How can your friends and family help attract new clients?

Friends, family, acquaintances and spouses can all help advisers seek out potential new clients, writes Bryce Sanders, president of Perceptive Business Solutions

The best ideas are often the simplest. Often when financial advisers attend sales training they are shown a “simple 15 step process” or told “change everything you do everyday from this day forward.” When you get back to your desk and look at a stack of message slips it is difficult to make big changes in “the middle of the game”. Since the market is moving continuously, the game never ends.

Here are four simple “one liners” you can use in social situations. They are easy strategies to implement.

Establish yourself as the alternative

Inertia keeps most people with their financial adviser. They will endure poor performance, a lack of service and high fees because it is a chore to find another adviser. As you read this you throw down the paper and shout: “Then why don’t they ask to be referred to someone!” Because they may be private people. They do not want to discuss how much money they have. They do not know if a friend’s adviser is any good either.

Establish yourself as the alternative. I met a restaurant owner in Pennsylvania. A relative sold chicken parts. Whenever the chicken part purveyor would meet another restaurant owner socially he would say: “I’m sure you are very happy with your current supplier. Here’s my card. If anything ever changes, give me a call.” He is planting a seed.

You could use the approach almost word for word. You meet someone at a party. They ask what you what you do. You answer. They reply “My adviser is with XYZ Securities.” You could respond: “I’m sure you are very happy with your current adviser. Here’s my card. If anything ever changes, give me a call.”

This is a passive, low key strategy. Picture yourself scattering seeds over a field by hand. You are planting 100 or 200 seeds over time. You wait patiently.

Often the recipient keeps the card. One day, something goes wrong. Their adviser leaves the business. They are reassigned to a new adviser. Maybe their calls are not returned anymore. By giving your card (and their keeping it) you have changed the dynamic. Now, it is not taking their money out of XYZ Securities, it is moving their money over to you at your firm. The alternative has a face – yours! They have met you and like you. You will handle all the tedious details of changing advisers. Relief is just a phone call away.

What do you need to do? When “the call comes” get over to this person with the transfer papers as quickly as possible!

The common issue

Friends talk with other friends about problems they face in common. “How did you handle this situation?” That is normal. Think of situations you face in your life that are also faced by peers in different social circles. Many come to mind – putting aside money to educate your children, saving for retirement, building a nest egg to buy a house or vacation property.

Find one you share. For example in the US putting money aside for educating your children is a big issue. According to the website www.CNNmoney.com the cost of attending Harvard University for a year including tuition, fees, room and board is about $48,868. A state university in New Jersey runs about $22,562 for a state resident. Four years of college is expensive. Costs will likely be higher when your child is ready to attend.

In the US certain account structures such as 529 plans are designed to help parents save towards this goal. You have young children. So does a friend. You bump into each other while grocery shopping on a Saturday and stop for coffee. You mention: “We’ve been trying to figure out how we are going to pay for the twins’ college education. We found out about a savings plan designed for this purpose. We set it up last month. What are you doing about the boy’s education?” Stop talking.

They might say: “Tell me more about what you did.” That is a good opening. They might reply: “Got it covered. The grandparents said they would take care of it.” This is wonderful –they are giving you information. You have never had this conversation before. Determine how much additional information you can tactfully gather: “Who makes the investment decisions?” and “Who pays the taxes in the meantime?”

Offering to do something

Every hobby, sport or leisure activity you can think about has a public company connected somewhere. Make a list of hobbies and list the publicly traded companies in the field.

You can reach people through their passions. Some wealthy investors who are wine fans might not bother to open their account statements but they probably read every page of Decanter magazine – including the letters to the editor!

You have friends who are “foodies”. They try the latest restaurants and read about celebrity chefs. They are always checking out the cookware stores in malls. You are all together at one of those stores and mention: “You know (firm) is a public company. You would be amazed at what they are doing. My firm just put out a research report about them. It makes great reading. Let me fax it to you. How do I do that?”

Often they say: “No, don’t go to any trouble…” You counter: “These reports come across my desk all the time. It’s not a big deal…” You fax it over. Now you have opened a door! The research report leads to news stories, earning announcements, reports on the industry and their competitors. Eventually you have “backed into” asset classes and allocation. It has taken awhile, but it all started with the one research report on the company involved in their passion.

Referral via spouse

Can your spouse other refer a person when they sense a business opportunity? Can they explain “what you do” in a couple of appealing sentences?

An adviser and his wife live in Northern California. When they attend community events often the adviser is on the other side of the room talking sports with his friends. His wife enjoys mingling. Someone asks: “What do you do?” She replies: “I raise our children at home. My husband is a financial adviser.”

Often the other person starts talking about their investments or the market. They assume, being married to an adviser, she understands the terminology. She is very smart! She waits until something “explodes” in the story (the situation gone wrong), stops them and says: “You should really speak with my husband. He may be able to help you with that problem…”

Next she circles back to her husband and whispers: “Harriet is expecting a call from you at her office on Friday morning.” Another proactive approach is when the adviser sits at that person’s table (assuming open seating) and politely introduces himself to the seated guests. This gives the potential prospect the opportunity to introduce the subject. The adviser is not being pushy or forward.

Assuming a need

It’s considered dangerous to assume a need. Sometimes the needs are very obvious. For example, you have an uncle. He has worked for a listed (publicly traded) company since he graduated from university 40 years ago. He is in middle or upper management. Is it safe to assume he has accumulated a large amount of his own company’s stock in his retirement plan, employee stock purchase program and deferred compensation plan? Probably yes.

You approach your uncle at a summer gathering and get him off to the side. “Uncle, there’s something I’ve always wondered about. You’ve been with your company about 40 years, your whole working life. You believe in your firm and are always telling us about the new products they are introducing. Since you believe in your company, it’s logical you’ve accumulated shares in your firm, probably quite a lot over forty years. How do you protect yourself in a volatile market environment when you have so much money invested in one position?” Stop talking.

Your uncle may respond: “I have a concentrated stock position strategy with (investment firm name). Thanks for asking.” Or he might say: “You’re right! I do own a lot of my company’s stock. Just got my statement after the first quarter. And you are right – I believe in the company so I’ve usually held on and ridden the price up and down over the years. But I’m 61 years old. I’ll be retiring soon. You mean you know something about this kind of situation? You may have uncovered a business opportunity because you asked about his concentrated stock position.

Social situations provide many opportunities to tactfully introduce business. Consider it like fly fishing. You cast out onto the river. If you do not get any bites you repeat the process further downstream. It is tactful, simple and easy. The ideal strategy for busy advisers.

Bryce Sanders is President of Perceptive Business Solutions Inc. His book “Captivating the Wealthy Investor” is available on Amazon.com