Archive for the ‘financial advisor’ Category

Wirehouse Brokers/Captive Agents Wake Up Call

Monday, April 25th, 2011

The ultimate defense against discount stockbrokers, on-line insurance and the Internet.

It’s time for a wake up call or your business will be swallowed by entities with more money than you who know how to use technology to take your business.  If you manage money or sell investments, there are already many sophisticated tools on the Web that can replace your advice.    If you sell insurance, anyone can get term insurance on the web in about 10 minutes and they do not need you.

Your hands are especially tied working for a large firm because you cannot use the Internet as a powerful tool to fuel your business.  You cannot have a web site, you likely cannot have a blog, you cannot build a personal reputation.  You are a sitting duck.

Sorry if you are affronted, but I want to help you protect your business and that means facing the truth.

If you think, “Well I’ll just offer term insurance on the web too,” realize that there are thousands of agents on the web who already do this.  There’s no reason to come to your site as this product has been made into a commodity.  If you think, “I will offer stock advice on my site,” join the other thousands of sites that can do this better than you.  In the long run, the Internet is not your friend.

The solution to this is to make sure you are NOT doing the same thing as everyone else.  You can differentiate any commodity and carve out a protected niche.

This may require that you learn something new.  For example, I cannot find advice on the web about where to find high yielding, yet safe preferred stocks.  That’s a specialty. To become such an expert, means you need an education in that arena.  How many sites are called “Term Insurance for Physicians?”  That can be made into a specialty and requires that you really understand the needs of physicians and how they differ form others.

The public is getting smarter all the time.  Ten years ago you could exist as a financial planning generalist.  As people get smarter they will realize they can fill out some forms on the web and get the same financial plan you handed them.  As they get more sophisticated , so must you.  Financial advisors must be one step ahead of the prospect, or you’ve got nothing of value to offer.

Please do not ignore the threat of commoditization of financial planning.  It’s happening slowly.  Schwab and Fidelity are offering your clients planning services.  These efforts will expand.  Insurance companies are turning their captive agents into financial planners.   And as mentioned, web sites already provide financial planning to your clients.

The good news is that the process of the public learning how to be their own planner is a slow one.  There’s also a segment of the public, the affluent, that has more complex problems that they will always need a professional (which requires that you understand and have solutions for those problems).  Additionally, seniors have not adopted the web as quickly and remain a viable market for personal service and like the attention of a human.  Last, there are certain personality types (a ripe area for you to study) that will always be more responsive to getting assistance than doing it themselves.  Targeting these people is wise.

What should you do.

Pick a specialty.  Some arena of your work that fascinates you or you see as a lucrative growing area.  Become an expert.  You do this by studying everything you can find and learning from any experts that already exist.  You may need to subscribe to new publications and attend specific seminars or workshops.  It’s an investment of your time and money. (The key to success in any business in this century is being a self-teacher). You will also need a marketing system to communicate your expertise to the target market that value’s it.  The benefit to you will be a business that has staying power.

Some examples of specialization:

  • Specialist in preferred stock
  • Specialist in stocks of (name an industry)
  • Specialist in working with (name a profession or segment of the population)
  • Specialist in tax reduction
  • Stock options specialist
  • 401k specialist
  • Specialist in insuring sub-standard cases

Pick a niche and protect yourself. Read more on niche marketing at Brokerville.

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Is your business down? It’s not about the market.

Wednesday, January 21st, 2009

In the last 12 months, the world has changed a lot.  Has your business changed or has your approach remained the same even when your prospects have different concerns?  This is the Achilles heel of most financial advisors—as the world changes and prospects have different concerns, advisors continue to:

  • Sell the same things
  • Say the same things
  • Do the same things

Is it any wonder you can’t attract business when the variables of the game have changed but you haven’t?  Do your prospects hear from you the same things that have not worked for them, advice like:

  • Equities for the long run
  • Be patient
  • Diversification is key

These mantras are old, tired and as far as your prospect is concerned, is mindless droning they teach you in financial advisor school, repeated by mindless “financial advisors.”.  These recommendations have caused them nothing but big losses in their portfolio.

