As a result of my frequent talks and articles, I often get approached by financial advisors for advice.

I recently received the following email from an advisor in Montreal, who works with an independent firm:

“My partner and I have been talking with a big prospect ($50 million-plus). We have met a few times and have gotten to the point at which we are close to possibly working together.

“However, at our last meeting, this prospect said: ‘Look, your returns are matching my returns, and your level of service and the independence of your firm is very similar to what I am currently getting from the four brokers and investment managers I currently deal with. If I change to you, my accountant is just going to say that this is yet another format and statement he has to interpret each month, with no clear advantage or differentiator, so why should I change?’

“So, all else being equal in terms of service standards and returns, what is the golden answer to the question: what is the competitive advantage that I can offer to this very big prospect?”



> Establishing Your Point Of Differentiation

Before reading further, consider how you would answer this question. What advice would you offer this advisor?

Here was my answer to this email:

There are a number of possible responses to your question.

The fact that a prospect of this size is even asking why he should be working with you is a positive sign. It may be that he’s testing you to see how confident you are in your ability to deliver value above and beyond what he’s getting now.

Remember, things are never exactly equal on performance and service levels. The differences may not be huge, but there are always differences.

The first challenge is to help your prospective client understand those differences. And, second, to make those differences significant enough to make the prospect willing to move.



> Five Possible Strategies

Here are five thoughts for you to consider in dealing with this type of prospective client:

1. The next time you’re meeting with this prospect, say, in a non-confrontational way: “Normally, if people are entirely happy where they are, they aren’t open to considering alternatives. So, what was it that made you agree to sit down and talk to us?”

The answer to that question may be key in helping you to move your conversation forward.

2. Even if the performance by your prospect’s current investment managers and brokers is comparable to what you’ve been producing, chances are that there are overlapping holdings among the four existing accounts, resulting in more risk and less efficiency than necessary.

It sounds like his accountant may already be consolidating the accounts.

If none of your prospect’s existing advi-sors has consolidated and analyzed all of his existing investments, you could offer to do so, with a view to pointing out where there are opportunities to increase efficiency and where you could add value.

3. I have written previously about the four key words to remember when dealing with existing or prospective clients.

Those four words are: “Focus on big problems.”

This focus involves really understanding the hot buttons that concern your prospect, whether they be how much taxes they pay, supporting a favourite charity or the concentration risk in their wealth.

In talking to a prospective client, one advisor of my acquaintance determined that succession planning on a family cottage to minimize the tax bill was a source of stress.
@page_break@This advisor tapped into a number of resources to provide this prospect with ideas on this issue. The advisor sent along a newsletter from a leading law firm on the topic, emailed a video interview with a tax expert outlining alternatives and also got a resource at his firm’s head office involved.

That effort ended up being critical in helping to accelerate conversations with this prospect and ultimately converting him into a client.

So, you need to ask yourself: what are this prospect’s big concerns?

Then, once you’ve identified those hot buttons, decide how to respond.

4. You could suggest that instead of converting different reporting formats into a common format, your prospect’s accountant should establish a common format that each advisor your prospect works with would be asked to report in each month — in addition to the standard reporting they already provide.

There would obviously be additional work in preparing these reports each month, but for a client this large, his advisors should be willing to put in the extra effort.

And you could offer to sit down with the prospect’s accountant to suggest some common formats you have seen work effectively.

5. If all else fails, you could ask if you may stay in touch with this prospective client and send information that you think might be of particular value or interest to him.

Then, your goal should be to send along a relevant article or video once a month.

You could send an article or video that you find on websites such as those run by Bloomberg LP, Thomson Reuters Corp., the Globe and Mail, the New York Times or the Wall Street Journal, for example.

Or you could send one of the videos my firm, Clientinsights, has produced in collaboration with such experts as Dan Ariely of Duke University, Niall Ferguson of Harvard University, Jeremy Siegel of the Wharton School (University of Pennsylvania), Robert Shiller of Yale University or Lee Hausner, former senior psychologist with the Beverly Hills School District.

This works even better if you tailor the videos and articles to your prospect’s preferences: stock market forecasts, interest rate outlook, economic projections or interviews with high-profile money managers or top economists.

The best way to make this happen is to say: “Here are five areas in which we currently provide our clients with information. Which would be of interest to you?”

Those five areas could include the subjects above, as well as the outlook for the dollar, tax-saving strategies, estate planning or charitable-giving strategies.

As I said earlier, once a month, you need to make a point of seeking out a report, article or video that addresses one of concerns this prospect has identified and send it to the prospect.

Chances are that this prospect isn’t getting this kind of information from the advi-sors he’s dealing with right now. At some point, one of the other advisors he works with will drop the ball, and you’ll be positioned as the logical successor.

Note that this entails a lot of work, which is why there’s a good chance his other advisors aren’t doing this. You probably couldn’t justify the investment of time for someone with a smaller account, but a prospect of this size merits a different level of time and energy.

I hope these thoughts are useful in helping you move forward with this prospect.



> No Single Right Answer

So, that was my answer to this advisor’s question.

Your answer may have been quite different. That doesn’t mean yours is better than mine or mine is better than yours; it merely means that different people approach problems in different ways.

What is important is that whenever you are talking to a prospective client, you must focus on that key question: “How am I different?”

Even if prospects don’t ask that question directly, chances are they’re thinking it. And your ability to provide a compelling response to that question will be critical to your success in converting prospects into clients. IE

Dan Richards is CEO of Clientinsights (www.clientinsights.ca) in Toronto. For other columns, visit www.investmentexecutive.com.