Today’s environment of more informed, skeptical investors has profound ramifications for financial advisors. That’s particularly true when it comes to the mindset it takes to have a successful conversation with a prospective client.

Historically, many advisors have looked at a conversation with prospects as an event: you would ask for a meeting on the phone, and you would either succeed or fail. Alternatively, you would meet with a prospect and, at the end of that meeting, either they would sign on or they wouldn’t.

The problem with thinking of a conversation with a prospect as an event is that it means you have to ask for the order at the end of any interaction. If you’re talking to a prospect on the phone, that may mean a request to meet. Or, if you’re meeting in person, it may mean asking for a commitment to make an investment.

All too often, that request will be premature and, if it’s too soon in the process, the prospect feels under pressure — a situation that typically will lead to a poor outcome. The solution is to change our thinking about the fundamental nature of prospecting.

More and more, advisors will have to regard prospecting as a process rather than as an event. One way to do that is to think of the process as a pipeline, in which you’re fostering trust with prospective clients.

The pipeline has three components. The first is getting prospects into the pipeline. That means getting their agreement to receive future communication from you. The second is moving them through the pipeline by communicating in a way that builds trust. The third is getting them out of the pipeline, typically by asking for a meeting.



> Getting Prospects Into Your Pipeline

Here’s how this might work, based on a recent conversation with an advisor who had applied this approach to his business. In early 2009, he began sending his clients an email each month, with links to three or four interesting articles and short videos — some from his firm and some from outside sources. This advisor was very pleased by the initial positive response from clients.

Once the advisor had begun sending these items to clients and gotten a good reaction, he began thinking about other people to whom he could email these articles and videos.

The advisor spent one Saturday in March putting together a list of all the clients he’d lost in the past while, prospects he’d talked to who hadn’t signed on and people he knew casually whom he thought might be good candidates to become clients.

The following Monday, the advisor went into his office and began calling the people on the list of prospects he’d put together. His pitch was very simple:

He said: “In light of the volatile markets, each month I’ve begun emailing clients three or four particularly interesting and useful articles and short video interviews from publications such as the Wall Street Journal and the Economist.

“My clients have found these useful, and it occurred to me that you might be interested in receiving this monthly email as well. I’m calling to see if I can add you to the distribution list for this email.”

The response was generally positive. Most of those contacted said: “Sure, no problem, I’d be happy to get those emails.”

This advisor has commented that he had always felt uncomfortable calling people he knew and asking for a meeting. But he found this call much easier to make, because it was low-key and low pressure and offered something of real value.



> Moving Prospects Through The Pipeline

Now that this advisor’s prospects had agreed to receive information, they were in his pipeline. Next, he began sending those monthly articles and videos. By doing so, he was building trust and credibility — essentially, moving prospects through his pipeline.

He had made an offer; they had accepted; and he was delivering. Second, he was providing real value. Third, he was borrowing some credibility from those third-party sources.



@page_break@With every monthly email the prospects received, the advisor was reinforcing top-of-mind awareness and reminding prospects of the value that he had delivered to his clients.

A note of caution: some advisors refer to this process as “dripping” on prospects — essentially, wearing them down through persistence. That’s the wrong way to view it. Instead, think of it as nurturing and cultivating prospective clients.

Getting Prospects Out Of Your Pipeline The final step for the advisor was to try to get prospects out of his pipeline. In September, six months after his initial conversations, he called each prospect who’d been receiving the emails: “Back in the spring, you expressed interest in receiving the monthly emails I’d been sending clients with links to articles. I’m calling for a couple of reasons. First, I wanted to be sure that you were finding these useful and wanted to keep receiving them.” And, indeed, almost everyone said they were finding the articles useful. Next, he asked if the prospects had any questions about the most recent group of articles and videos he’d emailed. Almost all said no. Then the advisor got to the real crux of his call: “The other reason for my call is to see if you’d like to sit down in the next three or four weeks to talk about your own situation and perhaps to get a second opinion on your portfolio.” Some prospects accepted this invitation, but most said they were fine or too busy. To prospects who didn’t want to meet right then, he said: “No problem. Is it OK if I check back in January?” To which almost everyone said, “Sure, that’s fine.” One interesting point was the advisor’s decision to wait until September to make that first follow-up call, six months after prospects had started receiving those emails. The advisor’s comment to me was that he could have called in June, but he wanted to be sure to give this process enough time so that prospects felt the offer to send these emails was genuine and not just a pretext to call and ask for a meeting. Indeed, this advisor reported that one prospective client he reached said: “I’ve been expecting your call.”

> The Prospect Pipeline In Action When this advisor called me, he described one case that epitomizes how the prospect pipeline process works. Last March, he had contacted a university classmate with whom he’d stayed in touch over the years; this was not an instance of calling 20 years later and saying, “Remember me?” This university buddy had agreed to be put on the email list. When the advisor followed up in September, his friend had been too busy to meet but agreed to a call in January. The advisor followed up in early January, and they agreed to a meeting. After the friend signed the paperwork to bring his account over to the advisor, the advisor told his friend how pleased he was to have the opportunity to work together. And then the advisor said to his new client: “You mentioned that you really weren’t that unhappy with the performance of your portfolio. Can you tell me what led to your decision to transfer your account?” His new client’s answer said it all: “As I thought about it, I realized I was getting more good-quality information from you than from my own advisor. I liked him well enough, he was doing an OK job and we’d meet from time to time. But I just didn’t feel he had the fire in his belly that you seem to have, in terms of keeping your clients up to date on what’s going on.”

> Two Powerful Lessons This case provides two key takeaways. The first is that the world has changed when it comes to prospecting. You are going to have to be more patient and think about prospecting as a process, in which your goal is to cultivate and nurture prospects over time. Second, you need to add another way of measuring progress in your business. In addition to clients and assets and revenue, you’re going to have to track the number of prospects you’re cultivating in your pipeline. In a sense, it’s a bit like the way a major league sports franchise operates. The players on the field determine whether you’ll win today; but often it’s the prospects being developed in the minor leagues who will determine success tomorrow. IE Dan Richards is CEO of Clientinsights in Toronto. For other columns, visit www.investmentexecutive.com.