The stock market fell 23% in 2 days in October of 1987.  Like now, investors had no appetite for equities.  Thousands of stockbrokers starved as they continued to talk up stocks to people who had no interest.  This is a very foolish strategy.  A better strategy is to sell what people want. (If you have some altruistic bent that you want to sell what people SHOULD buy, you will always be poor.  If you want to educate people, then become a teacher and make $60,000 a year.  If you want to make money as a financial sales professional, then sell what people want).

One clever advisor called through his prospect list in those dark days of 1987 and in three months opened 100 accounts selling bonds to his new clients.  He called and asked if they shopped at Safeway (tip: sell something familiar to your prospects, not a fund or some arcane security). They all shopped at Safeway, the dominant supermarket in the area.  He then proceeded as follows:

Advisor: How much money have you spent at Safeway over the last 20 years?
Prospect: I don’t know, but it’s thousands of dollars
Advisor:  How would you like to get some of their money for a change?
Prospect: sure, how does that work?
Advisor: Safeway is offering bonds that pay 11.75% (interest rates were higher back in the 80s so this rate was not out of the norm) so on a $100,000 investment, you get two checks a year of $5,875.  Would you like that?
Prospect: I only have $50,000 available. Can I still get these bonds?

Rather than pitching stocks, a financial plan, a mutual fund or something else for which prospects had no interest, this advisor pitched what prospects wanted:

  • A familiar name that gave them a sense of security
  • A fixed return

Are you selling what people want?

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Increase Your Income–But No need to Sell MORE

Thursday, January 8th, 2009

Years ago a colleague asked me how I sold more than he did.  I told him I did not sell more, I sold faster.

Most financial professionals, when seeking to increase their income look to increase the numerator of this fraction: 

Sales/Time

For example, if you generate $100,000 per year, you think about ways to increase that to $200,000 per year like dealing with prospects who have larger sums to invest, networking with professionals who can send you referrals or running financial seminars where you can present to 30 people simultaneously.  These all work but they limit your focus to only the numerator.  You can also earn “more” by reducing the denominator.

I saw my colleague come to the office each morning and waste 30 minutes reading the Wall Street Journal over coffee.  To me, this was a waste of time and nothing in the Wall Street Journal would help him do more business.  All it would do would help him form opinions and opinions have no place in investing (we cover this in a later post).  I also saw him meet with prospects for 90 minutes and more thinking that the longer the meeting, the more rapport and the more trust would be built. I, on the other hand limited appointments to one hour.  This forced me to get down to business and cut out the time wasting chit chat.  While my colleague had the belief that meaningless chit chat created rapport and a solid client, my belief was that competence and a direct focus on prospect concerns created new clients.
When I made my calls for the day, I called from a list.  I made one call after the other and did not take a break until I completed the list.  At the end of the list I entered my notes into my contact manager at the end.  My colleague on the other hand called from his contact manager database and wasted a couple minutes on each record looking at the previous notes and “meandering.”

I also noticed that every time his phone rang, he answered it.  I never answered a ringing phone because I noticed that 90% of the time it was a wholesaler, someone from the head office or some other time wasting distraction that would not generate business.  So I let my voice mails get all my calls and returned all calls at 4 pm, near the end of my day.

In an average day, these minor time management tactics, the attention on the denominator, gave me an extra 2 hours a day of productive time.  That’s 500 hours a year and at $200/hour (the value of selling time), I earned $100,000 more than my colleague.

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Differences Sell—How to Differentiate Yourself from other Financial Advisors

Tuesday, November 4th, 2008

 
It amazes me that most financial advisors go through their career saying the same things as their competition, selling the same products an services and never setting themselves apart. Why would any client come to you if you are not different than your competition? If you don’t have an answer, it may be why your prospecting is hard and your business does not grow as fast as you desire and you don’t havethe client quality you crave.  The focus of your financial advisor marketing must be differentiation.

