Sales Essentials for Financial Advisors

Aspiring financial advisers from large investment firms cold message me weekly via LinkedIn. These are financial advisors I’ve never met, but their messages are very similar, all asking for a meeting. Living and breathing sales, I appreciate the concept of prospecting for new business. I also understand unsolicited requests asking for time with busy leaders are very low probability plays. This article will explore how financial advisors can prospect for new clients without being pushy or feeling salesy.

Being a financial advisor is more complicated than passing your CFP or Series 7 exam. Asking people to trust you with their financial security, even friends and family, will likely create resistance. Asking a complete stranger via a social media platform is like asking to be ignored. This is a dilemma many new financial advisors face. Even if you are the most brilliant wealth manager at your firm, you could still struggle to build your book of business. If you find yourself in that situation, this article will help.

The Human Side of Financial Advising

Being a financial advisor is a very human job. The human qualities needed include confidence, empathy, passion, and storytelling. While financial advisors can be highly logical and analytical, if their human skills are lacking, they can struggle to find clients as new advisors. If you are a quant working for a hedge fund, that’s one thing. If you are a retail advisor responsible for generating new business, you need to focus on the human side as much as the financial side.

At Janek, we train sales professionals to position themselves as trusted advisors. For financial advisors, this is imperative. What separates a trusted advisor from a regular advisor? First, by definition, they provide rare knowledge. Second, the party asking the question feels confident in their answer. To be specific, confidence is the lack of doubt. For example, there are questions you’ll feel confident asking a stranger, like directions, and questions you reserve only for a trusted advisor, like what to do with your life savings.

The second element of trusted advisors is that they usually provide low-volume and high-impact solutions. Trusted advisors help people manage critical decisions. These decisions are made once or twice annually and involve risks. A trusted advisor is a person whose knowledge can mitigate risk and facilitate growth in others. However, establishing trust is the most significant barrier to new financial advisors achieving success.

The Scarcity Paradox

If financial advisors are trusted advisors, and trusted advisors are rare, this means financial advisors want to surround themselves with rare people. What do I mean by rare? By rare, I would say the top twenty percent of income earners. There are approximately 330 million people in the United States. According to Statista.com, there are about 22 million individuals with a net worth of over one million dollars. The good news for financial advisors is that the United States has more wealth than any other country. We also have more financial advisors, hence the challenge of rising above the noise.

For new financial advisors, the scarcity paradox works against them. They view clients as scarce resources. The harder they pursue new clients, the greater the prospect’s resistance. The greater the resistance, the more rejection. The more rejection, the less confidence. However, scarcity can also create value. What is scarce, we value, and value lowers resistance. What is common is unworthy of our consideration, hence rejected. In other words, financial planners can’t afford to be ordinary.

High net-worth individuals are not scarce. What is scarce is their attention. If attention is a scarce resource for the wealthy, then the financial planner with influence is valuable. This newly valuable resource, influence, is what financial planners should pursue. Influence is not optional for those seeking success. This is precisely the point where traditional sales training fails.

I assume financial advisors target me on LinkedIn because they see my title as Managing Partner. Because a person’s title is an easy data point to target, everyone on LinkedIn is doing it. Today, when I read, “Hope you’re doing well,” my resistance muscles are activated. Daily unsolicited pitches make executives an overserved prospecting segment. For well-intentioned financial planners, reaching out cold and asking for my time, is a big first ask. I would bet the conversion rate is close to zero with executives like me. What would get my attention? Let’s explore.

I’m confident many financial advisors receive traditional corporate sales training. This training is what I would classify as the old way. The old way includes:

• Methods like cold calling.
• Knocking on doors.
• Hosting seminars with free doughnuts.
• Networking events.

Prospecting to strangers the old way is difficult, even petrifying for some, because the chance of rejection is high. This type of prospecting is a numbers game, and the math stopped working years ago.

The new way of prospecting will challenge the status quo. When prospecting for new clients, the enemy is not the competition. It’s the prospect’s indifference. Think of challenging the status quo as a market correction. You need to provide the prospect with new information that refocuses their perspective, makes them reconsider their current situation, and creates awareness of potential needs. This is a correction in how they think about the future and manage their investments.

Questions Are the Key

One approach could be to ask the prospect a question they don’t know the answer to. Using the example of CFPs who reach out via LinkedIn asking for a chance to talk, they could have asked me, “Nick, I see you are an executive in Nevada. Are you aware of the recent statutory changes impacting earned income vs. capital gains?”

I’m not a financial advisor, but I assume there are things I don’t know. However, I’m not thinking of those things 24/7 because I am focused on running my business and assume my investments are in order. The point is, to get my attention, you need to challenge my current thinking. Once you get my attention, instead of asking for an appointment, which is way too big of a first ask for any business owner, ask if I’d like something of value, such as: “Would it make sense if I sent you the recent changes and a checklist for executives in Nevada?”

To influence today, you need to provide something of value first. The tricky part is, because the best prospects are already being serviced, it has to be value+1. Value+1 requires a higher level of thinking. For financial advisors, the current volatile market conditions create a situation to challenge the status quo. Investors need clarity at every point in the investment process. The financial planner who can present information that the prospect did not know about accrues influence.

Let’s break down modern prospecting for financial advisors. Financial advisors need to pursue influence to attract prospects. To influence, you need to gain the prospect’s attention. To gain the prospect’s attention, the prospect needs to be curious. To make a prospect curious, you must challenge their current status quo thinking. To challenge the status quo, you can ask a question the prospect has not considered. Simple, but not easy.

As a sales training company, we’ve worked with some of the largest financial institutions in the world. Each firm helps its clients manage their investment, but each does something unique that creates value+1. It could be an advanced technology platform, a wide breadth of financial products, or their ability to educate investors. When prospecting, financial advisors need to leverage their advisory firm’s uniqueness to challenge the status quo of the specific prospect. It’s personalized, not one size fits all.

In Conclusion

Modern prospecting for financial advisors is less about pitching and selling and more about educating and listening. However, before a financial advisor can educate, the sophisticated investor has to feel uncertain. With uncertainty comes the willingness to learn. Once the prospect becomes willing to learn, then the process becomes easy.

Time and again with our clients, I have seen average performers become high achievers when they start valuing what they bring to the table and asking better questions. It does not help in the long run to question yourself and present yourself as something you are not. The key human skill financial advisors need is confidence. Without confidence they will feel uncomfortable asking the status quo challenging questions. Prospecting for new business is not easy, but during the most challenging days, remember, you cannot lose if you do not quit.

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