“I already have an advisor”

Advisors who work for financial services institutions aren’t alone in hearing the words “I already have an advisor.” Anyone who spends time talking to prospective clients runs into that issue.

For many investors, receiving a second opinion doesn’t provide a sufficiently compelling benefit. After all, you’re asking someone not just to invest the time to meet with you, but also to risk experiencing an uncomfortable level of pressure from the ensuing conversation. There’s also the question of how objective that second opinion really will be.

To get prospects who already have an advisory relationship in place to meet with you, you have to give them a clear, tangible and credible reason. You can do this by raising hot button issues.

But before raising those issues, there’s something else you have to do first: take the pressure off.

When prospects tell you that they already have an advisor, that’s a good thing. They could simply have said “No thanks” without giving you a reason. So, the fact that they are honest about already working with an advisor gives you a leg up in building a relationship. The challenge is that when prospective clients tell you about their existing advisory relationship, many of those prospects expect to hear all the reasons that this shouldn’t matter and that they should meet with you regardless. As a result, as they tell you that they already have an advisor, many prospects immediately put their guards up.

At that point, your first priority is to get past those defences and convey that you and the prospect are on the same side of the table. Consider saying something like this:

“I’m delighted that you’re working with a professional advisor. People who work with good-quality advisors are significantly more likely to achieve their long-term financial goals, so the fact that you’re already working with an advisor is a good thing.”

At this point, you need to pause and wait for a response from the prospect, to see if they have anything to say. Once you hear them out, you need to ask a question that will communicate your value and introduce a seed of doubt about the advisors that they are working with – and to suggest that the potential upside of meeting with you outweighs the downside.

Here are four hot buttons you could use to introduce that little bit of doubt:

> Hot button no. 1: Running out of money in retirement

The first hot button relates to having a written plan to ensure that the prospect doesn’t run out of money in retirement. You could say something like:

“I’m just curious. What kind of written plan has your financial advisor prepared to ensure that in retirement your income exceeds your expenses?”

Vancouver-based research firm Corporate Insights Inc. has conducted in-depth research with affluent clients of leading bank-owned investment firms to gauge satisfaction, loyalty and share of wallet. In a recent conversation, Price Powell, the firm’s cofounder, told me that when it comes to financial plans, Corporate Insights has found that:

– Roughly 25% of investors say that their advisor has prepared a written financial plan.

– Another 25% of investors say that their advisor has prepared a financial plan, but not in writing. (We could debate whether a plan that’s not in writing is actually a plan, but let’s accept that if prospects think they have a plan, for all intents and purposes, they have a plan.)

– Overall, 40% of investors say they would be interested in having their advisors prepare a written financial plan.

This 40% of clients is the group that represents an opportunity for you.

> Hot button no. 2: Saving taxes

The second hot button relates to the two words that will get investors’ attention faster than almost any others: saving taxes. So, you could ask a question like:

“Just out of interest, when did your financial advisor last conduct an in-depth review of your portfolio to ensure that it’s structured to minimize your tax burden, both today and in future?”

No one enjoys paying taxes and, in many cases, suggesting that prospects could be paying too much in taxes will get their attention and provide an opportunity for you to get together and review the portfolio.

> Hot button no. 3: Reducing volatility

The third hot button relates to some other hot button words: reducing volatility and containing damage during a market downturn. So, your third question could be something like:

“Research has shown that regularly rebalancing your portfolio to maintain your target asset allocation can temper volatility and improve risk-adjusted returns over time. Tell me, how frequently does your advisor rebalance your portfolio to your target allocation?”

The market downturn last August makes this question especially fresh in prospects’ minds. And for those who don’t know what rebalancing a portfolio entails, the suggestion that this is something that their advisor may have neglected to do may add to their uncertainty.

> Hot button no. 4: Enjoying a happy retirement

The final hot button relates to an overall concern for many Canadians of all ages, and that is whether they’ll be able to enjoy a happy retirement. There is a growing body of research involving retirees regarding what leads to retirement happiness that takes into account factors that go well beyond simply the amount of money that retirees have to spend. A recent Angus Reid Institute report on the “anatomy of retirement” divides retirees into four categories: loving it; comfortable; struggling; and unhealthy. Research reports such as this one from Angus Reid create an opportunity to engage prospects in conversation, with an approach such as the following:

“Research shows that retirees are divided into those who say they are loving retirement, are comfortable, are struggling or are unhappy. Has your advisor talked to you about some of the new research on the factors that lead to a happy retirement?”

Chances are that the answer will be no, opening up an opportunity to engage with those prospects.

In each of these cases, the purpose of the questions is to introduce some second thoughts about prospects’ existing advisors and get those prospects to consider meeting with you for a short conversation. To make saying yes easy, having something concrete to point to is helpful. For example:

If prospects don’t have a written financial plan, you could say: “If you like, I’d be happy to walk you through a sample of the kinds of things that should be covered in a written financial plan.”

If a prospect’s advisor hasn’t communicated that the prospect’s portfolio is structured to be tax-efficient, you could say: “If you’re interested, I’d be pleased to share two or three case studies that outline how modest changes can improve significantly after tax returns.”

If your conversation is related to rebalancing, you could say: “Should it be of interest, I could show you some of the research on the impact of rebalancing and show you the effects of rebalancing on volatility and returns for a portfolio that started off 20 years ago with a 50/50 allocation of stocks and bonds.”

If your approach is related to the elements that lead to a happy retirement, you could say: “If you give me your email address, I’d be happy to send you a copy of the report on the “anatomy of retirement” that was released by the Angus Reid Institute. And if you’d like to sit down afterward to talk about some of the implications of that research, I’d be more than happy to do so.”

In addressing the “I already have an advisor” objection, there is no silver bullet that will work every time. But by responding in a way that relieves the immediate pressure, introduces a seed of doubt and makes saying yes easy, you’ll significantly increase both your chances of having those face-to-face meetings and of converting more prospects into clients as a result.

Dan Richards is CEO of Clientinsights (www.clientinsights.ca) in Toronto. For more of Dan’s columns and informative videos, visit www.investmentexecutive.com.

© 2015 Investment Executive. All rights reserved.