We have spelled out this simple formula for thousands of advisors. Maybe 1% have followed it and they are among the more successful financial advisors.

First, specialize. If you are a generalist, no one wants to consult you. Every prospect thinks their situation is unique or that they are unique. So decide how you want to specialize and do it. For example, if you want to specialize in working with retirees, then:

1. name your business appropriately, something like “Nestegg Protectors”
2. have a tag line “ We help you protect the financial assets you’ve accumulated”
3. have a brochure and a web site that detail how you help retirees with your specialty and what they will gain by employing you

Second, write a financial book on your specialty: “ Six Mistakes Retirees Make that Destroy Their Nestegg and How to Avoid Them.” If this seems like a daunting task, it’s because you simply don’t know how a book is written. Bill Clinton did not lock himself in an attic for 14 months. He simply dictated his answers to a writer’s questions into a cassette recorder.

The writer then took those dictations and wrote the book.

Comments from advisors who have had books written for them:

“Just a note to let you know how successful the co-authored book program has been for me. I mailed copies to CPAs that I wanted to meet with and I was able to set appointments with several. I also use the book as the second mailing in my referral program, which has made the program even more effective. I have made over three hundred thousand dollars from new clients to whom I have given the book. Thanks again for helping me make my marketing effort more successful.”Dennis R., St. Louis MO
 

Next, you must publish a financial advisor newsletter or insurance newsletter if an insurance professional. This shows that you are a knowledgeable professional on top of the evolving issues in your field. Would you rather have your knee surgery done by a physician who completed medical school 30 years ago and does not read any medical journals or the one that publishes “Knee Surgery Monthly—latest techniques in knee bone and cartilage repair.” You want to go to the newsletter publisher because that professional is obviously on top of their field.

Similarly, your prospects want to go to such an expert.

You don’t need to write a word to publish your financial newsletter. Simply buy the articles. We’ve provided hundreds of FINRA reviewed newsletter articles and newsletters to financial advisors and they have built a professional reputation without writing a word.

This is very little work to differentiate yourself, set yourself apart from the competition and gain clients that other advisors cannot. And you only need to set these differentiating factors in motion and outsource the continued writing to maintain your specialist image.

Note that suggestions in this article address ghost written materials.  Please follow the disclosure requirements if you are licensed by FiNRA found at http://www.cecouncil.com/Documents/d8d04a07-32ba-4405-b16a-b5efef81bc65.pdf

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Develop Your Referral System

Thursday, October 30th, 2008

Most producers get referrals by asking their clients for the names of any acquaintances who may need their services. But when you get referrals this way, you call the acquaintance and:

• They don’t know who you are.

• They don’t know what you do.

• They don’t know why you’re calling.

• They don’t know how you got their names.

The do-not-call rules make it that much tougher for you to build his practice from referrals that come to you in this manner.

Trust is everything in this business, and securing prospects’ trust before you meet increases your chances of opening a new account. The way most financial advisors or insurance agents get referrals, however, does not result in high trust. If you want to increase the success rate of your referral marketing, change the way you get referrals.

In addition, if you want more than the sporadic high quality referral from your referral program, you must develop a referral system, which becomes automatic in you practice, that will generate a continuous flow of good prospects.

Defining a good referral
To start with, determine the type of prospects to whom you want to be referred. All insurance referrals or investment referrals are not created equal, and when developing a referral system, concentrate your efforts on seeking prospects that best suit your practice.  For example, if you want more seniors as clients, then the way you cultivate a senior referral will be different than cultivating a referral to the baby boomer children of your clients.

Look at your current clientele and identify the 20% that provide 80% of your income. What characteristics do these clients share? Wouldn’t the best prospects be similar? Odds are excellent that these people have friends who share similar needs and circumstances.

