome with the phantom portfolio approach?

It’s a great way for the prospect to see: “Wow! Had I invested with you, I would have made more money over the last three months. I should switch my money to you.”

A fifth approach is “Chunking.” Please explain.

Rather than asking to manage all a prospect’s assets at once, ask for just 1% or 10% of their portfolio the next time they’re going to invest instead of investing it all with their existing advisor. Asking them to switch over all their assets is a big “ask.” So ask them to switch over only a small chunk. If it goes well, then ask for more.

What’s the psychology behind that?

Breaking it into chunks will make it more likely that they’ll say yes, more likely they’ll believe that you provide value — and more likely that they’ll switch to you.

Sixth: “Commit to Handling the Costs of Switching” their funds over to you. What’s the upside of that for the advisor?

Most people won’t take a certain upfront cost for an uncertain benefit later. So a challenge for the advisor is to bring up those benefits [early on] and put off those costs. This applies to switching costs in terms of time and effort for a client to switch their funds to the new advisor. You can mitigate all that by being helpful in taking care of those transitional switching costs.

A seventh: “Get Corroborating Evidence.” In this scenario, it would be offering testimonials from existing clients. Please discuss.

The best salesperson isn’t you — it’s your customers. We can say that we’re great till we’re blue in the face, but people aren’t necessarily going to trust us. Your clients are much more likely to provide proof than you are. So you might say, “Here are the phone numbers of three of my existing clients. Please talk to them.”

An eighth technique is “Make It Reversible.” How can that concept work with financial advisory?

You might say to the prospect, “I’ll make money only if you make money. I’ll pick a performance target and guarantee X%. For every amount above that, I’ll get a commission. But if I don’t get X%, I don’t receive any commission. If I get above X%, I’ll get a larger commission than I usually would on that investment. I’m so convinced of the value I’ll provide that I’ll shift some of that risk to me, and I’ll only win if you win.”

Any other way to “make it reversible”?

You can say, “I’ll switch all your funds over; and if you’re not happy [with the results] in six months, I’ll switch the funds back and take care of the switching costs for you.” So you’re not guaranteeing the return; but you’re mitigating those switching costs. You’re saying [in essence] that if [things] don’t work out, it’s not as hard for them to switch back to their former advisor.

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