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Prospecting: Everyone’s Looking for the Silver Bullet

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Stockbrokers have been around for a long time. The New York Stock Exchange was founded in 1817. In “The Great Gatsby,” Nick Carraway, the narrating character, was a bond broker on Wall Street when he wasn’t attending Gatsby’s parties.

For as long as there have been stockbrokers, there have been people looking for clients — prospecting. Over time, everyone has been looking for the Silver Bullet, the magic strategy that brings new clients, with a minimum of effort.

The Silver Bullet exists. Walmart discovered it. Just be cheaper than everyone else, adjusting your prices downwards if anyone beats you. No financial advisor wants to be the low-cost provider. They want a better Silver Bullet, one that brings prospects to your door, eager to pay full price.

The Silver Bullet Over the Years

Let’s take a humorous look at the hunt for that Silver Bullet:

  • 1970s: Buying the right lists. Everyone was cold calling. The quest was to find that magic list of people with money who weren’t being called by every other advisor.
  • 1980s: TV advertising. If only the firm ran TV ads, clients would come to me. Wow! The firm is running TV ads. Why aren’t they any good? I just don’t get it. Ads produced some leads.
  • 1980s. The mass mailing. You would get numbers to work in your favor. If you mailed enough letters and brochures to enough people, a certain number would reply. You follow up those leads.
  • 1980s. The massive seminar. It’s tied into the mass mailing. Let’s run newspaper ads, too. We will fill hotel ballrooms with people. Even if a small number were interested, we would have plenty of new clients.
  • 1990s. The client/prospect dinner. As we asked clients to attend seminars and bring friends, we discovered you could ask three clients to each bring a friend, go to a better restaurant and have a marketing partner take a seat and pay the bill. This worked pretty well.
  • 1990s. Hot new issues. If we could only get shares in those hot new issues, I could use that to get new prospects through the door. Then I would introduce them to other products. Hot issues are hot because you can’t get them.
  • 1990s. The internet and websites. It was all so new! If only the firm would let me have my own website! I have a friend who would design it. I promise I won’t post anything I would regret. The firm keeps saying no.
  • 1990s. Email. Did you know you can blast e-mail thousands of people? It’s like a mass mailing! If only the firm would let me do it. They keep saying no.
  • 2000s. Social media. Do you know how many people are on Facebook? If only the firm would let me prospect through social media … They keep saying no.
  • 2010s. LinkedIn. The firm has embraced social media. Well, sort of … The firm hosts my site. I can’t comment on posts. I can click on the birthday prompt and say “Happy birthday!” but that’s it.
  • 2010s. Social media. Posting has gotten better. The firm has provided access to an archive of compliance-approved articles.

Silver Bullets Today

Building a book requires prospecting. Prospecting requires hard work. If it didn’t, everyone who became an advisor would be successful. There are a few Silver Bullets out there.

  • Cross-selling. Banks bought wirehouses. They put advisors into bank branches. Bank clients put cash from maturing deposits into investment and insurance products. It works, but every new revenue stream gained from an investment product is a revenue stream lost to a banking product.
  • Referrals. One satisfied client brings a presold prospect through the door. It doesn’t get much better than that. The problem is, unlike advertising or mass mailings, you can’t ramp up your efforts or expenditures to get more referrals. Clients don’t like being pushed.
  • Social prospecting. Join the right organizations. Meet the right people. People do business with people they like. It’s the Old Boy network in action. However, it takes time.
  • Centers of influence. You cultivate people who tell other people what to do. Accountants and lawyers are the classic examples. You need to “give to get.” Advisors don’t have as much referral business to send along.
  • Buying a book. People retire. They would like to monetize their practice. For years, this was a non-starter. Then advisors brought in the next generation, creating dynasties. Retirement programs were developed where older advisors could step away and the accounts were gradually assumed by a different set of advisors, with the departing advisor gradually being paid out.
  • Teaming. Everyone gets comfortable with a product mix. This includes clients and advisors. Newer advisors are teamed with established advisors, get to know their clients and gradually introduce all the other products clients never heard about.

Is There Really a Silver Bullet?

Relationship building takes time. For years, people have said “Stocks aren’t bought, they are sold.” People talked about “story stocks.” People tend to give their money to other people to invest for them. They are paying for advice from a person they trust. It’s like a wine merchant who knows what you like and calls you when something comes into the store.

There are products and delivery systems that can commoditize the process and take a segment of the investing population “off the table.” But I think the majority of investors want a relationship. They want to be treated as an important client. It’s not quick and easy — but that’s the Silver Bullet.

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