Define this target market and then focus your referral efforts on those prospects most likely to fit your target profile.

Gaining Personal Referrals
Build the referral system by setting up business development meetings with your targeted clients. These meetings are not sales meetings, but rather their purpose is to grow your business. In addition, these meetings are meant to do far more than deliver a list of names and addresses from your clients; if done correctly, clients will introduce you to their friends.

Referring to the list created above of targeted clients, contact some of your best clients and invite them to a business development meeting. Explain to the clients that this is an integral part of your business and because of your relationship, ask if they would take a little bit of time to meet with you and help you build your business.  Offer to buy lunch.

Ask these clients to bring their address book. This is a good place to begin to target possible prospects. For example, if the client is a senior executive with his firm, you will ask to be introduced to his colleagues. If the client balks at this and says he is not sure his friends “need help,” the  tell him that it’s OK. The client does not need to determine which of his friends need help. The friends will decide for themselves.

Design your referral marketing presentation to inform your clients why you do this, and how it works. This presentation should detail how you will deal with the referrals. It must address the fears clients may have about sharing other people’s names and personal information. You can best can allay their fears if you explain exactly how you will use the information.

You will achieve more success from these referrals if the client introduces you to the referral. If you merely gets a referral name and telephone number from a client, that’s almost worthless. When you call the referral without an introduction, don’t expect much because you will have the problems I mentioned above.

If you follow the process I describe below, the referral will be expecting your call and will know you well.

Step 1: The personal introduction. Prepare an endorsement letter about yourself, which the client will send to the referral. This letter basically says, “I’m working with Bob, and he’s done a great job for me. I think it would be worth your while to meet with him.” The producer can add some specific information aimed at the services he provides, such as, “He has helped me organize my finances,” if he believes these might be of interest to the prospect.

This next step is important: At the bottom of the letter, add a sentence, “If you don’t want me to give your name to Bob, let me know.” This gives the prospective referred party the opportunity to opt out. You don’t want to waste his time on people who aren’t interested in what you offer. It also reassures the client who gave the producer the referral’s name to know that the producer isn’t jeopardizing the client’s relationship to the prospect.

Prepare these letters before the business development meeting so that the client can sign them at your lunch meeting. When you mail these referrals, include your brochure or some information on your practice.

With the client’s permission, print envelopes for the letters, adding the client’s return address. When the note arrives at the referral’s home, it appears to have been sent from the client’s home or office.

Step 2: Drip marketing. Now that you have been introduced in writing, build the prospect’s trust to improve the odds that you will get the prospect’s business. Make two additional mail contacts before attempting to call for an appointment.

A few weeks after the initial introduction, follow up with another passive form of contact. Send a copy of your financial advisor newsletter or a booklet the prospect might find useful. You might attach a personal note or Post-It.

The third contact should be a personal letter from you. This is where you introduce yourself, and describe what you do. This letter should mention, “I got your name from so-and-so. If you have any questions about me, feel free to call so-and-so before I call you next week.”

Step 3: The telephone call. Follow up with a telephone call, as promised. This call a week later is to set an appointment.

Yes, it really can be this simple to get referrals that you convert into clients. The secret to this referral program is to use a systematic approach to get referrals and convert referrals into clients.

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Sales success through zigzagging and stumbling

Tuesday, September 16th, 2008

Few people in the financial services industry ever become seven-digit earners but there are thousands that attain this sales success, which means it is possible for all. In fact, the financial services industry offers more opportunity for large earnings than possibly any other industry. So why do so few get there?

It’s the same reason that there are very few Albert Einsteins or Thomas Edisons. The folklore is that Edison made 10,000 attempts to invent the light bulb. Most financial advisors will not attempt something even a second time if they don’t get instant sales success. And therein lays the difference between those that earn more than the rest can imagine and the rest.

