Resolve to prospect

There was a consistent theme to these managers’ comments: while the large majority of advisors do a reasonably good job of communicating with existing clients, most advisors in their branches displayed little emphasis on prospecting activity and on attracting new clients, other than hoping for referrals from their client base.

In conversations with advisors, I have found that there are four primary reasons for this lack of prospecting focus: loss of confidence; lack of priority; no clear prospecting plan; and a failure to establish a prospecting routine.

Let’s talk about what you can do in 2013 to address each of these.

– Confidence

When talking to potential clients, you need to believe that those prospects would be better off working with you than with their current advisor or with other advisors. For prospects to believe that, you have feel that way first.

I’ve talked to advisors who lack this fundamental conviction and are questioning the value they provide to their clients. I recently spoke with an advisor who feels that over the past 15 years, she has let clients down; tough markets have meant that the plans her clients had made back then have had to be adjusted downward, with retirements postponed, holidays deferred and lifestyles scaled back.

I repeat: the first necessary condition to develop prospecting momentum is to have the gut feeling that prospects would be fortunate to work with you. If you don’t have that confidence, then you’re unlikely to be successful in developing prospecting momentum.

A strategy that has helped one advisor was to add an agenda item to his Monday morning team meetings: a team member will share an experience from the previous week in which a client thanked him or her for the job or difference the team member had done or made. Alternatively, a team member will select a client’s plan update that was reviewed the week before and talk about the how the client is better off as a result of the decisions that were made.

– Priority

When most current advisors entered this business, prospecting was a survival issue: if you weren’t successful in attracting new clients, your career in the financial advisory industry would be a short one.

This attitude is in stark contrast to today’s mindset: while most advisors know they should prospect, many see it as a “nice to do” activity rather than a critical issue for the health of their businesses.

As advisors have built up client bases and become successful, many have fallen into a comfort zone, caught up in the day-to-day routine of serving client needs. After all, until the autumn of 2008, most advisors felt confident that a healthy market would boost client assets, resulting in a steady stream of referrals from happy clients. The market turmoil of the past four years has changed expectations on both those fronts.

But while the world has changed, the behaviour of many advisors hasn’t kept up.

In The Seven Habits of Highly Effective People, the late Stephen R. Covey wrote about the tendency for things that are “urgent” to push things that are “important” out of our minds.

Prospecting isn’t urgent in the short term, so it is easy to put off as a result. But for most advisors, prospecting is absolutely critical in the long term. To be successful, you need to ensure that you assign to prospecting activity the right level of priority. (See story on page B9.)

Consider what percentage of your time and energy should go to bringing new clients on board. Whether it’s 5% or 50%, chances are that the actual levels of both thinking about your business and related effort are well below that number.

– Plan your path to success

One of the common complaints I hear from advisors with regard to prospecting is that “nothing works.” Methods that got results in the past are a waste of time: public seminars, educational sessions, cold calling, advertising and direct mail all worked well 10 and 15 years ago (or that’s how advisors recall it). These strategies draw meagre results today. As a consequence, some advisors throw up their hands and simply focus on doing a good job for current clients and hope they’ll see referrals as a result.

@page_break@ I wouldn’t suggest for a moment that referrals aren’t a key source of new clients. Referrals have been the No. 1 driver of new clients in the past, they are No. 1 today and that will be true as far into the future as we can see.

But a couple of things have changed when it comes to referrals: first, choppy markets mean that clients are less satisfied than in the past, and even some clients who are, on balance, satisfied are reluctant to jeopardize relationships by introducing friends to their advisors; second, even when someone is referred to you, often the decision-making process takes much longer than was the case historically.

In the second half of 2012, four of my columns related to attracting new clients:

In June, I wrote about two advisors who invested significant time to provide tangible, unexpected value to their clients. Both have seen a dramatic spike in referrals as a result.

July’s column focused on a four-step process to follow up with prospects without feeling like a pest.

October’s column featured three examples of how advisors had attracted affluent clients – in each case, by demonstrating above-average levels of patience.

In December, I outlined the advice of Harvard Business School strategy guru Michael Porter: narrow your focus, like retail giants IKEA and Target have, rather than be a generalist, like the Bay or Sears.

My columns in 2013 will continue to emphasize strategies for attracting new clients, including sharing some new research relating to what motivates clients to provide referrals.

A particular focus will be on how to build and cultivate a pipeline of potential clients with communication that provides clear value and that sets you apart.

– Prospecting habit

The fourth obstacle to prospecting success relates to the role of routine. We’re all creatures of habit, and unless you have a well-defined set of habits regarding prospecting, chances are that getting new clients isn’t getting the attention it deserves.

Here are three suggestions to help build your prospecting habit:

1. Ensure that you have a new business-development component in all your planning, whether it’s daily or weekly, on your own or with your team.

2. Create a file in your computer labelled “Prospecting Diary.” Enter the percentage of your business effort that should be dedicated to prospecting. Then, in the final three minutes of each working day, write down the answers to three questions:

– What did I do to attract new clients today?

– What did I learn from this?

– What am I going to do to attract new clients tomorrow?

3. Finally, carve out regular time in your calendar dedicated to prospecting. Don’t worry for the moment about how you’ll fill that time – that can come later. Perhaps start by scheduling 90 minutes a week dedicated to prospecting. Initially, all you’ll do with that time might be to read and reflect on what is working for other advisors or in other industries. Then, perhaps, you’ll have a coffee once a week with the accountant or lawyer of one of your top clients or with another professional in your community.

Ultimately, you may find that one 90-minute time block isn’t enough, and you’ll increase the amount of time you spend on prospecting.

When advisors ask me about the one thing they need to do to attract new clients, H.L. Mencken’s famous aphorism comes to mind: “For every complex problem, there is an answer that is clear, simple and wrong.”

There are no simple solutions to attract new clients – at least, none that I’m aware of. But by ensuring that you have the right confidence level, the right priorities, the right plan and the right routine, you can make 2013 the year that lays the foundation for your prospecting success for many years to come.

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