Welcome to Day 14 of our Referral Clinic and Blog-a-thon. We asked advisors to send us their toughest referral challenges. Now we're featuring the 20 best, along with solutions from top referral experts and veteran financial advisors.
Today's winning question comes from David G., a bank rep from Oregon. Nice job, David!
David's question will be answered by William Y. Smith, CFP. Bill is in his 25th year as a financial advisor and has written hundreds of popular articles for a major NYSE firm, as well as for Horsesmouth.
Question: "I have several old friendships in my local community which is very tight-knit and everyone talks. How do I go about broaching the subject of my unique capabilities without appearing to my prospects that I am being "salesy" or pushy?"
Bill Smith's answer: There are two parts to this answer. The first concerns what you do to get the business in the first place, and the second relates to how you keep the people happy so that they spread the good word about you, or at least don't badmouth you to that close-knit community.
Ready for an unorthodox, but absolutely true answer? I never broach the subject of business with friends, for example, or with people in my church, or with fellow non-profit board members.
Why? Because in this imperfect world, I have enough trouble doing things for the right reasons. If I need to say something difficult as a board member, I don't want to consider for a moment not saying it because I'm trying to get the investment business of people around the table. I want to be a friend with my friends, and not mix up anything else. To show that I'm not exaggerating—when my firm recently merged and combined offices with another firm, one of the advisors who attends my church that he was impressed to find out that I was in the same business that he was and that he never knew it!
With that said, I have picked up some incredibly good clients from just being real and helping people when needs came up. My single biggest client worked in my building, back when I was a medium-level producer. I saw him in the parking lot one day, fuming because the top producer in our office kept taking his parking place. I offered to talk to the guy for him. A year later, when he wanted to get a bunch of money out of a bank, he came downstairs to talk to me.
My second biggest client is the widow of a guy with whom I served for years on a non-profit board. One day he was going to pick up people at the airport, and lamented that he wasn't sure his car would hold them and their luggage. I offered him my SUV. He was thrilled. Two years later, when his advisor left, he called me.
I could go on and on. My experience is that people know what we do, and I'd rather be the guy who doesn't talk about what he does and have people be surprised that I'd be willing to take on a new client than be the guy that people avoid at parties. Best of all, many of my social acquaintances have been referred to me by a mutual friend who is a CPA, attorney, or other client. That's a powerful referral.
Here's the harder part: You can lose your friends' accounts faster and more painfully than any other accounts. And sometimes, they'll treat you worse and send you transfer instructions without as much as a phone call.
Ten years ago, after an agonizing weekend wondering why one of my friends had sent me a rude fax, I wrote up some conclusions and decisions about working with friends. They go something like this:
Your friends may be weirder clients because they haven't gone through the normal thought process in choosing to work with you. They haven't compared options and done the hard work of deciding whether you are competent or your services are reasonably priced, or whether they can take the risk of the market. Because of that, unless you go back and lay the proper groundwork with them, they don't have the proper foundation of a relationship with an investment advisor that "arms-length" relationships do.
Your friends won't call when they don't understand something. They'll let a question about a statement question, then a late returned phone call, then something else, pile up in their minds until they just get mad one day and transfer out without ever talking with you.
So when I open an account for a friend, I actually make them promise that they will call me when there is any question at all. I tell them I won't work with them without that promise. In fact, I describe to them the problem I just mentioned. We role play it. And the first time they timidly call with a question, I am profuse in thanking them for raising the issue. Don't let the pressure build up unrelieved.
Your friends will have unrealistic, excessive and, worst of all, unspoken expectations. Somehow, deep down, some of them will think that by working with you, they will finally not have to worry about the stock market going up and down. They'll believe that since they are your friends, they are doing you a favor by working with you, and you should never be on the phone when they call. They'll believe that they can just drop by anytime without an appointment. They'll either take your advice without thinking, or they'll fail to credit your expertise and ignore your advice, both because you don't have the arms-length relationship that you do with your other clients. They sometimes take offense when you treat them in your normal, effective way.
So again, this needs to be a conversation that you have with them. In other words, manage expectations.
Do all these things, and the good word about the work you do will spread throughout the group. The people who need your help will find out what you do and you'll be able to serve many, many people and the relationships will become broader and deeper.
Always looking out for your best interest,
Bill
Got questions or thoughts about today's challenge or Bill's response? Post a comment.
The very best practical advice for working with friends, that I have ever read. Well done William Smith
Posted by: Joel Rader | June 02, 2006 at 08:34 AM
I second that comment made by Joel Rader
Posted by: Bill Gibbons | June 02, 2006 at 10:41 AM