Really large producers know a secret about life. If you keep knocking at the door, it eventually opens. It’s a matter of how long one is willing to stand in front of “no success” that determines if you achieve sales success. But in a culture of “instant gratification,” it’s hard to stay with something that doesn’t work. And so, most people in financial services move from one idea to the next, one product to the next, one marketing system to the next, always in search of the Holy Grail but never finding it, never realizing that the big producers create their own grail through sheer commitment to stay the course.

Big producers simply have a commitment to an idea (usually not how much they earn), but of making something work, or of proving a point or of doing something better than anyone else. They continue to experiment, stumbling along in a zigzag fashion toward the target, making changes here and there to their approach, allowing their problem to continuously simmer in their thoughts. And by having the tenacity to hold the problem, the solution often comes coincidentally, like Newton being hit on the head by a falling apple and realizing the structure and formula describing gravity and mass.

How does this apply to you on Monday morning and your sales success? If that seminar you did was not successful, don’t give up and try something else. If you’ve been soliciting CPAs for 3 months with no referrals, don’t give up and try something else. If you’ve been running an ad that was not instantly successful, don’t give up and try something else. Stay with your problem and find the solution. Be willing to stand in the place called “I don’t know what I’m doing” because then you take steps to learn and find out what you don’t know (or find the person that has already solved your dilemma). In the Internet age, all knowledge is at your fingertips so you only need seek out the information or the person who can help you.

I get solicited every month to help people with their ideas (which are usually not in my area of expertise) and I wonder how many of these we will ever see:

• A nationwide financial planning firm for women

•A training to teach financial advisors to manage family business succession from one generation to another and building a network of such advisors

• A training to teach advisors to integrate the investment plan with the estate plan

• A plan for financial advisors to enroll their clients in a medical identification program, so that if injured anywhere in the world, the medical facility can instantly access the client’s medical background

• A training program sold through financial advisors that helps people be better investors

I meet many advisors with the same story of broken dreams, “I started in the business selling product X. But then the market went down so I shifted to Y. And then you know what happened to interest rates, so I shifted to Z. And then….

The sad fact of this recount is that had the advisor stayed with product X and not abandoned the original plan so quickly, that advisor may now be the best known provider of X in their town with wild sales success to their credit. Everyone else would have exited that business leaving the last man standing to win the spoils.

On Monday morning, take list the ideas and approaches you have abandoned in the last year or are ready to abandon and stop.

–Make three phone calls to people who you think can help you or refer you to others that can (you will likely find an expert through a zigzag network of referrals from one person to another).

–Do several Internet searches using various key phrases related to your problem (which will probably take you on a zigzag course to insight). It’s likely by the end of the week, you will have made a leap in solving your current dilemma or abandoned opportunities by zigzagging and stumbling along.

“Genius is 1% inspiration and 99% perspiration.”Thomas Edison

Post provided by Javelin Marketing

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How Financial Advisors Prosper From A Bear Market

Tuesday, July 1st, 2008

Many financial advisors have a knee-jerk negative reaction to a bear market. Securities firms commissions drop, brokers paychecks fall and the layoff of back office staff begins. This insanity repeats itself because brokers have failed to look at the underlying opportunities created by bear markets. In this article we will cover four of those opportunities.

You’ve Got More Prospects than Clients in a Bear Market
The negative reaction to bear markets is created by the broker’s concern of his existing clients losing money. Let’s assume you have 300 clients. You probably have a 10,000 prospects. By prospects, I mean all the people in your local area that meet your criteria for a new client and could potentially do business with you. Therefore, you have many more prospects than clients. In other words, your future is potentially brighter than your present.

Those10,000 prospects are now the clients of another financial advisor. These clients are getting less happy as a bear market progresses and are more inclined to make a change of advisers (you’re the broker in the “white hat” because you haven’t done anything wrong yet). That’s very good for you. So while a bear market robs net worth from your existing clients, it creates a lot more motivated prospects that you can gain as new clients. Bear markets are an opportunity to open more new accounts than ever. In the three months following the 1987 market crash, I opened up 100 new accounts. What I did was simple.

