When clients are dissatisfied with their financial advisor, they become fair game for competing advisors. But prospecting advisors must be able to persuade these disaffected clients that switching will be worth their while.
“Advisors operate in an ultra-competitive environment in which their clients are someone else’s prospects,” says David Andrews, vice president and portfolio consultant at Franklin Templeton Investments Corp. in Toronto. Seizing the opportunity to win such prospects can be a “healthy challenge in a competitive marketplace.”
But there are certain rules and guidelines you should follow when targeting potential clients who are dissatisfied with their advisors. For example, Andrews says, you should not “punch below the belt” by badmouthing the other advisor. Rather, you should take a professional approach in articulating what you can do for your prospect to enhance their experience. “Let the client make the decision to leave their current advisor,” Andrews says.
Konrad Kopacz, portfolio manager and investment advisor with Euro Pacific Canada Inc. in Toronto, says that most dissatisfied clients are unhappy because of unfulfilled portfolio performance expectations, poor service or lack of communication.
Although poor portfolio performance often is the primary stated reason for dissatisfaction, especially during weak markets, there may be another underlying cause, Kopacz says. A client’s disappointment often is a result of poor communication with the current advisor. “Clients might forgive you for not beating the market,” Kopacz says, “but they might not forgive you for giving them insufficient attention.”
So, how do you contact other advisors’ dissatisfied clients? George Hartman, CEO of Market Logics Inc. in Toronto, says that most conversations with these prospects begin with a referral.
Kopacz agrees, saying that referrals are his main source of prospects who are dissatisfied clients of other advisors.
To put the referral process in perspective, Hartman says, these prospects could be sharing their poor experience with an associate or friend who already is your client and who tells the dissatisfied prospect to “talk to my guy,” thus triggering a referral. You also may meet other advisors’ dissatisfied clients at networking or social events.
The key to understanding the expectations of these prospects requires careful listening to uncover what’s bothering them. For example, the prospect might expect a 15% rate of return but receive only 5%. The question you have to ask yourself is whether you can meet this prospect’s expectations, recognizing that they might be unrealistic.
In such cases, you should be careful not to overpromise what you can do just to win these prospects’ business, such as promising market returns that are not viable.
But you certainly can provide these potential clients with greater comfort in matters over which you have control, such as frequency of communication or level of service. You even can offer lower fees, suggests Kopacz, because you can control that element of the client/advisor relationship.
When meeting with dissatisfied clients of other advisors, you should ask these prospects if they have discussed their concerns with their current advisor, Hartman says. If they have and their expectations were not addressed, then you should empathize with these prospects, explaining that you understand their personal situation.
At this point, the door is open for you to tell your story. Articulate what you do and how you work with your clients, Andrews says. Be honest and straightforward.
“Relate what you offer to [address] the things the [prospect] is dissatisfied with,” Hartman says.
For example, says Kopacz, you may say that you meet with your clients every six months at a minimum and have monthly contact through newsletters, email or phone calls. You also should emphasize your investment process and how you strive to meet client expectations.
You should be selling yourself subtly without being pushy or making promises you can’t deliver on. And don’t be critical of the prospect’s current advisor.
“You should not openly tell [other advisors’] clients that you can do a better job,” Kopacz says. Rather, let these prospects decide whether what you offer is better than their experience with their current advisor.
Hartman suggests that you get these prospects’ feedback on what you’ve presented in order to gauge whether a prospect is a good fit. Some clients are difficult to work with and are easily dissatisfied.
At the end of your meeting, the prospective client must be armed with sufficient information to make a decision about whether to fire the current advisor. In some cases, a prospect might simply want to give their advisor “one last shot,” Hartman says. Your success comes down to how convincing you were in telling your story.
© 2016 Investment Executive. All rights reserved.