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How New Advisors Can Gain at the Expense of the Experienced

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“Just when you thought you were winning the rat race, along come faster rats.”

You can find the saying on T-shirts. Here’s another one, this time from Warren Buffett: “Only when the tide goes out do you discover who’s been swimming naked.”

Today, there’s a big opportunity for motivated, newer advisors to gain clients. Unfortunately, it’s at the expense of certain established advisors.

The Prey

Many established advisors are coasting. Thanks to fee-based income and annuitized business, revenue keeps rolling in, as long as the client remains invested with the firm.

You might know some advisors who are “semi-retired.” It’s not official, but they come into work three days a week. They “work from home” on Mondays and Fridays. They take frequent vacations. Long lunches, too. Their retirement plan is to be carried out feet first on a stretcher. They will collect revenue as long as there’s revenue to collect.

You might assume they have embraced call forwarding, taking incoming client calls at home. No. They leave day-to-day client contact to their sales assistant, who often covers other advisors, too. Overwhelmed and underappreciated, they often jump ship, leading the advisor to complain they just can’t find good support staff anymore.

The Hunter

This is the newer advisor, highly motivated to build their practice. We are in a business where it’s easy to define success. If you find 100 of the right clients, delivering an average of $1 million each into your managed money program, at a 1% average rate, you have become a million-dollar producer. It’s not that easy, but it boils down to finding 100 of the right people with the potential to bring over a large amount of retirement and investment assets.

Unsurprisingly, the new advisor runs into plenty of prospects who already have an advisor. If they have a good advisor who gives them excellent service, that’s wonderful. If they don’t, that relationship is in play. It’s logical that one advisor’s best client is another advisor’s best prospect.

What Can the Hunter Do?

The interests of the client must come first. All clients deserve excellent service. If they aren’t getting it, you have the potential to deliver it instead.

Establish yourself as the alternative.

It’s a person you see often. You explained what you do. They told you they have an advisor. “I’m sure you are very happy with your advisor. Let me know if anything ever changes.” Don’t press the point. Drip on them with anonymous success stories.

Make them feel important.

Remember details. If they mention stocks they own, file it away. Learn the names of their children. Issues they are facing in their lives. They know you want their business. They are feeling “courted.” Their current advisor may be taking them for granted. You are letting them know they would be an important client if they ever made the move.

Establish yourself as a resource.

People ask: “How’s the market?” They ask: “What do you think the market will do?” Have opinions, supported by facts. If/then statements help. Remember those stocks they own? Mention earnings and news when you see or talk with them. They might wonder why their current advisor doesn’t take such an interest.

Those strategies are more tactful and long term. Now, lets be more direct.

When did they last hear from their advisor?

2020 has been quite a year. Does their advisor call regularly? If they call, do they get the advisor or their assistant? Are they getting any advice and guidance? I’ve heard from an advisor who “sets a bar” by saying: “In times like these, we try to speak with each client at least once a quarter.” Ask what questions they have. Offer to try providing answers.

When was their last comprehensive review?

OK, they have heard from their advisor. It was a social call. “Just wanted to see how you are doing during the lockdown.” When was the last time someone looked over everything they own? Talked performance? Looked for concentrated positions? Looked at the balance vs. the model portfolio? You would be glad to do that for them.

How confident are they in reaching their goals?

Some advisors are focused on the short term. They think clients want to “make money.” They do. Advisors need to keep sight of what the client wants to ultimately accomplish. Often it’s financial independence. Being able to stop working. What’s their target. Are they 80% confident they will get there on schedule? 50%? Do they have any idea? You can help put that into perspective.

Have they embraced financial planning?

The above point ties into retirement planning. It’s a major component of financial planning. They likely have heard statistics people with plans do better than people without plans. Have they done one with their advisor? If so, how long ago? Is it reviewed often? When was the last time? This is another area where you can help now.

Is investing the only service offered by their advisor?

Some advisors don’t leave their comfort zone. They don’t do mortgages. Your firm provides a range of services. You might list a couple of big areas and a couple more niche ones that might apply. Does this sound like it ticks off the boxes in areas where they need guidance, but maybe don’t know where to turn?

Lots can happen. They might take a keener interest in their current advisor. They might mentally compare you and them and decide to move. They might have been reassigned after their previous advisor left. They might give you some money to test you out. They might decide to stay, but choose you as their next advisor once their current one retires or falls out of touch.

It’s a combination of drip marketing and asking directly for business. Everyone wants to be an important client.

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