The word “stock” became a dirty word during the bear market. So I had the good sense not to prospect with stocks but rather used bonds. At that time, Safeway had bonds yielding 11.75%. I called people age 60 and over and said “Mrs. Jones, the reason I’m calling is because Safeway is offering bonds that pay 11.75%. Do you ever shop there? They would of course answer “Yes.” “Well,” I said, “you’ve probably given them plenty of your money over the years, how would you like to have some of theirs?” I opened 100 new accounts.

The Fallacy of Perceiving Bear Markets as Bad
Your aversion to bear markets may stem from the fact that you view gaining new clients more difficult than keeping your existing clients. That’s simply a function of your false scarcity mentality. There is, in reality, no scarcity of qualified prospects. As an analogy, ask any investment banker if there was any of scarcity of money for investment in companies with no revenues and no earnings. The banker knows that money is abundant and all that’s required is a good story. Similarly, prospects and new clients are abundant and any other perception is simply inaccurate.

Because you view clients as scarce, you can create more damage to your existing book during a bear market than is necessary. All along, you’ve been telling your clients to take the long term view. If you now react to the short term fluctuations, you appear to be talking out of both sides of your mouth, you appear to have no conviction and you appear far less trustworthy in the eyes of your clients. Now more than ever you must reiterate your long term philosophy. If you don’t, you are guilty of the same criticism you have about most investors and their short-term orientation.

The Opportunity to Become a Better Money Manager
Bear markets are an opportunity for self education. If you’ve been a momentum investor, you now get to fully understand the ramifications of that methodology. These declines give you an opportunity to see if your strategies and philosophies are appropriate in all types of markets and whether you’ve selected the right types of clients.

My revenue never declined from existing clients during bear periods. I had each client on a system. They either paid an annual fee or they were on a system which required annual re-balancing and the constant flow of commissions each year. Brokers whose earnings decline in bear markets have their clients on a trading system (often called the shoot-from-the hip-system) which is bad for the client and bad for the broker. Time to clean up your act.

Your Clients Are Finally Ready to Listen
If you find that your clients are oriented toward the short-term no matter what you say, try this analogy with a client: “Joe, you have grandchildren don’t you?” “Have you ever babysat for them when their mother went on an errand? The child asks when will mommy be back.” You say, “in about an hour.” Then five minutes later your grandchild says, “has it been an hour yet?” That’s the same way adults act with the stock market. Rather than looking at the performance of their portfolio over years, which is the appropriate time frame for stock investing, they keep looking at their portfolio day to day and even minute to minute. “Has it been an hour yet?”

If you have younger clients you simply need to teach them as follows. Ask any client that’s 40-years-old if they will be investing more money during the rest of their life than they have already invested. If they say of course, then point out that bear markets are a huge buying opportunity with stocks on sale. Therefore, market declines help them more than hurt them because the bulk of their money is yet to be invested, at bargain prices. If you have clients dollar cost averaging, show them the example below which illustrates that dollar cost averaging benefits by higher volatility (over time, dollar cost averaging accumulates more shares from a volatile market than a stable market).

Dollar Cost Averaging—Volatile Market

Investment Month Price (changes 10% from start each month) Shares Purchased
$100 January $10 10
$100 February $11 9.09
$100 March $9 11.11
$100 April $11 9.09
$100 May $9 11.11
$500 (total investment) $10 (average price for period) 50.4 (total shares accumulated)

Dollar Cost Averaging—Stable Market

Investment Month Price Shares Purchased
$100 January $10 10
$100 February $10 10
$100 March $10 10
$100 April $10 10
$100 May $10 10
$500 (total investment) $10 (average price for period) 50 (total shares accumulated)

Bear markets are a great opportunity to take in new clients, orient your accounts to more stable investment methodologies and focus your business to capture the greatest profits yet to come.

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